Dividend Aristocrats: The Underrated Powerhouses for Reliable Income and Growth in 2024
In an era where market volatility and shifting interest rates dominate investor concerns, the quest for dependable income streams combined with growth potential has never been more critical. While Dividend Kings—companies boasting over 50 years of consecutive dividend increases—often steal the spotlight, there’s a compelling case for turning attention to their slightly younger but equally formidable cousins: the Dividend Aristocrats.
Dividend Aristocrats are elite S&P 500 companies that have raised their dividends for at least 25 consecutive years. This track record signals not just resilience but an ability to grow payouts through various economic cycles, making them a cornerstone for income-focused portfolios. But beyond just steady dividends, these companies often possess global scale, durable business models, and analyst backing that suggest upside potential in the current market environment.
Here’s why Dividend Aristocrats deserve a prime spot on your radar and portfolio in 2024—and which five stand out as top analyst picks right now.
Why Dividend Aristocrats Matter More Than Ever
With interest rates fluctuating and bond yields offering uncertain returns, investors are increasingly seeking alternatives that provide both income and growth. Dividend Aristocrats fit this bill perfectly. According to a recent report from S&P Dow Jones Indices, Dividend Aristocrats have historically outperformed the broader market during periods of rising interest rates, delivering total returns that combine capital appreciation with reliable income.
Moreover, the consistency of dividend growth acts as a buffer against inflation—a key concern for today’s investors. Companies that can afford to hike dividends year after year demonstrate strong cash flow generation and pricing power, which are vital in an inflationary environment.
Five Dividend Aristocrats with Strong Analyst Conviction
Using Barchart’s Stock Screener and Wall Street consensus ratings, here are five Dividend Aristocrats that analysts currently rate as “Strong Buy” candidates, offering a mix of stability, growth, and attractive yields.
1. Nucor Corporation (NUE) – Steel Industry Titan with Growth Potential
Nucor, North America’s largest steel producer and scrap recycler, has a 52-year streak of dividend increases. Despite a 44% dip in net earnings in Q2 2024, sales rose 5%, signaling resilience amid industry headwinds. With a modest forward yield of 1.46%, NUE is more about capital appreciation. Wall Street analysts set a high target price implying a 21% upside. Barchart’s 88% buy rating and strong short-term momentum suggest NUE is poised for growth.
Insight: The steel sector is often overlooked in dividend discussions, but with ongoing infrastructure spending in the U.S. and global supply chain realignments, Nucor’s position as a key supplier could translate into sustained growth and dividend security. Investors should consider NUE as a cyclical play with defensive dividend characteristics.
2. West Pharmaceutical Services (WST) – Healthcare Supply Chain Innovator
West Pharmaceutical, a manufacturer of injectable medicine components, has raised dividends for 33 years. Its 0.34% yield is modest, but the company has grown dividends over 30% in the past five years. Q2 2024 saw a 9.2% sales increase and 17% net income growth. Analysts give WST a “Strong Buy” rating with an upside potential of 44.6%. However, Barchart’s short-term outlook is cautious at 40% buy.
Insight: Healthcare supply chain companies like WST are gaining prominence as the pharmaceutical industry demands more sophisticated delivery systems. While the yield is low, investors with a growth-income focus might find WST’s dividend growth trajectory and market niche compelling for long-term holds.
3. S&P Global Inc. (SPGI) – The Financial Information Powerhouse
S&P Global offers critical financial analytics and owns major indices like the S&P Dow Jones Indices. With a 0.85% yield and 25+ years of dividend growth, SPGI reported 6% revenue growth and 7% net income growth in Q2 2024. Wall Street consensus rates it a “Strong Buy” with nearly 20% upside, supported by an 88% buy rating from Barchart and strengthening short-term indicators.
Insight: As financial markets evolve with increasing data and analytics needs, SPGI’s services are becoming indispensable. Its dividend growth and stock appreciation potential make it a dual-threat in portfolios focused on quality and growth.
4. Coca-Cola Company (KO) – The Beverage Giant with Steady Income
Coca-Cola’s iconic brand and diversified beverage portfolio have supported a 2.9% dividend yield and 58% net income growth in Q2 2024. With 24 analysts rating KO as a “Strong Buy” and a 24% upside target, the long-term bullish sentiment is clear. However, Barchart’s short-term rating is less enthusiastic at 40% buy, reflecting some near-term caution.
Insight: KO’s global brand strength and consistent dividend growth make it a classic defensive pick. The recent surge in net income suggests operational efficiencies or product mix improvements, which could support future dividend hikes. Income investors should balance KO’s steady yield with its lower short-term momentum.
5. Walmart Inc. (WMT) – Retail Giant with Income and Growth
Walmart, the world’s largest private employer, boasts a 0.95% dividend yield and a 25+ year dividend growth streak. Q2 2024 revenue grew 4.8%, with net income soaring 56.1%. Wall Street’s consensus is a “Strong Buy” with 32% upside potential. Yet, Barchart’s short-term rating is 40% buy with weak momentum.
Insight: Walmart’s scale and innovation in e-commerce and supply chain management position it well for continued growth. The company’s dividend yield might seem modest, but its earnings growth and analyst confidence suggest that dividend increases could accelerate, rewarding patient investors.
What Should Investors and Advisors Do Differently Now?
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Prioritize Dividend Growth Over Yield Alone: In today’s environment, a high yield can be a red flag if not supported by earnings growth. Focus on Aristocrats with strong dividend growth rates and analyst buy ratings to balance income and capital appreciation.
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Diversify Across Sectors: The highlighted Aristocrats span steel, healthcare, finance, beverages, and retail—diversification that can protect portfolios from sector-specific risks while capturing growth opportunities.
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Leverage Analyst Ratings and Technical Indicators: Combining fundamental dividend history with consensus analyst ratings and short-term technical outlooks (like Barchart’s Opinion ratings) can help time entries and exits more effectively.
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Watch for Inflation Hedge Potential: Companies with pricing power and essential products/services, like S&P Global and Coca-Cola, can better navigate inflationary pressures, protecting dividend real value.
What’s Next for Dividend Aristocrats?
Looking ahead, Dividend Aristocrats are likely to remain a cornerstone for investors seeking stability amid economic uncertainty. However, the key to maximizing returns lies in selective investing—choosing those with not just a long dividend history but also robust growth prospects and analyst conviction.
A recent study from Morningstar found that Dividend Aristocrats with above-average dividend growth rates outperformed their peers by nearly 3% annually over the past decade. This underscores the importance of focusing on growth, not just longevity.
For advisors, integrating Dividend Aristocrats into client portfolios can provide a compelling mix of income and growth, especially for retirees and conservative investors. For self-directed investors, tools like Barchart’s Stock Screener combined with analyst consensus data offer a powerful way to identify the best Aristocrats to own now.
In summary: Dividend Aristocrats offer a blend of reliability and upside that few other income-generating assets can match in today’s market. From steel to pharmaceuticals, these companies have proven their mettle—and with strong analyst backing, they are primed to reward disciplined investors in 2024 and beyond.
Sources: S&P Dow Jones Indices, Barchart.com, Morningstar, Wall Street Analyst Reports
Source: 5 Set It and Forget It Dividend Aristocrats for a Lifetime of Income