In this article, we will take a look at some of the best dividend aristocrat stocks.
Investors usually buy stocks with the expectation that their value will increase as the company grows more profitable. However, stocks can offer additional advantages. As businesses succeed and mature, they often choose to distribute a portion of their profits to shareholders as cash dividends. Even more appealing are companies that not only pay dividends but consistently increase them year after year. These stocks have delivered impressive performance over time compared to other asset classes.
According to a report by Thornburg Investment Management, from 1990 to 2023, bond yields, represented by the Bloomberg U.S. Aggregate Bond Index, fell significantly from nearly 9% to 3.41%. Similarly, equity yields, reflected by the dividend payouts on the Dividend Aristocrats Index, declined from just over 3% to 2.42% during the same period. The Dividend Aristocrats Index tracks large-cap, blue-chip US companies within the broader market that have consistently increased their dividends for at least 25 consecutive years. The report further mentioned that dividend-paying stocks can not only offer a source of current income with the potential for growth over time but also help investors bring greater stability to their portfolios in the long run. The report cited Bloomberg’s data and highlighted that dividend aristocrats delivered an 11.63% return to shareholders between 1990 to 2023, compared with a 10.2% return for the broader market.
Excluding the aristocrat factor from dividend stocks highlights their significance in overall market returns. A report by S&P Dow Jones Indices reveals that since 1926, dividends have accounted for roughly 32% of the broader market’s total returns, with the remaining 68% coming from capital appreciation. This demonstrates that both steady dividend income and the potential for capital growth play crucial roles in shaping total return expectations. The report also highlighted the significant impact of compounding when it comes to dividends. Without dividends, the market’s return from January 1, 1930, to the end of July 2023 would have grown to 214%. However, if dividends had been reinvested during the same period, the return would have reached an impressive 7,219%.
Also read: 8 Magnificent Dividend Growth Stocks to Buy Now
The dividend aristocrat index has delivered a 12.5% return since the start of 2024, underperforming the broader market that has returned nearly 27%. Although dividend stocks have lagged in performance this year, companies continue to increase their payouts, reflecting investor preferences steadily. According to a recent report from S&P Dow Jones Indices, 480 dividend increases were recorded in Q3 2024, compared to 448 in Q3 2023, representing a 7.1% year-over-year growth. The total value of these increases for the quarter reached $14.1 billion. Over the past 12 months, dividend increases amounted to $74.7 billion, up from $63.9 billion in the previous year.
In view of this, we will take a look at some of the best dividend aristocrat stocks.
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Our Methodology:
For this article, we first listed down all dividend aristocrat stocks — the companies with 25+ years of consecutive dividend increases. From that list, we picked 10 stocks with the highest number of hedge fund investors and ranked them in ascending order of hedge funds’ sentiment towards them, as per Insider Monkey’s Q3 2024 database.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
10. Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 63
Chevron Corporation (NYSE:CVX) is an American multinational energy company that mainly specializes in oil and gas. Over the years, the company has become one of the largest energy businesses globally. It invests billions annually in expanding its operations, both through organic growth and acquisitions. These efforts not only drive business growth but also enhance its profitability and cash flow. Since the start of 2024, the stock has surged by nearly 8% and its 12-month return came in at roughly 12%.
In the third quarter of 2024, Chevron Corporation (NYSE:CVX) reported revenue of $50.67 billion, which, though, fell by over 6% from the same period last year, beat analysts’ estimates by $1.63 billion. The company increased its global production by 7% compared to the previous year, reaching nearly 3.4 million barrels of oil equivalent per day (BOE/d). This growth was driven by record production levels in the Permian Basin and the acquisition of PDC Energy.
As highlighted earlier, Chevron Corporation (NYSE:CVX) has steadily increased its cash flow over the years, which is encouraging news for income-focused investors. In the most recent quarter, the oil giant generated approximately $9.7 billion in operating cash flow, up from $6.3 billion in the previous quarter. This cash flow was enough to pay $7.7 billion to shareholders through dividends and share repurchases.
On November 1, Chevron Corporation (NYSE:CVX) declared a quarterly dividend of $1.63 per share, which was in line with its previous dividend. Overall, the company has raised its payouts for 37 consecutive years, which makes CVX one of the best dividend aristocrat stocks. The stock has a dividend yield of 4.04%, as of November 25.
At the end of Q3 2024, 63 hedge funds tracked by Insider Monkey held stakes in Chevron Corporation (NYSE:CVX), compared with 64 in the previous quarter. These stakes have a total value of over $21 billion. With nearly 119 million shares, Warren Buffett’s Berkshire Hathaway owned the largest stake in the company.
9. AbbVie Inc. (NYSE:ABBV)
Number of Hedge Fund Holders: 68
AbbVie Inc. (NYSE:ABBV) is an Illinois-based pharmaceutical company that offers a wide range of services and products to its shareholders. The stock has surged by over 11% since the start of 2024, reflecting investor confidence in how the company navigated Humira’s patent expiration. Once a blockbuster drug with peak sales of $21 billion in 2022, Humira experienced a sharp decline in revenue after losing patent protection last year. However, the company’s management successfully mitigated the impact, offsetting the drop in Humira’s sales, which had previously contributed to about one-third of the company’s total revenue.
AbbVie Inc. (NYSE:ABBV) reported revenue of $14.46 billion in the third quarter of 2024, which showed a 4% hike from the same period last year. The company’s Immunology Portfolio generated over $7 billion, up 4% from the prior-year period. In August, AbbVie purchased Cerevel Therapeutics, a neuroscience-focused drug company, for $8.7 billion in cash. Cerevel brought with it a pipeline of promising drug candidates, including emraclidine, a potential treatment for schizophrenia.
AbbVie Inc. (NYSE:ABBV) announced a 5.8% hike in its quarterly dividend to $1.64 per share on October 30. This marked the company’s 52nd consecutive year of dividend growth. Moreover, since its split with Abbott in 2013, the company’s dividend has grown by over 310%. With a dividend yield of 3.7%, as of November 25, ABBV is one of the best dividend aristocrat stocks on our list.
As of the close of Q3 2024, 68 hedge funds in Insider Monkey’s database owned stakes in AbbVie Inc. (NYSE:ABBV), up from 67 in the preceding quarter. These stakes are worth $2.6 billion in total.
8. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 68
The Procter & Gamble Company (NYSE:PG) ranks eighth on our list of the best dividend aristocrat stocks. The American multinational consumer goods company specializes in a wide range of related products and services. The stock has had an outstanding performance this year, reaching an all-time high of over $177 per share. This achievement is primarily due to the company’s strong execution. It has consistently delivered solid results, particularly during inflationary periods, by successfully implementing substantial price increases. For instance, in fiscal 2023, the company posted organic sales growth in every quarter. Since the start of 2024, PG is up by nearly 20%.
In fiscal Q1 2025, The Procter & Gamble Company (NYSE:PG) reported revenue of $21.7 billion, down 1% from the same period last year. The company’s operating cash flow for the quarter came in at $4.3 billion and adjusted free cash flow productivity was 82%, in line with expectations. It remained committed to its shareholder obligation, returning $4.4 billion to investors through dividends and share repurchases.
The Procter & Gamble Company (NYSE:PG)’s fiscal 2025 forecast is quite strong, projecting sales growth of 2% to 4% and a diluted net EPS increase of 10% to 12% compared to $6.02 in fiscal 2024. If the company hits the midpoint of this guidance, it will achieve a diluted EPS of $6.68 in fiscal 2025, marking an all-time high in earnings.
The Procter & Gamble Company (NYSE:PG) is a strong dividend payer, with 68 consecutive years of dividend growth under its belt. In addition, the company has never missed a dividend in 134 years. It currently offers a quarterly dividend of $1.0065 per share and has a dividend yield of 2.26%, as of November 25.
The number of hedge funds tracked by Insider Monkey owning stakes in The Procter & Gamble Company (NYSE:PG) grew to 68 in Q3 2024, from 64 in the previous quarter. These stakes have a consolidated value of more than $8.8 billion. Among these hedge funds, Fisher Asset Management was the company’s leading stakeholder in Q3.
7. NextEra Energy, Inc. (NYSE:NEE)
Number of Hedge Fund Holders: 69
NextEra Energy, Inc. (NYSE:NEE) is a Florida-based renewable energy company. In the third quarter of 2024, the company reported revenue of $7.57 billion, which saw a nearly 6% growth from the same period last year. For the second quarter in a row, it added around 3 gigawatts of new renewable energy and storage projects to its backlog, marking another successful quarter for renewables origination. The stock has surged by nearly 24% since the start of 2024.
In recent decades, the demand for clean energy has grown consistently, and NextEra Energy, Inc. (NYSE:NEE) has continuously invested in increasing its capacity and operations to meet this demand. Analysts also believe the company is strategically positioned to capitalize on the rising demand for renewable energy, especially from tech companies. These companies are striving to meet their climate goals while simultaneously expanding their energy-intensive data centers. The company has already announced plans to invest nearly $100 billion between 2024 and 2027. This substantial investment is expected to more than double NextEra Energy’s renewables and storage capacity by 2027. Management anticipates adjusted earnings per share (EPS) growth of 6% to 8% through 2027 and a nearly 10% increase in dividends per share through 2026.
Madison Investments made the following comment about NextEra Energy, Inc. (NYSE:NEE) in its Q3 2024 investor letter:
“The top contributors in the quarter were NextEra Energy, Inc. (NYSE:NEE), Oracle Corporation, Progressive Corporation, Equifax Inc., and United Healthcare. NextEra has continued to perform well given its strong position in the renewable energy space, increasing demand for power, its transmission capabilities, as well as a tailwind from lower interest rates.”
On October 18, NextEra Energy, Inc. (NYSE:NEE) declared a quarterly dividend of $0.515 per share, which was consistent with its previous dividend. The company’s dividend growth streak spans over 28 years, which makes NEE one of the best dividend aristocrat stocks. The stock supports a dividend yield of 2.7%, as of November 25.
NextEra Energy, Inc. (NYSE:NEE) was a part of 69 hedge fund portfolios at the end of Q3 2024, compared with 73 in the previous quarter, as per Insider Monkey’s database. The stakes held by these hedge funds have a collective value of nearly $2.5 billion.
6. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 69
The Coca-Cola Company (NYSE:KO) is an American multinational beverage company. Since the start of 2024, the stock has surged by nearly 7%, showing investor confidence in the company. Its strongest competitive edge lies in its powerful brand, which establishes an economic moat, setting it apart from industry competitors. Along with its long-standing reputation for delivering a reliable product, the company has also built remarkable marketing expertise, keeping its brand highly visible and memorable to consumers.
The Coca-Cola Company (NYSE:KO) reported revenues of nearly $12 billion in the third quarter of 2024, surpassing analysts’ expectations by $290 million. The company’s cash flow was also robust, with $2.9 billion in operating cash flow and $1.6 billion in free cash flow. Its adjusted operating margin for the quarter stood at a remarkable 30.7%, highlighting the company’s strong profitability.
This consistent performance has translated into long-term benefits for shareholders, as The Coca-Cola Company (NYSE:KO) has increased its dividend for an impressive 62 years in a row. Few companies boast such a remarkable track record of returning profits to investors. The company currently pays a quarterly dividend of $0.485 per share, offering a dividend yield of 3.03% as of November 25.
By the end of the third quarter of 2024, 69 hedge funds tracked by Insider Monkey held positions in The Coca-Cola Company (NYSE:KO), an increase from 68 in the previous quarter. The combined value of these stakes totaled nearly $35 billion. Warren Buffett’s Berkshire Hathaway held the largest individual stake in the company, with 400 million shares.
5. The Sherwin-Williams Company (NYSE:SHW)
Number of Hedge Fund Holders: 78
The Sherwin-Williams Company (NYSE:SHW) ranks fifth on our list of the best dividend aristocrat stocks. The Ohio-based paint and coating manufacturing company specializes in the manufacturing and production of related products. It reported mixed earnings in the third quarter of 2024, with revenues of $6.16 billion growing by a modest 0.75% on a YoY basis. Sales in the Consumer Brands Group decreased due to ongoing weakness in the North American DIY market. However, the Paint Stores Group experienced growth, particularly driven by a high single-digit increase in protective and marine products. Previous investments in residential repainting helped sustain mid-single-digit growth despite a challenging market.
The Sherwin-Williams Company (NYSE:SHW)’s cash generation remained strong in the first nine months of 2024. During this period, the company reported an operating cash flow of $2.22 billion and returned $1.97 billion to shareholders through dividends. ClearBridge Investments highlighted the strong performance of SHW in its Q3 2024 investor letter. Here is what the firm has to say:
“Despite these stock-specific headwinds, we’re confident our portfolio continues to own high-quality franchises able to generate excess returns in various economic environments. The Sherwin-Williams Company (NYSE:SHW), for example, has seen its shares rise even while its end markets have not really recovered. As the Fed raised rates aggressively to combat inflation, existing homes turnover came to a halt. Turnover of existing housing stock is Sherwin-Williams’s bread and butter business as homeowners typically paint as they are ready to sell and new owners repaint when they buy. Despite slow end market demand and because Sherwin-Williams is a best-in-class operator, it continues to execute well and gain share, taking advantage of some disarray among competitors, allowing it to hold on to pricing and benefit from some raw material deflation.”
The Sherwin-Williams Company (NYSE:SHW) offers a quarterly dividend of $0.715 per share, having raised it by 18.2% in February this year. The company maintains a 45-year streak of consistent dividend growth. The stock’s dividend yield on November 25 came in at 0.72%.
Insider Monkey’s database of Q3 2024 indicated that 78 hedge funds owned stakes in The Sherwin-Williams Company (NYSE:SHW), up from 76 in the previous quarter. These stakes have a consolidated value of over $4.63 billion. With over 1.3 million shares, Viking Global was the company’s leading stakeholder in Q3.
4. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 81
Johnson & Johnson (NYSE:JNJ) is a New Jersey-based pharmaceutical company that specializes in a wide range of biotech and medical products and offers related services to consumers. The company has steadily expanded its portfolio through multiple acquisitions. Recently, it acquired the medical device company V-Wave for an upfront payment of $600 million. The deal also includes additional milestone payments of up to $1.1 billion, contingent on regulatory approvals and commercial successes. The stock has surged by over 3% in the past 12 months.
Johnson & Johnson (NYSE:JNJ) reported strong earnings in the third quarter of 2024. The company posted revenue of $22.4 billion, up 5.25% from the same period last year. The revenue also beat analysts’ estimates by $299.7 million. The company’s cash position was also very strong with year-to-date free cash flow amounting to approximately $14 billion, up from $11.9 billion in the prior-year period.
Johnson & Johnson (NYSE:JNJ), one of the best dividend aristocrat stocks, currently offers a quarterly dividend of $1.24 per share. The company has been rewarding shareholders with growing dividends for the past 62 consecutive years. The stock supports a dividend yield of 3.18%, as of November 25.
As of the close of Q3 2024, 81 hedge funds tracked by Insider Monkey held stakes in Johnson & Johnson (NYSE:JNJ), up from 80 in the previous quarter. The total value of these stakes is more than $5.4 billion. Fisher Asset Management owned the largest stake in the company, worth over $1.22 billion.
3. S&P Global Inc. (NYSE:SPGI)
Number of Hedge Fund Holders: 85
S&P Global Inc. (NYSE:SPGI) is an American capital market company that offers services in financial information and analytics. The company delivered impressive results in the third quarter of 2024, reporting $3.6 billion in revenue—a 16% increase compared to the same quarter last year. The company’s revenue also exceeded analysts’ estimates by $135.5 million. Beyond its ratings division, it benefits from a reliable cash flow through its data and analytics segment. So far this year, the company has generated nearly $4 billion in operating cash flow, a significant rise from $2.4 billion in the same period last year.
S&P Global Inc. (NYSE:SPGI) plays a pivotal role in credit markets by assessing the creditworthiness of corporations, governments, and various organizations. Its strong position is supported by the longstanding credibility of credit rating agencies. Additionally, stringent regulatory standards create substantial barriers for new entrants, enabling the company to maintain its leadership in the credit-rating sector with a commanding 50% market share. The stock has delivered an over 18% return this year so far.
Aristotle Atlantic Partners, LLC highlighted S&P Global Inc. (NYSE:SPGI)’s strong performance in its Q3 2024 investor letter. Here is what the firm has to say:
“S&P Global Inc. (NYSE:SPGI) contributed to portfolio performance in the third quarter, driven by growth in corporate bond issuance and refinancing activity, with expectations for further acceleration if interest rates decline. The company has also achieved better-than-expected expense and revenue synergies from its acquisition of IHS Markit.”
S&P Global Inc. (NYSE:SPGI) pays a quarterly dividend of $0.91 per share. Thanks to its diverse revenue sources and strong history of effective cash management, the company has proven to be a reliable dividend payer, consistently increasing its annual dividend for 52 consecutive years. The stock has a dividend yield of 0.70%, as of November 25.
As per Insider Monkey’s database of Q3 2024, 85 hedge funds owned stakes in S&P Global Inc. (NYSE:SPGI), down from 90 in the preceding quarter. The consolidated value of these stakes is over $9.85 billion. With over 10.4 million shares, TCI Fund Management was the company’s leading stakeholder in Q3.
2. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 86
An American energy company, Exxon Mobil Corporation (NYSE:XOM) ranks second on our list of the best dividend aristocrat stocks. The company ranks among the most favored energy stocks for investors, largely due to the benefits it derives from strategic acquisitions. In May, it finalized its purchase of Pioneer Natural Resources, a deal that included the issuance of 545 million ExxonMobil shares, valued at $63 billion at the time, along with the assumption of $5 billion in debt. This merger established ExxonMobil as the leader in high-return unconventional resource development, offering unmatched potential in this area. Since the start of 2024, the stock has surged by nearly 18%.
In the third quarter of 2024, Exxon Mobil Corporation (NYSE:XOM) reported revenue of $90.02 billion, which surpassed analysts’ estimates by $1.66 billion. The company’s exceptional performance reflects its enterprise-wide transformation’s effectiveness in enhancing its structural earnings capacity. In the Upstream segment, the profitability of barrels produced, on a constant price basis, has doubled. Within Product Solutions, the company has optimized its refining operations and boosted sales of high-value products. Additionally, ExxonMobil has realized $11.3 billion in structural cost savings since 2019, showcasing its commitment to operational efficiency across the board.
During Q3, Exxon Mobil Corporation (NYSE:XOM) reported an operating cash flow of $17.6 billion and its free cash flow came in at $11.3 billion. The company returned $9.8 billion to shareholders during the quarter in dividends and share repurchases. On November 1, it announced a 4% hike in its quarterly dividend to $0.99 per share. Through this increase, the company stretched its dividend growth streak to 42 years. The stock has a dividend yield of 3.29%, as recorded on November 25.
Insider Monkey’s database of Q3 2024 showed that 86 hedge funds owned stakes in Exxon Mobil Corporation (NYSE:XOM), compared with 92 a quarter earlier. The collective value of these stakes is nearly $7 billion.
1. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 88
Walmart Inc. (NYSE:WMT) is an American retail corporation that operates a chain of hypermarkets, discount stores, and grocery stores across the country. The company has seen an increase in customer traffic this year, with a 3% rise in the third quarter compared to the same period last year. This is a positive development for any major retailer. WMT is delivering exceptional returns this year, surging by over 68% since the start of 2024.
Walmart Inc. (NYSE:WMT)’s competitive strengths are driving significant financial benefits for its investors. Both cash flow and profitability are improving, fueled by more than just increased market share. The company’s e-commerce segment is now generating profits after years of substantial investment in its infrastructure. Additionally, strategic moves like price reductions and streamlined inventory management have yielded positive results.
In the third quarter of 2024, Walmart Inc. (NYSE:WMT) reported revenue of $168 billion, up 5.5% from the same period last year. The revenue beat analysts’ estimates by $1.4 billion. Being a strong dividend payer, the company boasts a solid cash position. Year-to-date, it has generated $22.9 billion in operating cash flow, an increase of $3.9 billion from the same period last year. The company’s free cash flow also increased by $1.9 billion on a YoY basis at $6.2 billion. It is one of the best dividend aristocrat stocks on our list with 51 consecutive years of dividend growth. The company’s quarterly dividend comes in at $0.2075 per share, for a dividend yield of 0.93%, as of November 25.
According to Insider Monkey’s database of Q3 2024, 88 hedge funds held stakes in Walmart Inc. (NYSE:WMT), compared with 95 in the previous quarter. These stakes are worth over $9.7 billion in total.
Overall, Walmart Inc. (NYSE:WMT) ranks first on our list. While we acknowledge the potential for WMT to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than WMT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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