All Dividend Aristocrats + 5 of My Favorites
Hi Partner 👋
Welcome to an 🔒 exclusive edition 🔒 of Compounding Dividends.
Dividend Aristocrats are companies that have raised their dividends for at least 25 consecutive years.
There are only 66 of them.
They’re a great place for Dividend Investors to look at for ideas!
In this article, we’ll rank the Aristocrats using different metrics.
At the end, I’ll share my 5 favorite ones.
Download all the Dividend Aristocrats here:
I created a spreadsheet for you with all the Aristocrats.
The spreadsheet has the following data:
Dividend Yield
Debt/Equity Ratio
5-Year Dividend CAGR
EPS CAGR
Forward PE
A short description of the business
Highest Yields
The 5 Dividend Aristocrats with the highest Dividend Yields are:
Franklin Resources: 6.2%
Realty Income: 6.0%
Amcor plc: 5.4%
Chevron: 4.5%
T. Rowe Price: 4.3%
Highest Dividend Growth Rate
Cintas: 20.5%
Lowe’s Companies: 19.3%
Sherwin-Williams: 16.1%
Nordson Corporation: 16.0%
Abbott Laboratories: 12.7%
Highest EPS Growth Rate
Ecolab: 16.6%
Stanley Black & Decker: 15.8%
C.H. Robinson Worldwide: 15.3%
S&P Global: 14.6%
Pentair plc: 14.4%
Starting with yields and growth rates is a good approach.
But I took it further.
I analyzed all 66 companies using an Earnings Growth Model and Reverse DDM.
I also considered the starting yield, historical dividend growth rate, and expected EPS growth rate for each one.
Using these criteria and the quality of the businesses, I selected 5 of my favorites.
The Aristocrats are a good starting point for dividend investors.
But I think these 5 companies offer some of the best opportunities.
The Earnings Growth Model says that these companies have an expected return of more than 10% per year.
The dividend growth rate from the Reverse DDM is also lower than the growth rate from the past five years for each company.
Ready to see what they are?
Let’s dive in!
5. Abbott Laboratories
Abbott makes and sells medical products, like tests for diseases, medication, and nutrition products.
Why is it an interesting company?
They’re positioned to take advantage of the aging population
Abbott has a strong balance sheet with a Debt/Equity of 38%
They offer a reasonable starting Dividend Yield, strong dividend growth, and attractive DPS growth
Here’s the revenue and net income for the past 10 years:
Valuation
Dividend Yield: 2.1% (5-year average 1.6%)
Earnings Growth Model: expected return of 10.3% per year
Reverse DDM: Abbott needs to grow the dividend by 7.9% per year.
5-year DPS CAGR: 12.7%
4. Automatic Data Processing
ADP makes money by providing payroll and human resources software and services to businesses, helping them manage employee payments and benefits.
They charge companies recurring fees for these services, making it easier for businesses to handle their staff and save time.
Why is it an interesting company?
ADP is a market leader in a growing market
The management is committed to returning capital to shareholders
ADP has very stable revenue and income growth
Valuation
Dividend Yield: 2.1% (5-year average 2.2%)
Earnings Growth Model: expected return of 10.7% per year
Reverse DDM: ADP needs to grow the dividend by 7.8% per year.
5-year DPS CAGR: 12.4%
3.PPG Industries (PPG)
Business description
PPG is the largest paints and coatings company in the world.
They make paints, coatings, and specialty materials used in homes, cars, and buildings.
Why is PPG interesting?
PPG operates in a oligopoly with Sherwin-Williams and Dutch paint company Akzo Nobel.
PPG has a strong track record of dividend growth, makes a necessary product, and has advantages in their brand as well as their size and scale .
Source: Finchat
Valuation
Dividend Yield: 2.2% (5-year average 1.6%)
Earnings Growth Model: expected return of 12.2% per year
Reverse DDM: PPG needs to grow the dividend by 7.8% per year.
5-year DPS CAGR: 6.2%
2. Sysco
Sysco is the largest foodservice distributor offering a wide range of food and related products to restaurants and institutions.
Why is it an interesting company?
Sysco’s size gives it economies of scale, and the ability to service a lot of customers like restaurants, schools, and healthcare facilities
Their supply chain is large and reliable, which is important to food service customers
People are eating more food away from home, which should benefit Sysco
Source: Finchat
Valuation
Dividend Yield: 2.7% (5-year average 2.7%)
Earnings Growth Model: expected return of 10.2% per year
Reverse DDM: Sysco needs to grow its dividend by 7.2% per year.
5-year DPS CAGR: 5.2%
1. Nordson Corporation
Nordson Corporation makes specialized equipment that helps other companies with packaging, coating, and sealing products.
Their equipment dispenses and applies adhesives, coatings, polymers, sealants, biomaterials, and other fluids.
Why is it an interesting company?
Nordson is a Dividend King with 61 years of dividend growth
They’re a successful serial acquirer
Nordson has global infrastructure and deep relationships with their customers
Valuation
Dividend Yield: 1.5% (5-year average 1.0%)
Earnings Growth Model: expected return of 13.1% per year
Reverse DDM: Nordson needs to grow the dividend by 8.3% per year.
5-year DPS CAGR: 16.0%
Conclusion
That’s it for today!
Here are the five Dividend Aristocrats I think are interesting:
Abbott Labs: Strong balance sheet ready to benefit from the aging population
ADP: A leader in a growing market
PPG: A necessary industrial supplier in an oligopoly
Sysco: A dominant food distributor benefiting from changing trends
Nordson Corporation: Successful serial acquirer in a specialized market
One Dividend At A Time
TJ
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Used sources
Interactive Brokers: Portfolio data and executing all transactions
Finchat: Financial data