Bulletin
Investor Alert
Philip van Doorn

Deep Dive Archives | Email alerts

Feb. 22, 2020, 8:56 a.m. EST

Here are 25 Dividend Aristocrat stocks screened for ‘quality’

This list is pared based on the advice of Matthew Page and Ian Mortimer of Guinness Atkinson Asset Management

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    Guinness Atkinson Dividend Builder Fund (GAINX)
  • X
    McDonald's Corp. (MCD)
  • X
    S&P 500 Dividend Aristocrats Index (SP50DIV)

or Cancel Already have a watchlist? Log In

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 /zigman2/quotes/209644320/realtime GAINX -0.91% , 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/lastsale MCD -0.72%  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 -10.67% , 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/lastsale NOBL -1.26%

But S&P Dow Jones Indices also maintains an expanded list of 119 High Yield Dividend Aristocrats /zigman2/quotes/210599901/delayed XX:SPHYDA -2.02% , which is tracked by the SPDR S&P Dividend ETF /zigman2/quotes/206871683/lastsale SDY -2.07% . 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/210599897/delayed MID -2.72%  and the S&P Small-Cap 600 Index /zigman2/quotes/210599868/delayed SML -3.55% ) 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:

Company Ticker Industry Average ROIC - five years Dividend yield
Colgate-Palmolive Co. /zigman2/quotes/200774077/lastsale CL Household/Personal Care 33.41% 2.26%
Clorox Co. /zigman2/quotes/206443229/lastsale CLX Household/Personal Care 32.14% 2.57%
Automatic Data Processing Inc. /zigman2/quotes/207661132/lastsale ADP Data Processing Services 28.67% 2.02%
C.H. Robinson Worldwide Inc. /zigman2/quotes/203490767/lastsale CHRW Air Freight/Couriers 27.17% 2.82%
T. Rowe Price Group /zigman2/quotes/203200152/lastsale TROW Investment Managers 26.85% 2.61%
Kimberly-Clark Corp. /zigman2/quotes/201766540/lastsale KMB Household/Personal Care 25.67% 2.98%
Fastenal Co. /zigman2/quotes/206312496/lastsale FAST Wholesale Distributors 25.44% 2.61%
3M Co. /zigman2/quotes/205029460/lastsale MMM Industrial Conglomerates 22.08% 3.70%
Polaris Inc. /zigman2/quotes/209008020/lastsale PII Recreational Products 19.82% 2.64%
International Business Machines Corp. /zigman2/quotes/203856914/lastsale IBM Information Technology Services 19.49% 4.29%
McDonald's Corp. Restaurants 18.76% 2.31%
Illinois Tool Works Inc. /zigman2/quotes/208031922/lastsale ITW Industrial Machinery 18.50% 2.30%
General Dynamics Corp. /zigman2/quotes/208560027/lastsale GD Aerospace & Defense 18.33% 2.17%
A. O. Smith Corp. /zigman2/quotes/208962119/lastsale AOS Building Products 17.82% 2.18%
PepsiCo Inc. /zigman2/quotes/208744353/lastsale PEP Beverages: Non-Alcoholic 16.95% 2.62%
Eaton Vance Corp. /zigman2/quotes/208450708/lastsale EV Investment Managers 16.92% 2.98%
Emerson Electric Co. /zigman2/quotes/200181610/lastsale EMR Electrical Products 16.87% 2.80%
Genuine Parts Co. /zigman2/quotes/204247574/lastsale GPC Wholesale Distributors 16.51% 3.27%
V.F. Corp. /zigman2/quotes/206706147/lastsale VFC Apparel/Footwear 16.17% 2.32%
AbbVie Inc. /zigman2/quotes/202428675/lastsale ABBV Pharmaceuticals 15.91% 5.04%
Lincoln Electric Holdings Inc. /zigman2/quotes/200454581/lastsale LECO Industrial Machinery 15.62% 2.15%
Johnson & Johnson /zigman2/quotes/201724570/lastsale JNJ Pharmaceuticals 13.95% 2.55%
Leggett & Platt Inc. /zigman2/quotes/206009340/lastsale LEG Home Furnishings 13.62% 3.55%
Target Corp. /zigman2/quotes/207799045/lastsale TGT Specialty Stores 11.89% 2.24%
Aflac Inc. /zigman2/quotes/208944541/lastsale AFL Life/Health Insurance 11.86% 2.16%
Source: FactSet

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.

Don’t miss: Health-care stocks hinge on presidential politics — and they’re now looking favorable

<STRONG>Create an email alert for Philip van Doorn’s Deep Dive columns <INTERNAL-PAGE URL="/tools/alerts/newsColumn.asp">here</INTERNAL-PAGE>.</STRONG>

/zigman2/quotes/209644320/realtime
US : U.S.: Nasdaq
$ 16.42
-0.15 -0.91%
Volume: 0.00
April 3, 2020
loading...
/zigman2/quotes/203508018/lastsale
US : U.S.: NYSE
$ 160.33
-1.17 -0.72%
Volume: 5.05M
April 3, 2020 6:30p
P/E Ratio
20.36
Dividend Yield
3.12%
Market Cap
$120.39 billion
Rev. per Employee
$100,120
loading...
/zigman2/quotes/210598428/delayed
XX : S&P Global Thematic Indices
981.18
-117.24 -10.67%
Volume: 0.00
March 16, 2020 5:26p
loading...
/zigman2/quotes/208747379/lastsale
US : U.S.: Cboe BZX
$ 55.60
-0.71 -1.26%
Volume: 781,365
April 3, 2020 4:10p
loading...
/zigman2/quotes/210599901/delayed
XX : ICE Gib Ind
2,574.94
-53.02 -2.02%
Volume: 0.00
April 3, 2020 6:59p
loading...
/zigman2/quotes/206871683/lastsale
US : U.S.: NYSE Arca
$ 76.17
-1.61 -2.07%
Volume: 821,139
April 3, 2020 8:00p
loading...
/zigman2/quotes/210599897/delayed
US : S&P US
1,337.95
-37.40 -2.72%
Volume: 715.56M
April 3, 2020 5:10p
loading...
/zigman2/quotes/210599868/delayed
US : S&P US
622.35
-22.94 -3.55%
Volume: 749.14M
April 3, 2020 5:10p
loading...
/zigman2/quotes/200774077/lastsale
US : U.S.: NYSE
$ 67.62
-0.55 -0.81%
Volume: 4.72M
April 3, 2020 6:30p
P/E Ratio
24.60
Dividend Yield
2.60%
Market Cap
$57.98 billion
Rev. per Employee
$450,551
loading...
/zigman2/quotes/206443229/lastsale
US : U.S.: NYSE
$ 177.54
-2.16 -1.20%
Volume: 2.28M
April 3, 2020 6:30p
P/E Ratio
27.90
Dividend Yield
2.39%
Market Cap
$22.21 billion
Rev. per Employee
$717,701
loading...
/zigman2/quotes/207661132/lastsale
US : U.S.: Nasdaq
$ 128.57
-2.98 -2.27%
Volume: 1.57M
April 3, 2020 4:00p
P/E Ratio
22.71
Dividend Yield
2.83%
Market Cap
$56.80 billion
Rev. per Employee
$242,819
loading...
/zigman2/quotes/203490767/lastsale
US : U.S.: Nasdaq
$ 68.15
-0.77 -1.12%
Volume: 2.17M
April 3, 2020 4:15p
P/E Ratio
16.30
Dividend Yield
2.99%
Market Cap
$8.95 billion
Rev. per Employee
$1.09M
loading...
/zigman2/quotes/203200152/lastsale
US : U.S.: Nasdaq
$ 95.19
-1.95 -2.01%
Volume: 1.16M
April 3, 2020 4:00p
P/E Ratio
10.94
Dividend Yield
3.78%
Market Cap
$22.67 billion
Rev. per Employee
$765,110
loading...
/zigman2/quotes/201766540/lastsale
US : U.S.: NYSE
$ 129.92
+0.64 +0.50%
Volume: 1.40M
April 3, 2020 6:30p
P/E Ratio
20.83
Dividend Yield
3.29%
Market Cap
$44.36 billion
Rev. per Employee
$450,878
loading...
/zigman2/quotes/206312496/lastsale
US : U.S.: Nasdaq
$ 30.48
-0.17 -0.55%
Volume: 4.62M
April 3, 2020 4:00p
P/E Ratio
22.14
Dividend Yield
3.28%
Market Cap
$17.51 billion
Rev. per Employee
$229,398
loading...
/zigman2/quotes/205029460/lastsale
US : U.S.: NYSE
$ 133.79
-4.12 -2.99%
Volume: 3.59M
April 3, 2020 6:30p
P/E Ratio
17.13
Dividend Yield
4.39%
Market Cap
$76.96 billion
Rev. per Employee
$350,368
loading...
/zigman2/quotes/209008020/lastsale
US : U.S.: NYSE
$ 39.00
-5.74 -12.83%
Volume: 2.11M
April 3, 2020 6:30p
P/E Ratio
7.50
Dividend Yield
6.36%
Market Cap
$2.75 billion
Rev. per Employee
$506,545
loading...
/zigman2/quotes/203856914/lastsale
US : U.S.: NYSE
$ 106.34
-3.66 -3.33%
Volume: 4.54M
April 3, 2020 6:30p
P/E Ratio
10.07
Dividend Yield
6.09%
Market Cap
$97.72 billion
Rev. per Employee
$208,845
loading...
/zigman2/quotes/208031922/lastsale
US : U.S.: NYSE
$ 140.41
-1.19 -0.84%
Volume: 1.50M
April 3, 2020 6:30p
P/E Ratio
18.14
Dividend Yield
3.05%
Market Cap
$44.96 billion
Rev. per Employee
$307,667
loading...
/zigman2/quotes/208560027/lastsale
US : U.S.: NYSE
$ 125.68
-2.24 -1.75%
Volume: 1.21M
April 3, 2020 6:30p
P/E Ratio
10.50
Dividend Yield
3.50%
Market Cap
$37.12 billion
Rev. per Employee
$342,737
loading...
/zigman2/quotes/208962119/lastsale
US : U.S.: NYSE
$ 35.87
-0.07 -0.19%
Volume: 1.26M
April 3, 2020 6:30p
P/E Ratio
16.16
Dividend Yield
2.68%
Market Cap
$5.82 billion
Rev. per Employee
$195,577
loading...
/zigman2/quotes/208744353/lastsale
US : U.S.: Nasdaq
$ 124.59
+0.73 +0.59%
Volume: 5.55M
April 3, 2020 4:00p
P/E Ratio
23.98
Dividend Yield
3.07%
Market Cap
$172.07 billion
Rev. per Employee
$242,172
loading...
/zigman2/quotes/208450708/lastsale
US : U.S.: NYSE
$ 30.29
-0.69 -2.23%
Volume: 559,533
April 3, 2020 6:30p
P/E Ratio
8.28
Dividend Yield
4.95%
Market Cap
$3.55 billion
Rev. per Employee
$939,759
loading...
/zigman2/quotes/200181610/lastsale
US : U.S.: NYSE
$ 45.72
-2.01 -4.21%
Volume: 4.74M
April 3, 2020 6:30p
P/E Ratio
13.06
Dividend Yield
4.37%
Market Cap
$27.97 billion
Rev. per Employee
$202,731
loading...
/zigman2/quotes/204247574/lastsale
US : U.S.: NYSE
$ 58.26
-3.14 -5.11%
Volume: 1.10M
April 3, 2020 6:30p
P/E Ratio
13.74
Dividend Yield
5.42%
Market Cap
$8.93 billion
Rev. per Employee
$374,701
loading...
/zigman2/quotes/206706147/lastsale
US : U.S.: NYSE
$ 48.88
-0.24 -0.49%
Volume: 3.67M
April 3, 2020 6:30p
P/E Ratio
15.19
Dividend Yield
3.93%
Market Cap
$19.39 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/202428675/lastsale
US : U.S.: NYSE
$ 73.37
-1.76 -2.34%
Volume: 8.06M
April 3, 2020 6:30p
P/E Ratio
13.89
Dividend Yield
6.43%
Market Cap
$108.34 billion
Rev. per Employee
$1.09M
loading...
/zigman2/quotes/200454581/lastsale
US : U.S.: Nasdaq
$ 66.32
-0.09 -0.14%
Volume: 348,957
April 3, 2020 4:00p
P/E Ratio
14.18
Dividend Yield
2.96%
Market Cap
$4.00 billion
Rev. per Employee
$275,354
loading...
/zigman2/quotes/201724570/lastsale
US : U.S.: NYSE
$ 134.17
+1.02 +0.77%
Volume: 10.07M
April 3, 2020 6:30p
P/E Ratio
23.83
Dividend Yield
2.83%
Market Cap
$351.03 billion
Rev. per Employee
$603,509
loading...
/zigman2/quotes/206009340/lastsale
US : U.S.: NYSE
$ 22.72
-1.49 -6.15%
Volume: 1.55M
April 3, 2020 6:30p
P/E Ratio
9.21
Dividend Yield
7.04%
Market Cap
$3.20 billion
Rev. per Employee
$193,977
loading...
/zigman2/quotes/207799045/lastsale
US : U.S.: NYSE
$ 92.57
-1.79 -1.90%
Volume: 6.82M
April 3, 2020 6:30p
P/E Ratio
14.55
Dividend Yield
2.85%
Market Cap
$47.27 billion
Rev. per Employee
$209,322
loading...
/zigman2/quotes/208944541/lastsale
US : U.S.: NYSE
$ 32.41
+0.58 +1.82%
Volume: 4.69M
April 3, 2020 6:30p
P/E Ratio
7.33
Dividend Yield
3.46%
Market Cap
$23.00 billion
Rev. per Employee
$1.95M
loading...

Philip van Doorn covers various investment and industry topics. He has previously worked as a senior analyst at TheStreet.com. He also has experience in community banking and as a credit analyst at the Federal Home Loan Bank of New York.

This Story has 0 Comments
Be the first to comment
More News In
Investing

Story Conversation

Commenting FAQs »
Link to MarketWatch's Slice.