Dividend Aristocrats - companies in the S&P 500 that have increased their dividend payout for at least 25 consecutive years - are the go-to dividend stocks for income-focused investors seeking income and safety.
However, finding companies with solid growth rates, decent yields, and a strong consensus is like finding a needle in a haystack. Fortunately, with Barchart, we have the tools to do it. Let me show you how I came up with my top 3 highest-yielding Dividend Aristocrats to buy and hold, literally forever.
Screening My List of Highest-Yielding Dividend Aristocrats
- Watchlist: I selected my watchlist for Dividend Aristocrats, which includes 69 companies. With Barchart, you have the option to create your own watchlist. I also have one for Dividend Kings, Magnificent 7, etc.
- Analyst Rating: I set the ratings to 4 or more, so I’ll only see aristocrats with a buy-rated consensus.
- Number of Analysts: I’m looking for Dividend Aristocrats with at least 16 analysts covering them for a more reliable consensus.
- 5-YR Dividend Growth: I set this to 20% and higher to filter out aristocrats with not-so-attractive dividend growth.
- Annual Dividend Yield: I left this blank to capture the full spectrum of dividend yields across the results.
After hitting “SEE RESULTS”, the screener looked through the 69 Dividend Aristocrats on my list, and narrowed the list down to 15 companies that matched the screen. Then, I sorted the list from highest to lowest annual dividend yield.
The initial top 3 were Chevron, AbbVie Inc, and NextEra Energy. However, I decided to skip AbbVie because its latest full-year earnings (GAAP) were insufficient to cover its dividend. Not necessarily a red flag, however, I prefer GAAP over “adjusted."
So that leaves me with Chevron Corp, NextEra Energy, and Sysco Corp as my highest-yielding Dividend Aristocrats.
Chevron Corp (CVX)
Chevron Corp is one of the largest energy companies among its peers. Its primary focus is oil and gas production on a global scale, with both upstream and downstream operations. Although it made its fortunes from fossil fuels, Chevron started exploring renewables and carbon capture tech, which honestly seems like a smart move given where the energy market is heading.
As a Dividend Aristocrat, Chevron is as good as it gets for dividend investors. Its forward dividend is currently $6.84 ($1.71 per quarter), which translates to an aprox 5% yield - that’s well above what you'd get from most blue chips today. Chevron’s dividend makes up aprox 65% of its earnings, ensuring enough funds for future growth.
Chevron’s Q4’24 financials reported a 43% increase (YOY) in its bottom line to $3.25 billion, translating to a quarterly EPS of $1.84, easily covering its quarterly dividend.
The consensus rating among 22 Wall Street analysts on CVX stock is a Strong Buy (4.45 out of 5) with a high target price of $203 - suggesting 50% upside potential for new investors.
Nextera Energy (NEE)
Next on the list of high-yielding Dividend Aristocrats is NextEra Energy, one of the most prominent names in the clean energy sector. It runs a two-pronged business through Florida Power & Light and its renewable arm, NextEra Energy Resources. The company is one of the world's biggest producers of wind turbines and solar for clean energy generation.
Although NextEra's Q4’24 financials reported bottom line dropping slightly to $1.2 billion YoY, translating to an EPS of $0.58 - enough to cover the $0.5665 quarterly dividend, translating to an aprox. 3.4% yield.
Wall Street is also bullish on NextEra's prospects, with a consensus “Moderate Buy” rating on NEE stock among 19 analysts (4.05 out of 5) on NEE. The highest price target is $102, suggesting a 52% upside potential from current levels.
Sysco Corp (SYY)
Last on the list of the highest-yielding Dividend Aristocrats to buy is Sysco Corporation - a company that literally feeds America. The company distributes food products to restaurants, healthcare facilities, schools nationwide, and more, leveraging its network of 340 distribution centers worldwide
Sysco's forward annual dividend is $2.04 per share ($0.51 per quarter), which translates to an aprox. 2.9% yield. While the dividend is modest, it's quite competitive in today's market. The company’s payout ratio of 45.9% is also conservative compared to the first two, but it also means plenty of room for future dividend growth.
Although SYY stock ranks lowest on this list in terms of buy ratings, 17 Wall Street analysts are still bullish on Sysco with a consensus Moderate Buy rating (4.29 out of 5) and a high target price of $95 per share, which means a potential 36% upside from the stock’s current trading price.
Final Thoughts
These three Dividend Aristocrats are solid picks for any long-term portfolio, but hey - the market can always throw something unexpected at anyone. So before you invest in any company, make sure to research the financials, the competition, and where the industry is heading, as even the most reliable dividend payers can hit rough patches (think Walgreens). That’s why it’s always best to look at the big picture from all angles.
