CINF - Doing Dividend Aristocrat Investing Better: 5% Yielders For The Long Term

2024-05-11 07:00:00 ET

Summary

• Dividend aristocrats, companies with 25-year-plus dividend growth streaks, are popular for income growth investors due to their superior quality and stable cash flow.
• However, aristocrat investing has limitations, including the possibility of underperforming the market for as long as 20 years, to name one.
• To improve dividend aristocrat investing, individual stock picking can be beneficial, and screening for safety, quality, valuation and future growth potential is important.
• Here is how I found 10 aristocrats, yielding an average of 5%, that offer the maximum five-year return potential according to the analyst consensus.
• They offer 4.5% yield, BBB+ credit rating, a 43-year dividend growth streak, 8% growth, 12.3% total return potential, and an 18% discount to fair value. That's why analysts think they could potentially deliver 106% returns in the next five years, beating the market, unlike the aristocrat ETF which is expected to underperform.

Dividend aristocrats, companies with 25-year-plus dividend growth streaks, are some of the most popular companies for income growth investors, and it's not hard to see why.

These companies have superior quality, as seen by Wall Street's favorite quality metric, profitability.

They tend to have more stable cash flow and earnings, which is how you can sustain 25-year-plus dividend growth streaks (average is 41 years).

The aristocrats have delivered faster dividend growth, resulting in superior long-term income.

Higher dividend yield, faster dividend growth, more resilient earnings, higher quality, and higher long-term returns with lower volatility....

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