In this article, we will take a look at the top 15 dividend aristocrats according to hedge funds.
Dividend Aristocrats are the companies in the S&P 500 index that have increased their dividend payouts for at least the last 25 consecutive years. Most of these companies hold the leading positions in their respective industries and have been in business for decades. Combined with their leadership positions and strong fundamentals, persistent dividend growth despite economic downturns makes these companies very strong candidates for long-term passive investments.
Global markets have been going through a rough patch with fears of an upcoming recession due to inflation and aggressive monetary policies implemented by central banks. Due to these concerns, investors have been flocking to equities with consistent dividend payouts. According to a Wall Street Journal report, in 2022, $48 billion were poured into U.S. mutual funds and Exchange Traded Funds that invest into dividend-paying stocks.
S&P 500 index companies have generally continued their dividend payouts even in the face of market upheavals. According to another Wall Street Journal report, companies in the S&P 500 distributed over $561 billion in dividends last year, compared with $511.2 billion in 2021. The dividend payouts for the index constituents are expected to increase by 5% in 2023, according to the report.
The returns on dividend stocks have surpassed the inflation rate over the years and have recorded their best performance during periods of high inflation.
Our list contains the dividend aristocrats that have the highest upside potential according to analyst price targets. In addition to the share price appreciation, these companies have also increased their dividends significantly at least over the last 25 years. The stocks on this list have had an average CAGR dividend growth of 8.0% during the past 20 years. General Dynamics Corporation (NYSE:GD), Nordson Corporation (NASDAQ:NDSN), and Air Products & Chemicals, Inc. had the highest dividend growth rate during this period.
Photo by Sharon McCutcheon on Unsplash
Methodology
Dividend aristocrats are the companies in the S&P 500 index that have increased their dividends at least for the past 25 consecutive years. The list of dividend aristocrats includes more than 60 companies. We used data from Finviz to rank these stocks based on the upside potential according to average analyst target price estimates.
15. Dover Corporation (NYSE:DOV)
Number of Hedge Fund Holders: 25
Target Price as of April 10: $165.44
Upside Potential as of April 10: 14.85%
Dover Corporation (NYSE:DOV) is a diversified global manufacturer and solutions provider based in Downers Grove, Illinois.
Dover Corporation has a long history of dividend payments and has increased its dividend payouts for 67 consecutive years. It currently pays a quarterly cash dividend of $0.505 per share which translates to a dividend yield of 1.40% based on its share price on April 10.
On April 12, BofA analyst Andrew Obin raised the price target for Dover Corporation shares to $200 from $180 and kept a ‘Buy’ rating for the shares. The analyst believes that the Company’s “portfolio evolution has been underappreciated by investors.”
As of Q4 2022, Ken Fisher’s Fisher Asset Management was the largest hedge fund shareholder of Dover Corporation with ownership of more than 1.5 million shares valued at $206 million. The hedge fund accumulated most of its stake in the company during the second half of 2022.
14. Caterpillar Inc. (NYSE:CAT)
Number of Hedge Fund Holders: 28
Target Price as of April 10: $247.58
Upside Potential as of April 10: 14.87%
Caterpillar Inc. (NYSE:CAT) is the world’s leading manufacturer of construction and mining equipment, off-highway diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. With a history that goes back to 1925, the company is based in Irving, Texas, and its products are sold in 192 countries worldwide.
On April 13, Deutsche Bank analyst lowered the price target on Caterpillar Inc. shares to $225 from $228. Based on the average analyst target price, the shares represent an upside potential of 14.87%.
13. 3M Company (NYSE:MMM)
Number of Hedge Fund Holders: 49
Target Price as of April 10: $119.63
Upside Potential as of April 10: 16.42%
St Paul, Minnesota-based 3M Company (NYSE:MMM) is a diversified technology company with the following businesses: Safety and Industrial; Transportation and Electronics; Health Care; and Consumer products.
3M Company has paid regular dividends for more than 100 years and has increased its dividend payouts for the last 65 consecutive years.
12. Air Products & Chemicals, Inc. (NYSE:APD)
Number of Hedge Fund Holders: 41
Target Price as of April 10: $331.81
Upside Potential as of April 10: 17.07%
Lehigh Valley, Pennsylvania-based Air Products & Chemicals, Inc. is a leading industrial gases company with a focus on providing essential industrial gases, related equipment, and applications expertise to customers in dozens of industries. It also develops, engineers, builds, owns, and operates some of the largest industrial gas and carbon-capture projects.
On March 24, BMO Capital analyst John McNulty lowered the price target on Air Products & Chemicals, Inc. shares to $360 from $386 and maintained an ‘Outperform’ rating for the shares.
11. General Dynamics Corporation (NYSE:GD)
Number of Hedge Fund Holders: 46
Target Price as of April 10: $270.05
Upside Potential as of April 10: 17.90%
Calgary, Alberta-based General Dynamics Corporation is a global aerospace and defense company that offers products and services in business aviation, ship construction and repair, land combat vehicles, weapons systems and munitions, and technology.
On March 30, William Blair analyst Louie DiPalma initiated coverage of General Dynamics Corporation with an ‘Outperform’ rating.
10. Nordson Corporation (NASDAQ:NDSN)
Number of Hedge Fund Holders: 25
Target Price as of April 10: $251.83
Upside Potential as of April 10: 17.91%
Based in Westlake, Ohio, Nordson Corporation engineers, manufactures, and markets products used for dispensing adhesives, coatings, sealants, biomaterials, and other materials; for fluid management; for test and inspection; and for UV curing and plasma surface treatment.
On February 20, Nordson Corporation released its financial results for the quarter ended January 31, 2023. Following the earnings release, KeyBanc analyst Jeffrey Hammond upgraded Nordson Corporation to ‘Overweight’ from ‘Sector Weight’ rating with a $255 price target for its shares.
9. Abbott Laboratories (NYSE:ABT)
Number of Hedge Fund Holders: 60
Target Price as of April 10: $122.49
Upside Potential as of April 10: 18.12%
Abbott Laboratories (NYSE:ABT) is a leading global healthcare company with a portfolio of products and services that spans healthcare, diagnostics, medical devices, nutritionals, and branded generic medicines.
On April 17, BTIG analyst Ryan Zimmerman raised the price target for Abbott Laboratories shares to $130 from $125 and maintained a ‘Buy’ rating.
8. Federal Realty Investment Trust (NYSE:FRT)
Number of Hedge Fund Holders: 16
Target Price as of April 10: $116.59
Upside Potential as of April 10: 19.26%
Founded in 1962, North Bethesda, Maryland-based Federal Realty Investment Trust (NYSE:FRT) is one of the oldest real estate investment trusts (REIT) in the United States. It focuses on the ownership, operation, and development of retail properties, including shopping centers and urban mixed-use properties.
The portfolio of Federal Realty Investment Trust comprised of 103 properties, which includes 3,000 residential units, and retail space of nearly 26 million square feet, as of December 31, 2022.
Federal Realty Investment Trust has increased its annual dividend rate for 55 consecutive years. It currently pays a regular quarterly cash dividend of $1.08 per share which translates to a dividend yield of 4.42% based on the share price as of April 10.
7. S&P Global Inc. (NYSE:SPGI)
Number of Hedge Fund Holders: 97
Target Price as of April 10: $407.12
Upside Potential as of April 10: 20.15%
S&P Global Inc. is a leading provider of transparent and independent ratings, benchmarks, analytics and data to the capital and commodity markets worldwide.
On January 25, the board of directors of S&P Global Inc. declared a regular quarterly cash dividend of $0.90 per share which represents a 5.9% increase. The company has paid regular dividends since 1937 and has increased its dividends annually for at least the last 50 years.
On April 4, Oppenheimer analyst Owen Lau raised the price target on S&P Global Inc. shares to $405 from $403 and maintained an ‘Overweight’ rating. The $407.12 average analyst target price for the shares of S&P Global Inc. represents an upside potential of 20.15% as of April 10.
6. Emerson Electric Co. (NYSE:EMR)
Number of Hedge Fund Holders: 32
Target Price as of April 10: $101.59
Upside Potential as of April 10: 20.30%
Founded in 1890, St. Louis, Missouri-based Emerson Electric Co. (NYSE:EMR) designs and manufactures products and delivers services that bring technology and engineering together. It offers products and services including measurement and analytical instrumentation, industrial valves and equipment, and process control software and systems, as well as heating, air conditioning and refrigeration solutions, among others.
Emerson Electric Co. has a long history of dividend payments and has increased dividend payments for 66 consecutive years. In February, the company declared a quarterly cash dividend of $0.52 per share. Its shares currently have a dividend yield of 2.46%.
On March 21, Morgan Stanley upgraded the rating on Emerson Electric Co. shares to ‘Overweight’ from ‘Equal Weight’, with a price target of $96, up from $95.
5. NextEra Energy, Inc. (NYSE:NEE)
Number of Hedge Fund Holders: 61
Target Price as of April 10: $94.85
Upside Potential as of April 10: 20.94%
Juno Beach, Florida-based NextEra Energy, Inc. (NYSE:NEE) is a leading electric power and energy infrastructure company with operations in US and Canada. It has two major business segments: FPL, the largest electric utility company in Florida focused on generation, transmission and distribution of electricity to more than 5.8 million customer accounts with 28.5 GW of net generating capacity; and NEER, one of the largest wholesale generators of electric power in the US with 24.1 GW of net generating capacity.
NextEra Energy, Inc. has steadily grown dividends over the course of its history. The latest increase came in February 2023, with a 10% increase in regular quarterly dividends to $0.4675 per share. The company intends to further increase its dividends by 10% annually, compared to its 2022 dividend, at least through 2024.
On March 28, Erste Group analyst Stephan Lingnau upgraded the rating for NextEra Energy, Inc. shares to ‘Buy’ from ‘Hold’.
4. Stanley Black & Decker, Inc. (NYSE:SWK)
Number of Hedge Fund Holders: 25
Target Price as of April 10: $95.33
Upside Potential as of April 10: 23.05%
New Britain, Connecticut-based Stanley Black & Decker, Inc. is a leading provider of hand tools, power tools, outdoor products, and related accessories, as well as engineered fastening solutions and attachment tools for infrastructure applications.
On February 2, Stanley Black & Decker, Inc. released its financial results for Q4 2022. Following the earnings release, analysts at Credit Suisse, Deutsche Bank, and Barclays raised their price targets for Stanley Black & Decker, Inc. to $95, $99, and $110, respectively. Inventory reduction, cost savings and improved margins were cited to be the major reasons for the upgrade.
3. Chubb Limited (NYSE:CB)
Number of Hedge Fund Holders: 45
Target Price as of April 10: $245.39
Upside Potential as of April 10: 25.18%
Chubb Limited (NYSE:CB) is the world’s largest publicly traded property and casualty insurance company with operations in 54 countries and territories. It provides commercial and personal property and casualty insurance, personal accident and supplemental health insurance, reinsurance, and life insurance.
On April 12, Barclays analyst Tracy Benguigui increased the price target on Chubb Limited shares to $256 from $255 and maintained an ‘Overweight’ rating on the shares. The analyst expects specialty insurers to outpace standard insurers in Q1 2023 by benefiting from the turmoil in the markets.
2. Archer Daniels Midland Company (NYSE:ADM)
Number of Hedge Fund Holders: 40
Target Price as of April 10: $101.57
Upside Potential as of April 10: 26.88%
Founded in 1902, Archer Daniels Midland Company (NYSE:ADM), commonly known as ADM, is a major player in the food industry, with a diverse portfolio of products including oils, sweeteners, starches, proteins, and feed ingredients. The company engages in every aspect of the food and feed production process, from sourcing and processing raw materials to delivering finished products to customers. ADM is also involved in global commodity trading of crops like corn, soybeans, and wheat.
On April 14, BMO Capital reinstated coverage of Archer Daniels Midland Company with a price target of $100 and an ‘Outperform’ rating for the shares.
1. Albemarle Corporation (NYSE:ALB)
Number of Hedge Fund Holders: 46
Target Price as of April 10: $306.96
Upside Potential as of April 10: 53.62%
Charlotte, North Carolina-based Albemarle Corporation (NYSE:ALB) is a leading global developer, manufacturer, and marketer of highly engineered specialty chemicals. It manages and reports its operations under three segments: Lithium, Bromine, and Catalysts, and serves nearly 1,900 customers across 70 countries worldwide.
On March 17, Loop Capital raised the price target for Albemarle Corporation shares to $403 from $397 and kept a ‘Buy’ rating for the shares. Albemarle Corporation shares have the highest upside potential on our list, based on the average analyst price target of $306.96 and the closing price of its shares on April 10.
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This article is originally published at Insider Monkey.
