I’m kind of down on dividend stocks these days. That’s not because dividend stocks are a bad idea, it’s just that the market is about 20% overvalued, and the rush to replace meager bond income resulted in dividend stocks being bid up too far. So that’s why I prefer to stick with Dividend Aristocrats.
Dividend Aristocrats have a slight advantage over what might be characterized as your standard blue-chip stock, in that they have been raising dividends annually for over 25 years straight.
That speaks to a high degree of success in the business, of course, but it also speaks to ongoing growth. It means that free cash flow is likely expanding from year to year, thus permitting more of that cash flow to be paid out as a dividend.
So here are three Dividend Aristocrats that I think pay a reasonable dividend, but also have a shot at capital gains.