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In this article, we discuss 11 best dividend aristocrats with over 3% yield. You can skip our detailed analysis of the past performance of dividend aristocrats, and go directly to read 5 Best Dividend Aristocrats With Over 3% Yield.
Dividend Aristocrats are the companies in the S&P 500 that have records of raising their dividends consistently for 25 years or more. Over the years, this elite group of stocks has outperformed the broader index, offering investors a stable source of income. According to a weekly letter published by Merrill Lynch, dividend growers outperformed the broader index by 6% during the Great Financial Crisis of 2008 and 2009. The report further mentioned that the S&P 500 Dividend Aristocrats Index surpassed the wider market by roughly 7% this year, as of October 10.
Dividend growers with strong dividend yields are considered great investments for long-term investors. This year’s returns of high dividend stocks have also exhibited their outperformance. In the second quarter of 2022, MSCI World Index declined by 16.19%, while MSCI World High Dividend Yield Index fell by 8.72%, as reported by Allspring Global Investments. Moreover, nine holdings announced dividend hikes during the quarter, at an annual average rate of 12%. In addition to this, Dividend Aristocrats have also reported higher yields than the S&P 500. According to a report by S&P Dow Jones Indices, the average yield of S&P 500 Dividend Aristocrats was 2.5% from 1998 to 2021, compared with a 1.8% yield of the broader index.
Economists are also acknowledging the strength in global dividend payments this year and expect the trend to continue for the rest of the year as well. According to Jane Shoemake, a client portfolio manager at Janus Henderson Investors, global dividends reached their all-time quarterly high in Q2 2022 to $544.8 billion. This figure reflects an 11.3% year-over-year growth on a headline basis and a 19% growth on an underlying basis. She further mentioned that the strength of the US dollar mainly contributed to this growth. Some of the most famous dividend stocks that are grabbing investors’ attention include AbbVie Inc. (NYSE:ABBV), Exxon Mobil Corporation (NYSE:XOM), and Johnson & Johnson (NYSE:JNJ) among others that are mentioned below.
Our Methodology:
The stocks mentioned below have raised their dividend for 25 years or more and have yields above 3%. These companies have strong financial health and solid balance sheets to further support their dividend policies. The stocks are ranked from the lowest dividend yield to the highest, as recorded on October 16.
11 Best Dividend Aristocrats With Over 3% Yield
11. The Coca-Cola Company (NYSE:KO)
Dividend Yield as of October 16: 3.20%
The Coca-Cola Company (NYSE:KO) is a multinational manufacturer and marketer of non-alcoholic beverages and syrups. The company is headquartered in Atlanta, Georgia. In September, the company announced its partnership with a Japan-based Kirin Holdings Company to develop a healthy drink that would be helpful to boost immunity. Coca-Cola Japan will also advertise its LC-Plasma boosts immunity in Georgia.
The Coca-Cola Company (NYSE:KO) pays a quarterly dividend of $0.44 per share. The company holds one of the longest dividend growth track records in the market, having raised its dividends for 60 consecutive years. This makes the company one of the best dividend stocks on our list. The Coca-Cola Company (NYSE:KO) also generated stable cash in the first half of 2022, with its operating cash flow of $4.5 billion and free cash flow of $4.1 billion. As of October 16, the stock's dividend yield came in at 3.20%.
In October, Wedbush initiated its coverage of The Coca-Cola Company (NYSE:KO) with an Outperform rating and a $63 price target. The firm mentioned that the company is exhibiting the best organic performance among its peers and is the market leader in the carbonated soft drink category with the best pricing power.
At the end of the June quarter, 60 hedge funds in Insider Monkey's database owned stakes in The Coca-Cola Company (NYSE:KO), down from 64 in the previous quarter. These stakes have a total value of over $28.3 billion. With 400 million shares, Berkshire Hathaway was the company's leading stakeholder in Q2.
In addition to some of the best dividend stocks like AbbVie Inc. (NYSE:ABBV), Exxon Mobil Corporation (NYSE:XOM), and Johnson & Johnson (NYSE:JNJ), The Coca-Cola Company (NYSE:KO) is also favored by income investors due to its strong dividend growth history.
Aristotle Capital Management, LLC mentioned The Coca-Cola Company (NYSE:KO) in its Q2 2022 investor letter. Here is what the firm has to say:
“The Coca-Cola Company (NYSE:KO), the global beverage business, was a leading contributor for the period. Coca-Cola continues to benefit from the refranchising of its bottling operations and realignment of incentives, catalysts we previously identified. These initiatives are demonstrating their strength in an inflationary and supply-chain-challenged environment. Additionally, the company has focused on evolving its customer engagement practices by leveraging digital and social medias for targeted campaigns, such as the design and launch of Coke Byte in the metaverse. Lastly, Coca-Cola has furthered its transformation into a total beverage company, as it debuted its new Jack Daniel’s Tennessee Whiskey and Coca-Cola ready-to-drink premixed cocktail. Although uncertainties surrounding cost pressures, lockdowns and geopolitical conflicts remain, we believe Coca-Cola is uniquely positioned to successfully continue its transition toward a total beverage business.”
10. Medtronic plc (NYSE:MDT)
Dividend Yield as of October 16: 3.33%
Medtronic plc (NYSE:MDT) is an American medical device company with headquarters in Ireland. In September, the company got its US FDA medical device approval for an expanded indication of its cardiac monitor system to use in kids aged two years and older. This was the first cardiac monitor approved by the FDA for pediatric patients.
On August 18, Medtronic plc (NYSE:MDT) declared a quarterly dividend of $0.68 per share, in line with its previous dividend. The company last raised its dividend in May 2022, which was its 45th consecutive year of dividend increase. In Q2 2022, it generated $1.08 billion in operating cash flow and $657 million in free cash flow, which shows that the company's cash generation is stable enough to support its dividends. As of October 16, the stock's dividend yield came in at 3.33%.
In October, Mizuho initiated its coverage on Medtronic plc (NYSE:MDT) with a Buy rating and a $100 price target, highlighting the company's large and diversified portfolio. The firm also appreciated its premier growth categories and stable balance sheet.
At the end of Q2 2022, 54 hedge funds tracked by Insider Monkey owned stakes in Medtronic plc (NYSE:MDT), the same as in the previous quarter. These stakes have a total value of over $2.48 billion.
Artisan Partners mentioned Medtronic plc (NYSE:MDT) in its Q2 2022 investor letter. Here is what the firm has to say:
“While Medtronic plc (NYSE:MDT)’s procedure volumes recovered to pre-COVID levels, foreign exchange headwinds overshadowed underlying business value growth, and supply chain issues, including those related to China’s lockdowns, impacted the surgical innovations business. The downdraft in the market during the quarter led to a pile-on. We are being patient with our investment in Medtronic because the company continues to be a strong free cash flow generator and is attractively priced, with a FCF yield of 5% on trailing one-year numbers and a dividend yield of 3%. Medtronic is under new management that is focused on growing the company’s top line, reinvesting in R&D, returning cash to shareholders and growing operating profits. We like new management’s strategy and believe new product launches, increased surgery visits, sound M&A transactions and a shareholder returns focus, should reinvigorate the business. We added to our positions in these health care names during the quarter.”
9. Exxon Mobil Corporation (NYSE:XOM)
Dividend Yield as of October 16: 3.55%
Exxon Mobil Corporation (NYSE:XOM) is a Texas-based multinational oil and gas company that markets fuels, lubricants, and chemicals. The company is one of the best dividend stocks on our list as it has managed to raise its dividends consistently for the past 39 years. Over this period, it has raised its dividends at a CAGR of 6%. It currently pays a quarterly dividend of $0.88 per share. As of October 16, the stock's dividend yield came in at 3.55%.
Recently, Exxon Mobil Corporation (NYSE:XOM) announced its partnership with CF Industries to capture and store up to 2 million metric tons per year of carbon dioxide. The deal will prove to be a new milestone for the company's Low Carbon Solutions Unit. In Q2 2022, Exxon Mobil Corporation (NYSE:XOM) generated nearly $17 billion in free cash flow and distributed $3.7 billion in dividends, which shows its stable FCF.
In September, Morgan Stanley raised its price target on Exxon Mobil Corporation (NYSE:XOM) to $113 with an Overweight rating on the shares, as the company provides its support for low carbon growth. The firm also mentioned that this diversified gas company is well-positioned to benefit from oil prices.
At the end of Q2 2022, 72 hedge funds tracked by Insider Monkey owned stakes in Exxon Mobil Corporation (NYSE:XOM), compared with 83 in the previous quarter. The collective value of these stakes is over $7.4 billion. GQG Partners was the company's leading stakeholder in Q2.
First Eagle Investments mentioned Exxon Mobil Corporation (NYSE:XOM) in its Q2 2022 investor letter. Here is what the firm has to say:
“Integrated oil and gas giant Exxon Mobil performed well in the second quarter as continued high prices for energy products supported the stock. As the largest refiner in the US, the company has benefitted from wide “crack spreads,” or the margin between the cost of crude oil and the petroleum products extracted from it. Exxon continues to invest in refining capacity in the US, which industrywide has been in steady decline since 2019. We are pleased that Exxon has been using its strong cash flows to reduce debt and to return cash to shareholders through dividends and stock repurchases.”
8. Consolidated Edison, Inc. (NYSE:ED)
Dividend Yield as of October 16: 3.86%
Consolidated Edison, Inc. (NYSE:ED) is one of the largest investor-owned energy companies, based in New York. The company provides electric, gas, and steam services to its ten million customers in the city. In October, Mizuho maintained its Buy rating on the stock with a $91 price target. The firm acknowledged the company's step to enter into a purchase and sale agreement to sell its renewable business for a value of over $6.8 billion. In addition to this, the firm also appreciated its commitment to shareholder return.
Consolidated Edison, Inc. (NYSE:ED) is one of the best dividend stocks on our list as the company has been raising its dividends consistently for the past 48 years. It currently pays a quarterly dividend of $0.79 per share and has a dividend yield of 3.86%, as recorded on October 16.
At the end of Q2 2022, 21 hedge funds tracked by Insider Monkey owned stakes in Consolidated Edison, Inc. (NYSE:ED), compared with 26 in the previous quarter. These stakes are collectively valued at over $381.2 million. With over 1.3 million shares, AQR Capital Management owned the largest position in the company.
7. Essex Property Trust, Inc. (NYSE:ESS)
Dividend Yield as of October 16: 3.95%
Essex Property Trust, Inc. (NYSE:ESS) is a California-based real estate investment trust company that mainly invests in residential apartments. In Q2 2022, the company reported an operating cash flow of over $194.4 million and a free cash flow of $156.7 million. The company's same-property revenue and net operating income grew by 12.7% and 16.7% from the same period last year, respectively.
On September 15, Essex Property Trust, Inc. (NYSE:ESS) declared a quarterly dividend of $2.20 per share, consistent with its previous dividend. In 2022, the company stretched its dividend growth streak to 28 years, which makes it one of the best dividend stocks on our list. As of October 16, the stock's dividend yield came in at 3.95%.
In October, Stifel maintained its Buy rating on Essex Property Trust, Inc. (NYSE:ESS) with a $291 price target as the rental growth in the US is normalizing after the pandemic. The firm also mentioned that the multifamily REITs sector is the best place to invest in.
The number of hedge funds tracked by Insider Monkey owning stakes in Essex Property Trust, Inc. (NYSE:ESS) grew to 34 in Q2 2022, from 26 in the previous quarter. These stakes have a total value of over $477.8 million.
6. Kimberly-Clark Corporation (NYSE:KMB)
Dividend Yield as of October 16: 4.10%
Kimberly-Clark Corporation (NYSE:KMB) is an American multinational manufacturing company that produces paper-based consumer products. The company pays a quarterly dividend of $1.16 per share, with a yield of 4.10%, as recorded on October 16. It holds a 49-year track record of consistent dividend growth, coming through as one of the best dividend stocks on our list. In addition to this, the company has a healthy payout ratio of 88.4%.
In Q2 2022, Kimberly-Clark Corporation’s (NYSE:KMB) cash from operations stood at $740 million, up from $565 million during the same period last year. The company paid $388 million in dividends in the first half of 2022, up from $380 million paid at the end of December 2021. Its cash generation is stable to fulfill its shareholder return.
As of the close of Q2 2022, 24 hedge funds in Insider Monkey’s database owned stakes in Kimberly-Clark Corporation (NYSE:KMB), down from 33 in the previous quarter. These stakes hold a collective value of $507.2 million. Ray Dalio, Ken Griffin, and Cliff Asness were the company’s major stakeholders in Q2.
In addition to AbbVie Inc. (NYSE:ABBV), Exxon Mobil Corporation (NYSE:XOM), and Johnson & Johnson (NYSE:JNJ), Kimberly-Clark Corporation (NYSE:KMB) is a valuable addition to dividend portfolios.
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Disclosure. None. 11 Best Dividend Aristocrats With Over 3% Yield is originally published on Insider Monkey.
