There is a segment of stocks on the U.S market who hold the title of “Dividend Aristocrat.” This title is not bestowed lightly and means that the stock has successfully paid out and increased their dividend yield for at least the past 25 years!
Here are the Absolute 7 Best Dividend Aristocrat Stocks to Own for Growth.
- NextEra Energy ($NEE)
- Target Company ($TGT)
- Consolidated Edison ($ED)
- Lowe’s ($LOW)
- Clorox ($CLX)
- McDonald’s ($MCD)
- Walmart ($WMT)
Each of these above stocks will see their stock price grow conservatively over time. Further, since they have a track record of increasing their dividend payouts year over year you will be getting a higher dividend check every year.
Each of the above dividend aristocrat stocks were chosen because they all follow a similar investment thesis. As the U.S population grows so will their underlying business model increase.
For example, as the U.S population grows we can expect energy companies (NextEra and Edison) to have to sell more energy. At the same time we can expect home repairs and buildings to increase (Lowes, Walmart, Target). Finally, people need to clean and eat food (McDonalds and Clorox).
Because of this a portfolio constructed of these dividend aristocrats will see two major things happen. First, as the U.S population grows so will the underlying stock price. If you bought in at $100 then you can resell the stock two years from now at $150.
Second, as the price of the stock increases so will the dividend payout. This is because these stocks are dividend aristocrats. They will continue to increase the payout of their dividends. As such you will gain money just by waiting around.
Without further ado, let’s jump into the 7 absolute best dividend aristocrat stocks to own for growth.
NextEra Energy ($NEE)
Dividend Rate: 2.88%
If you have read these articles before you will know that I am a huge fan of Nextera Energy. Look at that chart. If you invested $10,000 in 2010 then not only would you have made a huge dividend payout but also your stock would now be worth $37,000. That return alone beat’s the average return of the market at 10% per year.
Nextera Energy on the other hand is expected to continue to return well above normal market returns over the next decade. This is because the underlying revenue generation source for NEE is FPL. FPL is called Florida Power and Light, and as you might have guessed FPL provides power to Florida.
Florida’s population is expected to grow exponentially over time. As a result so will NEE’s base revenue source.
That alone would make NEE a good investment but there is more. NEE also reinvests nearly all of its net profit back into what it calls ‘smart investments.’ These are renewable energy generation farms. As such NEE is able to sell electricity at a much lower rate then its competitors in select areas, which effectively creates a monopoly.
As such, we can expect NEE to continue to climb.
If you want more info, I wrote an article on NEE a while back. Check it out.
Dividend Rate: 2.85%
Target has consistently paid out a dividend and increased its overall market cap consistently over the past 20 years. Its entire business model is centered around being a better alternative to major competitors such as Walmart.
They do this by providing a ‘better’ shopping experience. The building is cleaner, the products better displayed, and the staff is friendlier. This might not sound like a good business model but it has proven to work.
In many respects Target created it.
Anyways, Target is incredibly successful at what it does. Since 2018 Target has been heavily investing in ‘generational marketing.’ This type of marketing is targeted at mothers who in turn will bring their children to the store, then children become parents and the cycle repeats.
Companies such as Disney have demonstrated how effective this style of marketing is.
Target is a great choice in combination with Walmart because you capture an entire sector of consumer staples.
Consolidated Edison ($ED)
Dividend Rate: 3.64%
Consolidated Edison, much like Nextera Energy, is an energy generation and distribution company.
The thesis for why you should own Consolidated Edison is simple. ED provides power to the entirety of New York City, Jersey City, and Parts of Long Island and Connecticut.
This area of the U.S demands near constant electricity usage and only ED can provide electricity there. As the population increases in the urban centers of the U.S so will ED’s revenue increase.
ED is significantly smaller than NEE but their revenue is comparable. That says something as ED only focuses on the Greater New York City area.
Simply put, ED is here to stay and with a good dividend rate too. It’s worth it to have a position in ED if you think that New York City is going to continue to be New York City. I sure do.
Dividend Rate: 1.69%
Lowe’s is a great stock to own. As the U.S population increases so will the price of home construction (lumber) and the price of everything else associated with home ownership.
Lowe’s has positioned itself to capture a majority of this U.S home market. Simply put, as the U.S population increases so will the need for homes. This will directly lead to Lowe’s stock price increasing. Which I hope will increase your net worth if you invested in it.
Further, whenever a home is damaged then the home owners or contractors will buy their repair products from Lowe’s. As such Lowe’s always gets a nice little bump in revenue during a bad storm season in the U.S.
As such if you invest in Lowe’s not only are you going to be getting a nice dividend check but you will also be getting investment appreciation in the form of an increasing stock price.
I own Lowe’s, the funds client’s own Lowe’s, my Grandmother owns Lowe’s. It’s a decent company, with good capital appreciation, good brand recognition, great leadership, and solid finances to tie it all together.
Dividend Rate: 2.43%
Clorox is a company that only does one thing. It sells Clorox bleach and bleach accessories.
Most companies that only do one thing or have one product fail. However CLX has stood the test of time and successfully demonstrated year over year how well it can sell bleach.
Chances are you have a Clorox product in your home right now. Now imagine all households in the U.S having Clorox products in their homes. This is what CLX has done through clever marketing and product positioning in stores.
During the 2020 pandemic CLX products went soaring through the roof as people rushed to find cleaning products. The price has since come down but still settled above its previous price.
As the U.S population increases so will the need to have cleaning products to clean with. CLX has no real competitors in the bleach sector and its only real competitor is Proctor and Gamble, with their other products.
As such CLX has been able to payout a dividend every year without fail. This has directly rewarded investors who also saw huge capital appreciation over the last 10 years.
I didn’t get a chance to ride the CLX wave 10 years ago, but I am riding it now.
Dividend Rate: 2.43%
I don’t have to say much about McDonald’s. They completely dominate the fast food space and own several other businesses that hedge against their downside.
They are more akin to Amazon than they are to Wendy’s at this point. No longer is MCD a fast food restaurant but instead it participates in Nascar sponsorships, Korean boy group music videos (BTS Meal), and even attempted to partner with NASA for a planned space mission to the asteroid “449 Hamburga.” (Source)
Simply put, MCD is a giant with one of if not the largest brands globally. As such it is a great investment and has one of the best executive teams you could ever hope for.
There really is not much to say about how good of an investment MCD is. As the U.S population increases so will the need for food, which MCD will be cooking up at a breakneck pace.
Dividend Rate: 2.08%
Walmart is the world’s largest private employer. They cover everything and are probably the only company in the world that can successfully compete with Amazon in e-commerce.
In 2020 Walmart decided to begin its transfer to e-commerce effectively entering into a space previously dominated by Amazon. Initially this was thought to be an awful idea but as time would prove WMT can take market share away from Amazon.
As such WMT surprisingly has a tone of economic potential in the next 2-10 years. Perhaps we could see WMT surpassing Amazon by 2030, who knows.
Regardless it’s a great investment for those who want to see capital appreciation while also getting a dividend check. You can reasonably expect to see nothing but green from this giant of a company.
This is because as the U.S population increases so will the underlying business model for WMT. More people will shop at WMT than ever before and as such WMT will increase its overall revenue source.
Further, with WMT’s successful transition to e-commerce you can expect a whole new level of revenue growth. 2021-2024 is going to be an exciting time for WMT investors.
Those are the 7 absolute best dividend aristocrat stocks to own for growth. By investing properly you can expect to see capital gains in the range of 100-200% over the next 3-5 years. This will be nearly double what the average return on the market will be.
Further, by reinvesting your dividends you will get an even higher return with even less total risk in your portfolio. This could lead to a dividend snowball that would make you filthy rich. This is the exact strategy that Warren Buffet employed to gain his billions.
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Until we meet again, I wish you the best of luck in your investment journey.