Dividend aristocrats make an excellent case for inclusion in your portfolio, irrespective of the underlying circumstances. To qualify as a dividend aristocrat, a stock must represent one of the S&P 500 companies and have boosted their dividend every year for at least 25 years. It’s a rare accomplishment as you might imagine. However, the beautiful part is that companies who have achieved this status won’t give it up cheaply.
Unlike companies that focus exclusively on business expansion, dividend aristocrats typically stem from mature enterprises. The main objective here is not necessarily to deliver robust growth – although that would be nice. Rather, it’s to steadily march higher while rewarding stakeholders along the way. By providing payouts every quarter (or in some cases every month), these organizations help keep the ship steady.
That attribute is all the more relevant right now amid the severe global market correction. With investors jittery about the possibility of a recession, these dividend aristocrats offer something sturdy to hold onto.
Atmos Energy (ATO)
Operating in the regulated gas segment of the utilities industry, Atmos Energy (NYSE:ATO) makes a strong case for dividend aristocrats to buy. No, it’s not an exciting enterprise by any means. However, its natural gas distribution business, along with its pipeline and storage solutions should be relevant for years to come. Per Yahoo Finance, Atmos offers a forward yield of 2.53%.
Notably, the company has been increasing its payout to shareholders for 40 years. Therefore, it’s very close to becoming a dividend king. That makes ATO stock an exceptionally enticing idea because of the incentivization factor. Management will almost certainly push for the king status. That makes ATO’s yield all the more dependable.
On the business side, analysts are projected almost 11% expansion in the bottom line by year’s end, with earnings per share hitting $6.77. On the top line, sales could rise by 8% to $4.62 billion. In other words, Atmos provides a balanced profile, making it one of the top dividend aristocrats to consider.
Sysco (SYY)
A food distribution company, Sysco (NYSE:SYY) represents one of the most relevant investments available. Engaged in the marketing and distribution of food and related products to the foodservice and food-away-from-home industries, SYY stock isn’t exciting. However, it’s predictable. It also offers a fairly generous forward yield of 2.71%.
To note, Sysco commands 56 years of consecutive dividend increases. That makes it one of the dividend kings. Further, the payout ratio sits at 44.36%, offering confidence regarding yield sustainability. It’s also reasonably priced, trading hands at 0.48x trailing-year revenue. In the past year, this metric landed at 0.49x.
By the end of the current fiscal year, EPS could rise 6.73% to hit $4.60. In the following year, the bottom-line metric could bump up again to $4.95. On the top line, analysts are projecting revenue to rise by 4.3% to reach $82.24 billion. The following year could see sales move up again to $85.86 billion.
As with Atmos Energy, Sysco delivers a mix of income and growth potential, making it one of the top dividend aristocrats.
Genuine Parts (GPC)
Falling under the auto parts industry, Genuine Parts (NYSE:GPC) could be an intriguing wager. Should the economy fall into recession, people will likely be reluctant to buy a new or new-to-them vehicle. Instead, they may opt to keep their current rides running for as long as possible. That could translate to increased demand for Genuine. Right now, the company offers a forward yield of 2.86%.
Notably, Genuine Parts is one of the top names among dividend kings, featuring 69 years of consecutive payout increases. What’s more, the company’s payout ratio sits at 39.27%, providing confidence for yield sustainability. It’s worth pointing out that the underlying consumer discretionary sector’s average yield is only 1.89%.
For fiscal 2024, covering experts believe that EPS may rise slightly to reach $9.38. That’s about half-a-percent up from last year’s print of $9.33. However, a more robust performance could transpire in fiscal 2025, with EPS possibly hitting $10.18.
On the top line, sales could reach $23.5 billion in fiscal 2024, a modest lift of 1.8%. In the following year, revenue may land at $24.52 billion. Thanks to relevant fundamentals, GPC is an intriguing name among dividend aristocrats.
PepsiCo (PEP)
PepsiCo (NASDAQ:PEP) represents one of the most popular brands within dividend aristocrats. It may also become an especially relevant player. Should weakness hit the economy, consumers may trim down on discretionary purchases. Instead, they’ll focus more on the essentials, which could benefit Pepsi as a staple on grocery store shelves. Right now, the company offers a forward yield of 3.14%.
At the moment, PepsiCo commands 53 years of consecutive annual payout increases. That means it recently achieved its dividend king status. So, don’t expect for management to throw this newfound achievement away cheaply. Now, one factor to watch is the payout ratio. While it’s not the highest level in the world, 61.88% is a bit elevated.
Let’s look at the good news. Covering experts believe that by the end of fiscal 2024, EPS could rise by 5.37% to $7.45. In the following year, earnings could bump up by 7.38% to $8 per share. The high-side view calls for $8.10.
On the top line, analysts see only 1% growth in fiscal 2024 sales to $85.73 billion. Circumstances could more noticeably improve in 2025, when revenue potentially hits $89.38 billion.
Consolidated Edison (ED)
Another utilities player, Consolidated Edison (NYSE:ED) focuses on the regulated electricity industry. Through its subsidiaries, Con Ed also provides gas and steam delivery businesses. Its mainline electricity unit serves approximately 3.7 million customers in New York City and Westchester County. Recently, the utility giant offers a forward annual dividend yield of 3.29%.
As of this writing, Con Ed enjoys 51 years of consecutive payout increases. That means it just achieved dividend king status, making it a compelling idea. Like the dividend aristocrats (and kings) mentioned earlier, it takes time and effort to achieve these lofty labels. Such privileged companies won’t give up their status so easily.
Even better, analysts believe that fiscal 2024 EPS could hit $5.30, an improvement over the prior year’s print of $5.07. In the following year, earnings could hit $5.62 per share, up 6%. The high-side view calls for $5.67.
On the top line, revenue could reach $15.23 billion, gaining 3.8% over last year. Fiscal 2025 could see sales land at $15.76 billion, with a high-side view of $16.53 billion.
Essex Property Trust (ESS)
A fully integrated real estate investment trust or REIT, Essex Property Trust (NYSE:ESS) acquires, develops and manages multifamily residential properties. Primarily, the company focuses on select markets in the West Coast. Per its corporate profile, Essex has ownership interests in 252 apartment communities. Thanks to the housing shortage, ESS could be cynically relevant.
Right now, Essex offers a forward yield of 3.5%. Moreover, the company commands 30 years of consecutive dividend increases. Compared to other REITs, the yield is somewhat modest. Further, the payout ratio is sky high, presenting concerns for investors. At the same time, we all need a roof over our heads. That fundamental reality could help soothe out certain issues with ESS stock.
Another factor to consider is the financials. In fiscal 2024, analysts anticipate that EPS could soar to $8.32. If so, that would be up 31.65% from last year’s print of $6.32. It must be said, though, that in the following year, EPS could drop sharply to $5.93.
On the top line, sales could hit $1.74 billion, up 4% from 2023’s tally of $1.67 billion. In fiscal 2025, revenue could again rise to $1.8 billion. If you’re looking for a balanced and kinetically relevant idea, ESS could be one of the top dividend aristocrats.
Realty Income (O)
One of the most popular ideas for dividend aristocrats, Realty Income (NYSE:O) represents yet another REIT. Here, the focus is on long-term net lease agreements with commercial clients. Realty primarily conducts business with entities that enjoy everyday demand: pharmacies, convenience stores, home improvement retailers and similar outlets.
Realty’s calling card comes from its massive forward yield of 5.22%. Not only that, the company’s payout frequency is monthly. That means with enough invested in O stock, you could potentially pay your bills with the passive income. However, a drawback is the sky-high payout ratio. Still, with 32 years of consecutive payout increases, management probably won’t do anything to jeopardize this status.
Regarding the financials, analysts are looking for fiscal 2024 EPS to hit $1.35, up 7.14% from the prior year. In fiscal 2025, the company might generate earnings of $1.59 per share, an improvement of nearly 18%.
On the top line, sales could shoot up in fiscal 2024 to $5.04 billion. If so, that would be a 23.7% lift from last year’s print of $4.08 billion. Fiscal 2025 could see another year of growth to $5.4 billion. Overall, it’s one of the top dividend aristocrats to consider.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
