In this article, we will be taking a look at 5 dividend aristocrats with payout ratio less than 55%. To read our detailed analysis of dividend investing, you can go directly to see the 10 Dividend Aristocrats with Payout Ratio Less than 55%.
5. Franklin Resources, Inc. (NYSE: BEN)
Number of Hedge Fund Holders: 30
Dividend Yield: 3.4%
Number of Years of Consistent Dividend Increases: 41
Payout Ratio: 45.2%
Franklin Resources, Inc. (NYSE: BEN), an American multinational investment firm, launches equity, fixed income, balanced, and multi-asset mutual funds. The company also invests in public equity, fixed income, and alternative markets. It ranks 5th on our list of dividend aristocrats with payout ratio less than 55%
Deutsche Bank has a Hold rating on shares of Franklin Resources, Inc. (NYSE: BEN), alongside a raised price target of $33, as of this May.
In the fiscal third quarter of 2021, Franklin Resources, Inc. (NYSE: BEN) had an EPS of $0.96, beating estimates by $0.18. The company’s revenue was $2.17 billion, up 82.89% year over year and beating estimates by $43.73 million. Franklin Resources, Inc. (NYSE: BEN) has gained 21.10% in the past 6 months and 35.33% year to date.
By the end of the second quarter of 2021, 30 hedge funds out of the 873 tracked by Insider Monkey held stakes in Franklin Resources, Inc. (NYSE: BEN) worth roughly $205 million. This is compared to 31 hedge funds in the previous quarter with a total stake value of approximately $198 million.
4. General Dynamics Corporation (NYSE: GD)
Number of Hedge Fund Holders: 37
Dividend Yield: 2.4%
Number of Years of Consistent Dividend Increases: 30
Payout Ratio: 39.5%
General Dynamics Corporation (NYSE: GD), an aerospace and defense company, ranks 4th on our list of dividend aristocrats with payout ratio less than 55%. The company operates through its Aerospace, Marine Systems, Combat Systems, and Technologies segments.
This July, Credit Suisse raised its price target on shares of General Dynamics Corporation (NYSE: GD) from $182 to $198. The firm also holds a Neutral rating on the stock.
In the second quarter of 2021, General Dynamics Corporation (NYSE: GD) had an EPS of $2.61, beating estimates by $0.06. The company’s revenue was $9.22 billion, but missing estimates by $97.44 million. General Dynamics Corporation (NYSE: GD) has gained 19.55% in the past 6 months and 36.85% year to date.
By the end of the second quarter of 2021, 37 hedge funds out of the 873 tracked by Insider Monkey held stakes in General Dynamics Corporation (NYSE: GD) worth roughly $6.2 billion. This is compared to 31 hedge funds in the previous quarter with a total stake value of approximately $5.9 billion.
Oakmark Funds, an investment management firm, mentioned General Dynamics Corporation (NYSE: GD) in its first-quarter 2021 investor letter. Here’s what they said:
“The second new U.S. equity purchase was General Dynamics, a leading U.S. defense contractor and owner of the world’s premier business jet franchise (Gulfstream). We were able to purchase this high-quality and durable business at a meaningful discount to our estimate of its intrinsic value after a series of near-term concerns hurt its share price. Taking a longer term view, the company’s business jet franchise should benefit from a multi-year investment program in new, differentiated product. Also, its free cash flow conversion is set to improve materially and the company is poised to benefit from a highly visible ramp up in revenue related to next generation nuclear-powered submarines. As these positives come into clearer view, we expect sentiment to improve, along with the company’s share price.”
3. Archer-Daniels-Midland Company (NYSE: ADM)
Number of Hedge Fund Holders: 41
Dividend Yield: 2.5%
Number of Years of Consistent Dividend Increases: 46
Payout Ratio: 35.3%
Archer-Daniels-Midland Company (NYSE: ADM) works to procure, transport, store, process, and merchandise agricultural commodities, products, and ingredients in the United States and internationally. The company ranks 3rd on our list of dividend aristocrats with payout ratio less than 55%.
Jefferies has a hold rating on shares of Archer-Daniels-Midland Company (NYSE: ADM) as of this July. The firm also holds a $55 price target on Archer-Daniels-Midland Company (NYSE: ADM) shares.
In the second quarter of 2021, Archer-Daniels-Midland Company (NYSE: ADM) had an EPS of $1.33, beating estimates by $0.30. The company’s revenue was $22.93 billion, up 40.81% year over year and beating estimates by $4.59 billion. Archer-Daniels-Midland Company (NYSE: ADM) has gained 5.71% in the past 6 months and 21.46% year to date.
By the end of the second quarter of 2021, 41 hedge funds out of the 873 tracked by Insider Monkey held stakes in Archer-Daniels-Midland Company (NYSE: ADM) worth roughly $837 million. This is compared to 34 hedge funds in the previous quarter with a total stake value of approximately $696 million.
2. Aflac Incorporated (NYSE: AFL)
Number of Hedge Fund Holders: 33
Dividend Yield: 2.34%
Number of Years of Consistent Dividend Increases: 39
Payout Ratio: 14.6%
Aflac Incorporated (NYSE: AFL) provides supplemental health and life insurance products. It ranks 2nd on our list of dividend aristocrats with payout ratio less than 55%.
Goldman Sachs raised the price target on shares of Aflac Incorporated (NYSE: AFL) to $47 this May.
In the second quarter of 2021, Aflac Incorporated (NYSE: AFL) had an EPS of $1.59, beating estimates by $0.31. The company’s revenue was $5.56 billion, up 2.9% year over year and beating estimates by $197.02 million. Aflac Incorporated (NYSE: AFL) has gained 17.18% in the past 6 months and 32.18% year to date.
By the end of the second quarter of 2021, 33 hedge funds out of the 873 tracked by Insider Monkey held stakes in Aflac Incorporated (NYSE: AFL) worth roughly $268 million. This is compared to 36 hedge funds in the previous quarter with a total stake value of approximately $343 million.
Madison Funds, an investment management firm, mentioned Aflac Incorporated (NYSE: AFL) in its second-quarter 2021 investor letter. Here’s what they said:
“This quarter we are highlighting Aflac (AFL) as a relative yield example in the Financial sector. AFL is a leading provider of life and supplemental medical insurance in Japan and the U.S. AFL products offer financial protection against loss of income for policy holders based on qualifying health events. Aflac Japan generates approximately 70% of total revenues, and the company has dominant market share in Japan. In the U.S., AFL provides voluntary insurance for policy holders at businesses with products sold through payroll deduction by its large sales force which sells primarily through face-to-face interactions. We believe AFL’s dominant market position in Japan and its large U.S. sales force create a sustainable competitive advantage for the company.
Our thesis on AFL is that its sales will recover from the impact of the COVID pandemic, and it will return significant amount of capital to shareholders. Sales were negatively impacted in both Japan and the U.S. but appear to be in early stages of recovering. We believe sales will improve further as economies open and new products are introduced in Japan. In the U.S., agents will be able to return to face-to-face interactions as people get vaccinated, something that was restricted last year.
In terms of capital returns, AFL committed to returning $8-9 billion between 2020-2022, which is expected to be 75% of operating earnings. The company returns capital via share buybacks and dividend increases. AFL is a Dividend Aristocrat that has increased its dividend 39 years in a row including 10% annually over the last five years; it also recently announced an 18% dividend increase. Other favorable attributes include an A- rated balance sheet by Standard and Poor’s and an attractive valuation with a relative yield near the high end of its historical range.
We believe its valuation is cheap with its forward expected Price/Earnings (P/E) ratio just 9x and a relative P/E of 0.4x versus the S&P 500 despite an industry leading return on equity. At the time of purchase, AFL had a dividend yield of 2.5% and its relative dividend yield vs. the S&P 500 was 1.8x, as shown. Some risks to the thesis include a prolonged economic downturn, loss of market share due to unsuccessful new product roll outs and potential losses in its investment portfolio.”
1. Cincinnati Financial Corporation (NASDAQ: CINF)
Number of Hedge Fund Holders: 22
Dividend Yield: 2.06%
Number of Years of Consistent Dividend Increases: 60
Payout Ratio: 13.9%
Cincinnati Financial Corporation (NASDAQ: CINF) offers property-casualty insurance products in America. It operates through its Commercial Lines Insurance, Personal Lines Insurance, Excess and Surplus Lines Insurance, Life Insurance, and Investments segments, and ranks 1st on our list of dividend aristocrats with payout ratio less than 55%.
Wolfe Research holds an Outperform rating on shares of Cincinnati Financial Corporation (NASDAQ: CINF), alongside a price target of $148 as of this August.
In the second quarter of 2021, Cincinnati Financial Corporation (NASDAQ: CINF) had an EPS of $1.79, beating estimates by $0.81. The company’s revenue was $2.29 billion, also beating estimates by $578.93 million. Cincinnati Financial Corporation (NASDAQ: CINF) has gained 22.97% in the past 6 months and 47.22% year to date.
By the end of the second quarter of 2021, 22 hedge funds out of the 873 tracked by Insider Monkey held stakes in Cincinnati Financial Corporation (NASDAQ: CINF) worth roughly $780 million. This is compared to 22 hedge funds in the previous quarter with a total stake value of approximately $886 million.
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