Bulletin
Investor Alert

New York Markets Close in:

Philip van Doorn

Deep Dive Archives | Email alerts

March 26, 2019, 10:33 a.m. EDT

These 20 stocks may give you the best shot to cash in on fast-rising dividends

Some Dividend Aristocrats have been raising their payouts by 10% or more

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    McDonald's Corp. (MCD)
  • X
    U.S. 10 Year Treasury Note (TMUBMUSD10Y)
  • X
    S&P 500 Dividend Aristocrats Index (SP50DIV)

or Cancel Already have a watchlist? Log In

By Philip van Doorn, MarketWatch


Bloomberg
McDonald’s shares have nearly doubled in price over the past five years, while the dividend has increased 43%.

If you are looking for investment income, times are tough. Interest rates remain very low and long-term rates fell significantly after the Federal Reserve signaled it won’t raise rates anymore this year. But if you want to build an income source, holding the right stocks for the long term can pay off tremendously.

McDonald’s /zigman2/quotes/203508018/composite MCD -0.79% is an excellent example. Investors now receive a quarterly dividend of $1.16 a share, which translates to a yield of 2.48%, based on the closing price of $186.81 on March 22. That yield may not be very impressive, but it exceeds the yield of 2.43% on 10-year U.S. Treasury Notes /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y +1.56% . And owners of McDonald’s expect the share price to rise over time and for the dividend to keep increasing.

If you had purchased McDonald’s stock five years ago, at the market close on March 25, 2014, you would have paid $95.91 a share. The quarterly dividend at that time was 81 cents, for a yield of 3.38%. If you had not reinvested the dividends (which makes the math a lot easier), the yield on the shares you bought in March 2014 would now be 4.84%. That is quite an increase in income, not to mention the near doubling of the share price.

Last week, Bill McMahon, the chief investment officer of ThomasPartners (a unit of Charles Schwab), discussed with MarketWatch the importance of steady and significant increases in dividends, especially when Federal Reserve policy is so clearly designed to hold long-term interest rates down.

With that in mind, a look at recent history for the S&P 500 Dividend Aristocrats sheds light on 20 companies whose most recent dividend increases have been 10% (rounding up) or more.

The S&P 500 Dividend Aristocrats Index /zigman2/quotes/210598428/delayed XX:SP50DIV -0.08%  is made up of the 57 companies in the S&P 500 /zigman2/quotes/210599714/realtime SPX -0.71%  that have increased their regular dividend payouts for at least 25 consecutive years. That is the only requirement — it makes no difference how high a stock’s current dividend yield is. The idea is that management teams that continue to reward shareholders are likely to show better stock performance over the long term. The ProShares S&P 500 Dividend Aristocrats Index /zigman2/quotes/208747379/composite NOBL -0.77%  is a way to “play” the Dividend Aristocrats Index as a growth investment.

Getting back to income, here are the 20 S&P 500 Dividend Aristocrats whose most recent increase in regular payouts have been the highest:

Dividend Aristocrat Ticker Most recent dividend increase Previous dividend increase Current dividend yield
Sherwin-Williams Co. /zigman2/quotes/210069062/composite SHW 31.4% 1.2% 1.07%
Illinois Tool Works Inc. /zigman2/quotes/208031922/composite ITW 28.2% 20.0% 2.82%
Cintas Corp. /zigman2/quotes/201631915/composite CTAS 26.7% 24.0% 1.05%
A. O. Smith Corp. /zigman2/quotes/208962119/composite AOS 22.2% 28.6% 1.70%
Lowe's Companies Inc. /zigman2/quotes/205563664/composite LOW 17.1% 17.1% 1.83%
McDonald's Corp. /zigman2/quotes/203508018/composite MCD 14.9% 7.4% 2.48%
Automatic Data Processing Inc. /zigman2/quotes/207661132/composite ADP 14.5% 10.5% 2.05%
Clorox Co. /zigman2/quotes/206443229/composite CLX 14.3% 5.0% 2.43%
Abbott Laboratories /zigman2/quotes/203724446/composite ABT 14.3% 5.7% 1.64%
S&P Global Inc. /zigman2/quotes/208931849/composite SPGI 14.0% 22.0% 1.11%
Franklin Resources Inc. /zigman2/quotes/201997162/composite BEN 13.0% 15.0% 3.24%
Ecolab Inc. /zigman2/quotes/202628210/composite ECL 12.2% 10.8% 1.06%
Roper Technologies Inc. /zigman2/quotes/204270015/composite ROP 12.1% 17.9% 0.56%
Hormel Foods Corp. /zigman2/quotes/209170265/composite HRL 12.0% 10.3% 1.93%
AbbVie Inc. /zigman2/quotes/202428675/composite ABBV   11.5% 35.0% 5.37%
V.F. Corp. /zigman2/quotes/206706147/composite VFC 10.9% 9.5% 2.44%
Caterpillar Inc. /zigman2/quotes/203434128/composite CAT 10.3% 1.3% 2.65%
Walgreens Boots Alliance Inc. /zigman2/quotes/203410933/composite WBA 10.0% 6.7% 2.82%
General Dynamics Corp. /zigman2/quotes/208560027/composite GD 9.7% 10.5% 2.46%
McCormick & Co., Incorporated /zigman2/quotes/206739653/composite MKC 9.6% 10.6% 1.60%
Source: FactSet

You can click the tickers for more about each company.

Here’s a quick summary of sell-side (brokerage firms) analysts’ opinions about these stocks:

Dividend Aristocrat Ticker Share 'buy' ratings Share neutral ratings Share 'sell' ratings Closing price — March 22 Consensus price target Implied 12-month upside or downside potentia l
Sherwin-Williams Co. /zigman2/quotes/210069062/composite SHW 62% 35% 3% $420.72 $458.25 9%
Illinois Tool Works Inc. /zigman2/quotes/208031922/composite ITW 13% 61% 26% $141.65 $135.83 -4%
Cintas Corp. /zigman2/quotes/201631915/composite CTAS 41% 47% 12% $194.55 $212.00 9%
A. O. Smith Corp. /zigman2/quotes/208962119/composite AOS 54% 38% 8% $51.74 $56.13 8%
Lowe's Companies Inc. /zigman2/quotes/205563664/composite LOW 69% 31% 0% $104.95 $116.93 11%
McDonald's Corp. /zigman2/quotes/203508018/composite MCD 80% 20% 0% $186.81 $197.80 6%
Automatic Data Processing Inc. /zigman2/quotes/207661132/composite ADP 36% 59% 5% $153.81 $159.06 3%
Clorox Co. /zigman2/quotes/206443229/composite CLX 16% 58% 26% $158.13 $153.50 -3%
Abbott Laboratories /zigman2/quotes/203724446/composite ABT 83% 9% 8% $77.97 $80.76 4%
S&P Global Inc. /zigman2/quotes/208931849/composite SPGI 53% 41% 6% $205.49 $210.38 2%
Franklin Resources Inc. /zigman2/quotes/201997162/composite BEN 0% 47% 53% $32.10 $28.54 -11%
Ecolab Inc. /zigman2/quotes/202628210/composite ECL 37% 50% 13% $173.38 $170.12 -2%
Roper Technologies Inc. /zigman2/quotes/204270015/composite ROP 60% 33% 7% $329.47 $325.50 -1%
Hormel Foods Corp. /zigman2/quotes/209170265/composite HRL 7% 66% 27% $43.59 $40.33 -7%
AbbVie Inc. /zigman2/quotes/202428675/composite ABBV 31% 53% 16% $79.76 $90.13 13%
V.F. Corp. /zigman2/quotes/206706147/composite VFC 72% 24% 4% $83.72 $95.29 14%
Caterpillar Inc. /zigman2/quotes/203434128/composite CAT 58% 34% 8% $129.77 $151.19 17%
Walgreens Boots Alliance Inc. /zigman2/quotes/203410933/composite WBA 30% 59% 11% $62.41 $74.52 19%
General Dynamics Corp. /zigman2/quotes/208560027/composite GD 48% 43% 9% $165.85 $199.45 20%
McCormick & Co., Incorporated /zigman2/quotes/206739653/composite MKC 15% 77% 8% $142.37 $132.27 -7%
Source: FactSet

So only nine of these companies have majority “buy” or equivalent ratings from analysts right now. Then again, it is very important to keep in mind that the ratings are based on 12-month price targets. One year is a short period for a serious long-term investor, especially one who is looking for dividend yields to increase considerably over a period of many years. But it still signals a disconnect between how the company sees its prospects compared to how brokerage firms’ analysts judge it.

Getting back to our five-year McDonald’s example, way back on March 25, 2014, only 12 out of 27 analysts polled at that time by FactSet had “buy” or equivalent ratings on the stock, while the rest had neutral ratings. The consensus price target then was $103.52, which implied 12-month upside potential of “only” 8% for the shares. Actually, that wasn’t bad, considering the current yield at that time was 3.38%.

So if you are interested in any of these 20 companies as long-term income growers, your next step is to do your own research and form you own opinion about how well a company’s strategy will enable it to compete and prosper over the next decade at least.

/zigman2/quotes/203508018/composite
US : U.S.: NYSE
$ 237.19
-1.90 -0.79%
Volume: 767,085
Oct. 6, 2022 12:06p
P/E Ratio
29.33
Dividend Yield
2.32%
Market Cap
$175.90 billion
Rev. per Employee
$117,972
loading...
/zigman2/quotes/211347051/realtime
add Add to watchlist BX:TMUBMUSD10Y
BX : Tullett Prebon
3.82
+0.06 +1.56%
Volume: 0.00
Oct. 6, 2022 12:06p
loading...
/zigman2/quotes/210598428/delayed
XX : S&P Global Thematic Indices
1,579.64
-1.20 -0.08%
Volume: 0.00
April 19, 2021 5:12p
loading...
/zigman2/quotes/210599714/realtime
US : S&P US
3,756.29
-26.99 -0.71%
Volume: 2.22B
Oct. 6, 2022 12:06p
loading...
/zigman2/quotes/208747379/composite
US : U.S.: Cboe BZX
$ 83.31
-0.65 -0.77%
Volume: 198,093
Oct. 6, 2022 12:05p
loading...
/zigman2/quotes/210069062/composite
US : U.S.: NYSE
$ 218.82
+1.45 +0.67%
Volume: 396,986
Oct. 6, 2022 12:05p
P/E Ratio
33.02
Dividend Yield
1.09%
Market Cap
$56.34 billion
Rev. per Employee
$340,652
loading...
/zigman2/quotes/208031922/composite
US : U.S.: NYSE
$ 192.46
-0.35 -0.18%
Volume: 354,595
Oct. 6, 2022 12:06p
P/E Ratio
22.87
Dividend Yield
2.72%
Market Cap
$59.70 billion
Rev. per Employee
$337,444
loading...
/zigman2/quotes/201631915/composite
US : U.S.: Nasdaq
$ 412.28
+0.34 +0.08%
Volume: 102,619
Oct. 6, 2022 12:03p
P/E Ratio
34.63
Dividend Yield
1.11%
Market Cap
$42.04 billion
Rev. per Employee
$188,929
loading...
/zigman2/quotes/208962119/composite
US : U.S.: NYSE
$ 51.19
-0.31 -0.60%
Volume: 151,295
Oct. 6, 2022 12:05p
P/E Ratio
15.81
Dividend Yield
2.18%
Market Cap
$7.95 billion
Rev. per Employee
$281,292
loading...
/zigman2/quotes/205563664/composite
US : U.S.: NYSE
$ 201.19
+2.16 +1.09%
Volume: 1.15M
Oct. 6, 2022 12:06p
P/E Ratio
15.92
Dividend Yield
2.08%
Market Cap
$123.54 billion
Rev. per Employee
$280,565
loading...
/zigman2/quotes/203508018/composite
US : U.S.: NYSE
$ 237.19
-1.90 -0.79%
Volume: 767,085
Oct. 6, 2022 12:06p
P/E Ratio
29.33
Dividend Yield
2.32%
Market Cap
$175.90 billion
Rev. per Employee
$117,972
loading...
/zigman2/quotes/207661132/composite
US : U.S.: Nasdaq
$ 237.51
-1.54 -0.64%
Volume: 468,112
Oct. 6, 2022 12:06p
P/E Ratio
33.92
Dividend Yield
1.75%
Market Cap
$99.33 billion
Rev. per Employee
$274,972
loading...
/zigman2/quotes/206443229/composite
US : U.S.: NYSE
$ 130.74
-0.95 -0.72%
Volume: 176,338
Oct. 6, 2022 12:06p
P/E Ratio
35.18
Dividend Yield
3.60%
Market Cap
$16.22 billion
Rev. per Employee
$789,667
loading...
/zigman2/quotes/203724446/composite
US : U.S.: NYSE
$ 102.25
-1.13 -1.09%
Volume: 2.65M
Oct. 6, 2022 12:06p
P/E Ratio
21.42
Dividend Yield
1.83%
Market Cap
$181.04 billion
Rev. per Employee
$403,080
loading...
/zigman2/quotes/208931849/composite
US : U.S.: NYSE
$ 317.08
-4.57 -1.42%
Volume: 361,338
Oct. 6, 2022 12:06p
P/E Ratio
23.73
Dividend Yield
1.07%
Market Cap
$107.27 billion
Rev. per Employee
$418,249
loading...
/zigman2/quotes/201997162/composite
US : U.S.: NYSE
$ 23.04
-0.28 -1.20%
Volume: 766,537
Oct. 6, 2022 12:06p
P/E Ratio
6.88
Dividend Yield
5.00%
Market Cap
$11.62 billion
Rev. per Employee
$825,155
loading...
/zigman2/quotes/202628210/composite
US : U.S.: NYSE
$ 149.85
-1.47 -0.97%
Volume: 289,576
Oct. 6, 2022 12:06p
P/E Ratio
39.29
Dividend Yield
1.35%
Market Cap
$43.12 billion
Rev. per Employee
$287,930
loading...
/zigman2/quotes/204270015/composite
US : U.S.: NYSE
$ 383.42
+2.97 +0.78%
Volume: 196,242
Oct. 6, 2022 12:06p
P/E Ratio
37.06
Dividend Yield
0.65%
Market Cap
$40.33 billion
Rev. per Employee
$301,166
loading...
/zigman2/quotes/209170265/composite
US : U.S.: NYSE
$ 45.33
-0.98 -2.12%
Volume: 923,527
Oct. 6, 2022 12:06p
P/E Ratio
24.86
Dividend Yield
2.29%
Market Cap
$25.29 billion
Rev. per Employee
$631,504
loading...
/zigman2/quotes/202428675/composite
US : U.S.: NYSE
$ 140.61
-2.72 -1.90%
Volume: 2.25M
Oct. 6, 2022 12:06p
P/E Ratio
19.97
Dividend Yield
4.00%
Market Cap
$253.42 billion
Rev. per Employee
$1.15M
loading...
/zigman2/quotes/206706147/composite
US : U.S.: NYSE
$ 30.32
-1.58 -4.95%
Volume: 1.39M
Oct. 6, 2022 12:06p
P/E Ratio
11.96
Dividend Yield
6.53%
Market Cap
$12.39 billion
Rev. per Employee
$341,120
loading...
/zigman2/quotes/203434128/composite
US : U.S.: NYSE
$ 179.02
+0.64 +0.36%
Volume: 842,591
Oct. 6, 2022 12:06p
P/E Ratio
14.41
Dividend Yield
2.67%
Market Cap
$94.17 billion
Rev. per Employee
$501,588
loading...
/zigman2/quotes/203410933/composite
US : U.S.: Nasdaq
$ 32.48
-0.68 -2.05%
Volume: 1.73M
Oct. 6, 2022 12:06p
P/E Ratio
5.28
Dividend Yield
5.87%
Market Cap
$28.66 billion
Rev. per Employee
$427,035
loading...
/zigman2/quotes/208560027/composite
US : U.S.: NYSE
$ 223.80
-1.63 -0.72%
Volume: 226,014
Oct. 6, 2022 12:06p
P/E Ratio
19.03
Dividend Yield
2.24%
Market Cap
$62.17 billion
Rev. per Employee
$372,852
loading...
/zigman2/quotes/206739653/composite
US : U.S.: NYSE
$ 73.66
+0.34 +0.47%
Volume: 903,752
Oct. 6, 2022 12:06p
P/E Ratio
29.28
Dividend Yield
2.00%
Market Cap
$19.71 billion
Rev. per Employee
$452,779
loading...
/zigman2/quotes/210069062/composite
US : U.S.: NYSE
$ 218.82
+1.45 +0.67%
Volume: 396,986
Oct. 6, 2022 12:05p
P/E Ratio
33.02
Dividend Yield
1.09%
Market Cap
$56.34 billion
Rev. per Employee
$340,652
loading...
/zigman2/quotes/208031922/composite
US : U.S.: NYSE
$ 192.46
-0.35 -0.18%
Volume: 354,595
Oct. 6, 2022 12:06p
P/E Ratio
22.87
Dividend Yield
2.72%
Market Cap
$59.70 billion
Rev. per Employee
$337,444
loading...
/zigman2/quotes/201631915/composite
US : U.S.: Nasdaq
$ 412.28
+0.34 +0.08%
Volume: 102,619
Oct. 6, 2022 12:03p
P/E Ratio
34.63
Dividend Yield
1.11%
Market Cap
$42.04 billion
Rev. per Employee
$188,929
loading...
/zigman2/quotes/208962119/composite
US : U.S.: NYSE
$ 51.19
-0.31 -0.60%
Volume: 151,295
Oct. 6, 2022 12:05p
P/E Ratio
15.81
Dividend Yield
2.18%
Market Cap
$7.95 billion
Rev. per Employee
$281,292
loading...
/zigman2/quotes/205563664/composite
US : U.S.: NYSE
$ 201.19
+2.16 +1.09%
Volume: 1.15M
Oct. 6, 2022 12:06p
P/E Ratio
15.92
Dividend Yield
2.08%
Market Cap
$123.54 billion
Rev. per Employee
$280,565
loading...
/zigman2/quotes/203508018/composite
US : U.S.: NYSE
$ 237.19
-1.90 -0.79%
Volume: 767,085
Oct. 6, 2022 12:06p
P/E Ratio
29.33
Dividend Yield
2.32%
Market Cap
$175.90 billion
Rev. per Employee
$117,972
loading...
/zigman2/quotes/207661132/composite
US : U.S.: Nasdaq
$ 237.51
-1.54 -0.64%
Volume: 468,112
Oct. 6, 2022 12:06p
P/E Ratio
33.92
Dividend Yield
1.75%
Market Cap
$99.33 billion
Rev. per Employee
$274,972
loading...
/zigman2/quotes/206443229/composite
US : U.S.: NYSE
$ 130.74
-0.95 -0.72%
Volume: 176,338
Oct. 6, 2022 12:06p
P/E Ratio
35.18
Dividend Yield
3.60%
Market Cap
$16.22 billion
Rev. per Employee
$789,667
loading...
/zigman2/quotes/203724446/composite
US : U.S.: NYSE
$ 102.25
-1.13 -1.09%
Volume: 2.65M
Oct. 6, 2022 12:06p
P/E Ratio
21.42
Dividend Yield
1.83%
Market Cap
$181.04 billion
Rev. per Employee
$403,080
loading...
/zigman2/quotes/208931849/composite
US : U.S.: NYSE
$ 317.08
-4.57 -1.42%
Volume: 361,338
Oct. 6, 2022 12:06p
P/E Ratio
23.73
Dividend Yield
1.07%
Market Cap
$107.27 billion
Rev. per Employee
$418,249
loading...
/zigman2/quotes/201997162/composite
US : U.S.: NYSE
$ 23.04
-0.28 -1.20%
Volume: 766,537
Oct. 6, 2022 12:06p
P/E Ratio
6.88
Dividend Yield
5.00%
Market Cap
$11.62 billion
Rev. per Employee
$825,155
loading...
/zigman2/quotes/202628210/composite
US : U.S.: NYSE
$ 149.85
-1.47 -0.97%
Volume: 289,576
Oct. 6, 2022 12:06p
P/E Ratio
39.29
Dividend Yield
1.35%
Market Cap
$43.12 billion
Rev. per Employee
$287,930
loading...
/zigman2/quotes/204270015/composite
US : U.S.: NYSE
$ 383.42
+2.97 +0.78%
Volume: 196,242
Oct. 6, 2022 12:06p
P/E Ratio
37.06
Dividend Yield
0.65%
Market Cap
$40.33 billion
Rev. per Employee
$301,166
loading...
/zigman2/quotes/209170265/composite
US : U.S.: NYSE
$ 45.33
-0.98 -2.12%
Volume: 923,527
Oct. 6, 2022 12:06p
P/E Ratio
24.86
Dividend Yield
2.29%
Market Cap
$25.29 billion
Rev. per Employee
$631,504
loading...
/zigman2/quotes/202428675/composite
US : U.S.: NYSE
$ 140.61
-2.72 -1.90%
Volume: 2.25M
Oct. 6, 2022 12:06p
P/E Ratio
19.97
Dividend Yield
4.00%
Market Cap
$253.42 billion
Rev. per Employee
$1.15M
loading...
/zigman2/quotes/206706147/composite
US : U.S.: NYSE
$ 30.32
-1.58 -4.95%
Volume: 1.39M
Oct. 6, 2022 12:06p
P/E Ratio
11.96
Dividend Yield
6.53%
Market Cap
$12.39 billion
Rev. per Employee
$341,120
loading...
/zigman2/quotes/203434128/composite
US : U.S.: NYSE
$ 179.02
+0.64 +0.36%
Volume: 842,591
Oct. 6, 2022 12:06p
P/E Ratio
14.41
Dividend Yield
2.67%
Market Cap
$94.17 billion
Rev. per Employee
$501,588
loading...
/zigman2/quotes/203410933/composite
US : U.S.: Nasdaq
$ 32.48
-0.68 -2.05%
Volume: 1.73M
Oct. 6, 2022 12:06p
P/E Ratio
5.28
Dividend Yield
5.87%
Market Cap
$28.66 billion
Rev. per Employee
$427,035
loading...
/zigman2/quotes/208560027/composite
US : U.S.: NYSE
$ 223.80
-1.63 -0.72%
Volume: 226,014
Oct. 6, 2022 12:06p
P/E Ratio
19.03
Dividend Yield
2.24%
Market Cap
$62.17 billion
Rev. per Employee
$372,852
loading...
/zigman2/quotes/206739653/composite
US : U.S.: NYSE
$ 73.66
+0.34 +0.47%
Volume: 903,752
Oct. 6, 2022 12:06p
P/E Ratio
29.28
Dividend Yield
2.00%
Market Cap
$19.71 billion
Rev. per Employee
$452,779
loading...
1 2
This Story has 0 Comments
Be the first to comment
More News In
Investing

Story Conversation

Commenting FAQs »

Partner Center

Link to MarketWatch's Slice.