Dividend Aristocrats offer great value to defensive investors, as their consistent and increasing dividend yields make for an excellent and reliable income stream. They’re not everyone’s cup of tea, though, as they tend to be stable in price, leaving little to no room for capital appreciation. Or, at least, some people think so.
Some investors and analysts even go as far as saying that dividends are immaterial, and they could just as easily replicate dividend yields with capital appreciation through various strategic investments.
But what if you could have the best of both worlds? What if you could get a Dividend Aristocrat with excellent growth potential and a big green “Strong Buy” stamp from analysts?
While I normally write about “top 3” stocks, in my screen, I found an extra that was a tie. So, in this article, you'll discover the four highest-rated Dividend Aristocrats with excellent growth prospects for your consideration.
Emerson Electric Co (EMR)
Dividend aficionados will immediately recognize Emerson Electric Co. It is both a Dividend Aristocrat and a Dividend King and has increased dividend payouts since 1957.
EMR provides technology, engineering, and software solutions to companies worldwide. The company is divided into Intelligent Devices and Software and Control, further split into six segments that service industrial and consumer-level clients. EMR offers thousands of products ranging from household appliances to industrial automation solutions. The company also has a solid foothold in many industries like Automotive, Chemical, Electronics, Food & Beverage, Life Sciences, Marine, Medical, Mining, Minerals & Metals, Oil & Gas, Packaging, and Power Generation.
What Does EMR's Trading Price Tell Us?
Aside from rave analyst reviews, EMR’s price movement shows that it’s not just a dividend stock. The stock price is up more than 11% since the first week of February. The recent rally also resulted in a new all-time high for the stock at $107.08. Investors who want to time their entries might want to watch the stock for now.
Analyst consensus rates EMR as a Strong Buy with a $130 high target price. Emerson Electric currently has a 2.46% dividend yield.
Linde PLC (LIN)
Linde PLC has a little tagline on its website: "Linde Is Everywhere.” Ostensibly, LIN is a chemical company focusing on industrial gasses and engineering. The “Everywhere” part of their proclamation starts to make sense when you see the list of industries they’re serving, including:
- Energy
- Food And Beverage
- Electronics
- Healthcare
- Mining
- Manufacturing
LIN is also a noted proponent of clean energy and sustainability, with a strong emphasis on utilizing hydrogen as an alternative fuel source. According to their website, Linde PLC has the world's largest liquid hydrogen capacity and distribution systems that help with electrolysis for green hydrogen production and fueling technologies.
Are Analysts Right About LIN?
Like EMR, LIN recently carved out a new all-time high at $439.40—and by recent, I mean just yesterday.) The price spike comes after a year-long uptrend, which might not be as attractive to traders. However, analysts anticipate that LIN will reach $485, so there is room for growth. Additionally, LIN has a 1.18% annual dividend yield.
Becton Dickinson and Co (BDX)
Becton Dickinson and Co. is a well-known developer and manufacturer of medical supplies. Their products and solutions cover various specialties and positions in the medical field, from administrators to surgeons. The company is divided into three segments that comprehensively cover the healthcare industry.
BD Medical covers Medication Delivery Solutions (MDS), Medication Management Solutions (MMS), and Pharmaceutical Systems (PS). BD Life Sciences operates the Integrated Diagnostic Solutions (IDS) and Biosciences (BDB) units. Meanwhile, BD Interventional handles Surgery, Peripheral Intervention (PI), and Urology & Critical Care (UCC).
Is BDX A Buy?
It should come as no surprise that BDX is a Strong Buy (all of the stocks in this article are). What’s notable here is that it is currently trading near its 52-week low, giving investors an excellent chance to buy it at discounted levels. Another great thing is that the high target price for the stock is $315, or 30.89% above its current trading price.
BDX currently has a 1.53% annual dividend yield.
S&P Global Inc (SPGI)
As I mentioned earlier, I usually make stock recommendations by threes, but the topic calls for a special addition.
One of the requirements of being a Dividend Aristocrat is that the stock must be included in the S&P 500. So, it shouldn’t be surprising that S&P Global Inc.—the majority owner of the joint venture S&P Dow Jones Indices that manages the S&P 500 index—belongs to this acclaimed list. SPGI provides credit ratings, research, analytics, and financial intelligence solutions. Its notable segments include Market Intelligence, Ratings, Mobility, and Indices.
Is SPGI Worth A Look?
S&P Global offers this list's lowest annual dividend yield at 0.85%. But, it also has the distinction of having the highest average analyst rating on our list at 4.84 on a 0-5 scale. For context, the other three stocks have an average rating of 4.5.
Currently, prices are down from a recent 52-week high and moving along a support channel, presenting investors an opportunity to buy it at a fair price. Those who want to maximize their chances may wait for lower prices before jumping in. High target estimates for the stock are at around $500.
Final Thoughts
Dividends can be a great way to earn income, and analyst ratings can give investors confidence that their stock pick is good. These companies combine the best of both and offer growth and stability.
However, there are very few hard and fast rules in investing, and you need to consider each potential pick on a case-by-case basis. Always align your stock picks to your goals; if things don’t go according to plan, always have an exit strategy.
On the date of publication, Rick Orford did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
