Here are 25 Dividend Aristocrat stocks screened for ‘quality’

By Philip van Doorn, MarketWatch

Bloomberg

Clorox has had one of the highest average returns on invested capital among the S&P High Yield Dividend Aristocrats.

Dividend stocks are always a popular topic for investors. Some are attracted to payout yields that may be much higher than bond yields. Others believe that consistently raising dividends is a good sign that a company’s management team is strong and that the stock will perform well in the long run.

MarketWatch’s Michael Brush has a list of nine secrets of dividend investing, based on his interview with Matthew Page and Ian Mortimer, who manage the Guinness Atkinson Dividend Builder Fund , which is rated four stars (out of five) by Morningstar. The managers give practical advice, including focusing on companies with consistent records of increasing payouts, with high returns on capital and moderate dividend yields.

A high dividend yield may be a signal that a majority of investors don’t trust the company to maintain the payout. A dividend cut is typically associated with a severe drop in a company’s stock price. A long-term investment in a quality company with a moderate dividend yield may be much better, as the company will be more likely to increase the payout over the years.

Here’s an example: If you had bought shares of McDonald’s /zigman2/quotes/203508018/composite MCD -0.81%  at the close Feb. 18, 2015, your share price would have been $94.58 and the quarterly dividend of 85 cents a share would have made for a dividend yield of 3.59%. If you held those shares through the close Feb. 18, 2020, and had not reinvested your dividends (to keep our math simple), your share price would have more than doubled to $216.15, while the dividend yield based on your cost in 2015 would have risen to 5.29%, based on the current quarterly payout of $1.25 a share.

For someone who just bought shares of McDonald’s on Feb. 18, 2020, the dividend yield was “only” 2.3%.

Screen of U.S.-listed companies

You may have heard of the S&P 500 Dividend Aristocrats Index /zigman2/quotes/210598428/delayed XX:SP50DIV -0.08% , which is made up of the 57 companies in the S&P 500 that have increased their regular dividends for at least 25 consecutive years. That’s the criteria — it makes do difference how high a company’s current dividend yield is. You can invest in this group all together with the ProShares S&P 500 Dividend Aristocrats ETF /zigman2/quotes/208747379/composite NOBL -0.42% . 

But S&P Dow Jones Indices also maintains an expanded list of 119 High Yield Dividend Aristocrats /zigman2/quotes/210599901/delayed XX:SPHYDA -0.34% , which is tracked by the SPDR S&P Dividend ETF /zigman2/quotes/206871683/composite SDY -0.30% . These are companies included in the S&P 1500 Composite Index (made up of the S&P 500, the S&P 400 Mid-Cap Index /zigman2/quotes/219506813/composite MID -0.08%  and the S&P Small-Cap 600 Index /zigman2/quotes/210599868/delayed SML -0.68% ) that have increased their regular dividends for at least 20 straight years.

Despite the name, it makes no difference how high a company’s yield is when it is included in the High Yield Dividend Aristocrats Index.  

Getting back to focusing on companies with “moderate” payouts, we are paring the High Yield Dividends Aristocrats to a list of 25 with minimum dividend yields of 2% that have had the highest average returns on invested capital (ROIC) over the past 20 reported quarters through Feb. 19. Here’s the list, sorted by ROIC:

You can click on the tickers for more about each company.

A company’s ROIC is its after-tax profit divided by the total of its debt and equity. It provides an indication of how good a management team is at deploying money to expand, improve products and services, expand distribution and sales methods, etc.

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/zigman2/quotes/203508018/composite

Add to watchlist MCD

McDonald's Corp.

US : U.S.: NYSE

$ 263.44

-2.15 -0.81%

Volume: 3.37M

Sept. 29, 2023 4:00p

P/E Ratio

24.25

Dividend Yield

2.31%

Market Cap

$191.99 billion

Rev. per Employee

$161,293

/zigman2/quotes/210598428/delayed

Add to watchlist XX:SP50DIV

S&P 500 Dividend Aristocrats Index

XX : S&P Global Thematic Indices

1,579.64

-1.20 -0.08%

Volume: 0.00

April 19, 2021 5:12p

/zigman2/quotes/208747379/composite

Add to watchlist NOBL

ProShares S&P 500 Dividend Aristocrats ETF

US : U.S.: Cboe BZX

$ 88.55

-0.37 -0.42%

Volume: 388,965

Sept. 29, 2023 4:00p

/zigman2/quotes/210599901/delayed

Add to watchlist XX:SPHYDA

S&P High Yield Dividend Aristocrats Index (AMEX Calculation)

XX : ICE Gib Ind

3,891.98

-13.32 -0.34%

Volume: 0.00

Sept. 29, 2023 4:19p

/zigman2/quotes/206871683/composite

Add to watchlist SDY

SPDR S&P Dividend ETF

US : U.S.: NYSE Arca

$ 115.01

-0.35 -0.30%

Volume: 429,134

Sept. 29, 2023 4:00p

/zigman2/quotes/219506813/composite

Add to watchlist MID

American Century Mid Cap Growth Impact ETF

US : U.S.: NYSE Arca

$ 44.70

-0.04 -0.08%

Volume: 89.00

Sept. 29, 2023 4:10p

/zigman2/quotes/210599868/delayed

Add to watchlist SML

S&P Small Cap 600 Index

US : S&P US

1,151.26

-7.86 -0.68%

Volume: 496.97M

Sept. 29, 2023 5:20p

/zigman2/quotes/200774077/composite

Add to watchlist CL

Colgate-Palmolive Co.

US : U.S.: NYSE

$ 71.11

-0.20 -0.28%

Volume: 3.23M

Sept. 29, 2023 4:00p

P/E Ratio

39.65

Dividend Yield

2.70%

Market Cap

$58.79 billion

Rev. per Employee

$552,544

/zigman2/quotes/206443229/composite

Add to watchlist CLX

Clorox Co.

US : U.S.: NYSE

$ 131.06

+2.44 +1.90%

Volume: 2.80M

Sept. 29, 2023 4:00p

P/E Ratio

109.40

Dividend Yield

3.66%

Market Cap

$16.23 billion

Rev. per Employee

$849,310

/zigman2/quotes/207661132/composite

Add to watchlist ADP

Automatic Data Processing Inc.

US : U.S.: Nasdaq

$ 240.58

-2.73 -1.12%

Volume: 1.34M

Sept. 29, 2023 4:00p

P/E Ratio

29.31

Dividend Yield

2.08%

Market Cap

$99.11 billion

Rev. per Employee

$285,908

/zigman2/quotes/203490767/composite

Add to watchlist CHRW

C.H. Robinson Worldwide Inc.

US : U.S.: Nasdaq

$ 86.13

-1.01 -1.16%

Volume: 962,735

Sept. 29, 2023 4:00p

P/E Ratio

19.84

Dividend Yield

2.83%

Market Cap

$10.03 billion

Rev. per Employee

$1.16M

/zigman2/quotes/203200152/composite

Add to watchlist TROW

T. Rowe Price Group Inc.

US : U.S.: Nasdaq

$ 104.87

+0.73 +0.70%

Volume: 1.43M

Sept. 29, 2023 4:00p

P/E Ratio

15.65

Dividend Yield

4.65%

Market Cap

$23.52 billion

Rev. per Employee

$795,653

/zigman2/quotes/201766540/composite

Add to watchlist KMB

Kimberly-Clark Corp.

US : U.S.: NYSE

$ 120.85

-0.75 -0.62%

Volume: 1.71M

Sept. 29, 2023 4:01p

P/E Ratio

24.91

Dividend Yield

3.91%

Market Cap

$40.87 billion

Rev. per Employee

$462,409

/zigman2/quotes/206312496/composite

Add to watchlist FAST

Fastenal Co.

US : U.S.: Nasdaq

$ 54.64

-1.01 -1.81%

Volume: 3.13M

Sept. 29, 2023 4:00p

P/E Ratio

27.88

Dividend Yield

2.56%

Market Cap

$31.22 billion

Rev. per Employee

$323,425

/zigman2/quotes/205029460/composite

Add to watchlist MMM

3M Co.

US : U.S.: NYSE

$ 93.62

+0.36 +0.39%

Volume: 3.04M

Sept. 29, 2023 4:01p

P/E Ratio

N/A

Dividend Yield

6.41%

Market Cap

$51.68 billion

Rev. per Employee

$359,283

/zigman2/quotes/209008020/composite

Add to watchlist PII

Polaris Inc.

US : U.S.: NYSE

$ 104.14

+0.12 +0.12%

Volume: 427,759

Sept. 29, 2023 4:00p

P/E Ratio

9.71

Dividend Yield

2.50%

Market Cap

$5.90 billion

Rev. per Employee

$564,259

/zigman2/quotes/203856914/composite

Add to watchlist IBM

International Business Machines Corp.

US : U.S.: NYSE

$ 140.30

-1.28 -0.90%

Volume: 5.70M

Sept. 29, 2023 4:00p

P/E Ratio

65.06

Dividend Yield

4.73%

Market Cap

$127.81 billion

Rev. per Employee

$194,423

/zigman2/quotes/203508018/composite

Add to watchlist MCD

McDonald's Corp.

US : U.S.: NYSE

$ 263.44

-2.15 -0.81%

Volume: 3.37M

Sept. 29, 2023 4:00p

P/E Ratio

24.25

Dividend Yield

2.31%

Market Cap

$191.99 billion

Rev. per Employee

$161,293

/zigman2/quotes/208031922/composite

Add to watchlist ITW

Illinois Tool Works Inc.

US : U.S.: NYSE

$ 230.31

-1.74 -0.75%

Volume: 827,117

Sept. 29, 2023 4:00p

P/E Ratio

22.79

Dividend Yield

2.43%

Market Cap

$69.64 billion

Rev. per Employee

$349,457

/zigman2/quotes/208560027/composite

Add to watchlist GD

General Dynamics Corp.

US : U.S.: NYSE

$ 220.97

-1.42 -0.64%

Volume: 764,051

Sept. 29, 2023 4:00p

P/E Ratio

18.13

Dividend Yield

2.39%

Market Cap

$60.33 billion

Rev. per Employee

$383,653

/zigman2/quotes/208962119/composite

Add to watchlist AOS

A.O. Smith Corp.

US : U.S.: NYSE

$ 66.13

-0.35 -0.53%

Volume: 996,469

Sept. 29, 2023 4:00p

P/E Ratio

37.05

Dividend Yield

1.81%

Market Cap

$9.95 billion

Rev. per Employee

$311,458

/zigman2/quotes/208744353/composite

Add to watchlist PEP

PepsiCo Inc.

US : U.S.: Nasdaq

$ 169.44

-0.06 -0.04%

Volume: 5.19M

Sept. 29, 2023 4:00p

P/E Ratio

29.71

Dividend Yield

2.99%

Market Cap

$233.25 billion

Rev. per Employee

$286,162

/zigman2/quotes/200181610/composite

Add to watchlist EMR

Emerson Electric Co.

US : U.S.: NYSE

$ 96.57

-0.44 -0.45%

Volume: 2.04M

Sept. 29, 2023 4:00p

P/E Ratio

5.32

Dividend Yield

2.15%

Market Cap

$55.19 billion

Rev. per Employee

$192,269

/zigman2/quotes/204247574/composite

Add to watchlist GPC

Genuine Parts Co.

US : U.S.: NYSE

$ 144.38

+1.12 +0.78%

Volume: 994,022

Sept. 29, 2023 4:00p

P/E Ratio

16.87

Dividend Yield

2.63%

Market Cap

$20.28 billion

Rev. per Employee

$394,466

/zigman2/quotes/206706147/composite

Add to watchlist VFC

VF Corp.

US : U.S.: NYSE

$ 17.67

+1.08 +6.51%

Volume: 9.17M

Sept. 29, 2023 4:00p

P/E Ratio

58.68

Dividend Yield

6.79%

Market Cap

$6.87 billion

Rev. per Employee

$346,613

/zigman2/quotes/202428675/composite

Add to watchlist ABBV

AbbVie Inc.

US : U.S.: NYSE

$ 149.06

-3.19 -2.10%

Volume: 5.58M

Sept. 29, 2023 4:01p

P/E Ratio

30.61

Dividend Yield

3.97%

Market Cap

$263.10 billion

Rev. per Employee

$1.12M

/zigman2/quotes/200454581/composite

Add to watchlist LECO

Lincoln Electric Holdings Inc.

US : U.S.: Nasdaq

$ 181.79

-2.42 -1.31%

Volume: 372,327

Sept. 29, 2023 4:00p

P/E Ratio

22.23

Dividend Yield

1.41%

Market Cap

$10.44 billion

Rev. per Employee

$330,199

/zigman2/quotes/201724570/composite

Add to watchlist JNJ

Johnson & Johnson

US : U.S.: NYSE

$ 155.75

-1.13 -0.72%

Volume: 7.68M

Sept. 29, 2023 4:00p

P/E Ratio

31.55

Dividend Yield

3.06%

Market Cap

$375.05 billion

Rev. per Employee

$640,563

/zigman2/quotes/206009340/composite

Add to watchlist LEG

Leggett & Platt Inc.

US : U.S.: NYSE

$ 25.41

+0.07 +0.28%

Volume: 1.01M

Sept. 29, 2023 4:00p

P/E Ratio

14.93

Dividend Yield

7.24%

Market Cap

$3.38 billion

Rev. per Employee

$247,709

/zigman2/quotes/207799045/composite

Add to watchlist TGT

Target Corp.

US : U.S.: NYSE

$ 110.57

+1.01 +0.92%

Volume: 4.74M

Sept. 29, 2023 4:03p

P/E Ratio

15.17

Dividend Yield

3.98%

Market Cap

$51.04 billion

Rev. per Employee

$245,473

/zigman2/quotes/208944541/composite

Add to watchlist AFL

AFLAC Inc.

US : U.S.: NYSE

$ 76.75

-0.92 -1.18%

Volume: 2.92M

Sept. 29, 2023 4:00p

P/E Ratio

10.28

Dividend Yield

2.19%

Market Cap

$46.14 billion

Rev. per Employee

$1.46M