In this article, we will analyze the list of some of the best dividend aristocrat stocks with over 3% yield.
When it comes to investing in stocks, high-growth companies often steal the spotlight. However, during uncertain times, dividend stocks—companies that regularly pay out quarterly dividends to shareholders—can serve as safe havens, helping to build wealth regardless of market conditions. Historically, dividends have played a significant role in stock market gains. Since 1930, dividends have contributed about 40% of the S&P 500’s total returns. When it comes to dividend stocks, companies that consistently increase their dividends hold special importance for investors. These companies provide shareholders with a steadily growing income.
One popular dividend strategy to invest in dividend growth stocks is dividend aristocrats, which are the companies that have raised their payouts for 25 consecutive years. Though the dividend aristocrats index is lagging this year, delivering a little over 5% return year-to-date, it has performed well in the long run, especially during market downturns. Phillip Brzenk, S&P’s global head of multi-asset indexes, studied the performance of dividend growth strategies, focusing on times when the market performed negatively. He discovered that since the end of 1989, there have been six years when the broader market experienced negative returns. In each of those years, the Dividend Aristocrats index outperformed the benchmark by an average of 13.28%. Notably, the Dividend Aristocrats even achieved a positive total return in three of those years.
Given the strong returns of dividend growth stocks, numerous companies are keen to enhance their dividends. In the second quarter of 2024, there were 539 dividend increases, a 17.2% rise from the 460 increases in the same quarter of 2023. The total dividend hikes amounted to $20.4 billion for the quarter, significantly up from $9.8 billion in Q2 2023, according to a report by S&P Dow Jones Indices. These dividend increases aren’t just a quick fix to attract investors; it’s supported by strong corporate balance sheets and increased cash flows. According to Janus Henderson, corporate cash flow remained solid across most sectors in 2023, providing ample resources for dividends and share buybacks. Consequently, global dividend growth increased by 5% for the year, following the long-term trend. The firm also gave an optimistic outlook for dividends in 2024, predicting $1.72 trillion in dividends for the year, marking a 3.9% increase on a headline basis, equivalent to a 5% growth rate.
Dividend aristocrat stocks are renowned for their growing income, but that doesn’t mean they lack solid yields. Many dividend aristocrats provide above-average yields along with decades of consistent dividend growth. This combination is particularly advantageous for income investors, as it offers the best of both worlds: robust yields and steady growth. Let’s now take a look at some of the best dividend aristocrat stocks with over 3% yield.
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Our Methodology:
For this list, we looked at a group of 67 dividend aristocrat companies, which are known for raising dividends for 25 years or more. From this list, we chose 10 stocks with dividend yields above 3%, as of July 17, and arranged them in order from lowest to highest yield. We’ve also mentioned the hedge fund sentiment for each stock, which was sourced from Insider Monkey’s database of 920 funds as of Q1 2024.
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 Best Dividend Aristocrats with Over 3% Yield
10. Hormel Foods Corporation (NYSE:HRL)
Dividend Yield as of July 17: 3.51%
Hormel Foods Corporation (NYSE:HRL) is a Minnesota-based food processing company that specializes in marketing and production of a wide range of consumer-branded food and meat products. On May 20, the company declared a quarterly dividend of $0.2825 per share, which was in line with its previous dividend. The company has been rewarding shareholders with growing dividends for the past 58 years. With a dividend yield of 3.5% as of July 17, HRL is one of the best dividend aristocrat stocks on our list.
Hormel Foods Corporation (NYSE:HRL) is currently facing challenges in passing rising costs to customers, unlike its competitors. Its turkey operations have been hit hard by avian flu outbreaks. In the first quarter of 2024, the company posted revenue of $2.9 billion, down 3% from the same period last year. Its operating income also fell to $252 million, from $296 million in the prior-year period. Despite these challenges, the company reported stable volumes across various segments. Notably, its food service volumes increased by 2.9% compared to the same period last year. The company had a strong first half, with consecutive quarters of earnings exceeding expectations and a substantial increase in operating cash flows. It also made progress on strategic initiatives and is on track to meet its goals to improve business performance and drive long-term growth and returns for shareholders. Year-to-date, the company generated over $640 million in operating cash flow, marking a 55% increase from the same period last year.
Despite these current business headwinds, analysts are positive about Hormel Foods Corporation (NYSE:HRL) because the company has a strong history of successfully managing the consumer staples market. As a Dividend King, it has endured tough economic times over the past 50 years while consistently rewarding its investors.
At the end of Q1 2024, 27 hedge funds tracked by Insider Monkey reported having stakes in Hormel Foods Corporation (NYSE:HRL), up from 25 in the previous quarter. These stakes have a collective value of over $604.3 million. With over 2.6 million shares, Millennium Management was the company’s leading stakeholder in Q1.
9. Stanley Black & Decker, Inc. (NYSE:SWK)
Dividend Yield as of July 17: 3.61%
Stanley Black & Decker, Inc. (NYSE:SWK) is an American manufacturing company that deals in industrial tools, household hardware, and security products. It has been a challenging year for industrial manufacturers and the company is facing low interest from both consumers and DIY enthusiasts. This difficult period began right after the pandemic and continues to persist. From March 2021 until July 2024, the stock has declined by nearly 53%.
These obstacles didn’t prevent Stanley Black & Decker, Inc. (NYSE:SWK) from innovating. In 2022, it initiated a broad restructuring plan that included consolidating facilities, streamlining management, reducing the number of suppliers, and enhancing its supply chain. The goal was to reduce costs by $2 billion from 2022 to 2025. The positive news is that the plan is progressing as expected. In its recent quarterly earnings, the company highlighted that the Global Cost Reduction Program is on track to achieve its anticipated pre-tax run-rate savings of $1.5 billion by the end of 2024 and $2 billion by the end of 2025.
That said, analysts are worried about weak consumer demand, a concern we share. In its first-quarter earnings report, Stanley Black & Decker, Inc. (NYSE:SWK) described consumer demand as “muted” and noted a decline in volumes within its infrastructure segment. To address this, the company is investing in growth initiatives to drive innovation and develop unique market strategies, aiming to capitalize on promising long-term opportunities.
Stanley Black & Decker, Inc. (NYSE:SWK), one of the best dividend aristocrat stocks, currently offers a quarterly dividend of $0.81 per share. The company has been growing its dividends consistently for the past 57 years. As of July 17, the stock has a dividend yield of 3.61%.
As of the close of Q1 2024, 31 hedge funds tracked by Insider Monkey reported having stakes in Stanley Black & Decker, Inc. (NYSE:SWK), which remained unchanged from the previous quarter. These stakes are collectively valued at more than $715 million. Among these hedge funds, Millennium Management was the company’s leading stakeholder in Q1.
8. Federal Realty Investment Trust (NYSE:FRT)
Dividend Yield as of July 17: 3.97%
Federal Realty Investment Trust (NYSE:FRT) ranks eighth on our list of the best dividend aristocrat stocks. The Maryland-based real estate investment trust company invests in shopping centers and other entertainment properties. In the first quarter of 2024, the company reported a rental income of over $291 million, up from $273 million in the same period last year. It showcased a strong start to 2024, achieving its highest-ever first-quarter leasing volume by leasing over 566,000 square feet of comparable retail space. In addition, it secured leases for around 190,000 square feet of office space at its top-tier mixed-use destinations during the quarter. This strong demand underscores the company’s leadership in the shopping center industry.
Although Federal Realty Investment Trust (NYSE:FRT) operates as a typical REIT, its business approach sets it apart from its peers. Unlike competitors that aim to accumulate vast property portfolios, the company focuses on quality over quantity. By the end of March 2024, it owned just 102 properties, but these are highly desirable. The company strategically acquires properties in and around major metropolitan areas with high population density and income levels. This strategy has several advantages, such as during the pandemic when many properties struggled with occupancy, FRT attracted tenants looking to move from nearby locations to secure space in its properties.
Federal Realty Investment Trust (NYSE:FRT) has raised its dividends consistently for the past 56 years in a row. During this period, it raised its payouts at a compound annual growth rate (CAGR) of 7%. Currently, it pays a quarterly dividend of $1.09 per share. With a dividend yield of 3.97%, as of July 17, FRT is one of the best dividend aristocrat stocks on our list.
Insider Monkey’s database of Q1 2024 indicated that 22 hedge funds held stakes in Federal Realty Investment Trust (NYSE:FRT), worth collectively over $244 million.
7. Chevron Corporation (NYSE:CVX)
Dividend Yield as of July 17: 4.08%
When it comes to dividend stocks, energy companies are at the forefront, as they are renowned for their generous dividend payments to shareholders. Chevron Corporation (NYSE:CVX) is no exception. The American energy company has never missed a single dividend since 1984 and has raised its payouts for 37 consecutive years. Its quarterly dividend currently comes in at $1.63 per share for a dividend yield of 4.08%, as of July 17. It is among the best dividend aristocrat stocks on our list.
Dividends have long been a favored method of returning capital to shareholders for oil companies. Even when low oil prices affect their cash flow, they frequently incur debt and leverage assets to sustain their payouts. That isn’t the case with Chevron Corporation (NYSE:CVX). The company is gaining traction with investors thanks to its robust cash flow, which acts as a safety net against fluctuating oil prices. In the first quarter of 2024, the company reported an operating cash flow of $6.8 billion and its free cash flow for the period came in at $2.7 billion. Due to this strong cash generation, the company remained committed to its shareholder return, distributing $6 billion among investors through dividends and share repurchases. This marked the company’s eighth straight quarter of providing over $5 billion in shareholder returns.
According to analysts, Chevron Corporation (NYSE:CVX) is well-positioned to benefit from an anticipated increase in natural gas demand, driven by the growing number of data centers. According to the company’s CEO, Mike Wirth, natural gas demand is expected to exceed expectations due to rising electricity consumption driven by artificial intelligence and data centers. Wirth further mentioned that data centers operate around the clock without interruption. He emphasized the importance of maintaining a reliable baseload supply to meet these continuous demands and expressed his belief that natural gas would play a significant role in meeting future energy needs.
Warren Buffett’s Berkshire Hathaway was the largest stakeholder of Chevron Corporation (NYSE:CVX) at the end of Q1 2024, owning roughly 123 million shares. Overall, 62 hedge funds tracked by Insider Monkey held positions in the company, worth collectively over $23.2 billion.
6. T. Rowe Price Group, Inc. (NASDAQ:TROW)
Dividend Yield as of July 17: 4.15%
T. Rowe Price Group, Inc. (NASDAQ:TROW) is an American asset management company that offers a wide range of related services to institutions, individuals, and financial intermediaries. The company’s assets under management grew to $1.57 trillion at the end of June 2024, from $1.54 trillion at the end of May. According to the company’s management, favorable market conditions contributed to the growth of AUM. That said, the company also reported net outflows of $3.7 billion for the second quarter of 2024. The company indicated that while outflows are anticipated to persist through the second half of 2024, there is optimism for improvement this year due to increased sales and reduced redemptions.
T. Rowe Price Group, Inc. (NASDAQ:TROW) is a reliable option from a dividend point of view. The company’s balance sheet is strong with over $2.4 billion available in cash and cash equivalents at the end of March 2024, up from $2.06 billion in the previous quarter. That said, the company operates as an asset manager, deriving revenue from investing client funds. This business model exposes it to fluctuations in earnings driven by client inflows, outflows, and market volatility, making its earnings as unpredictable as the market itself. Despite these challenges, the company maintains a robust financial position with no long-term debt and a low debt/equity ratio of 0.03. This financial strength provides a substantial cushion, ensuring dividend stability even through market cycles.
In the first quarter of 2024, T. Rowe Price Group, Inc. (NASDAQ:TROW) returned $365 million to shareholders through dividends and share repurchases. The company offers a quarterly dividend of $1.24 per share and has a dividend yield of 4.15%, as of July 17. It has been raising its payouts consistently for the past 38 years, which makes TROW one of the best dividend aristocrat stocks on our list.
T. Rowe Price Group, Inc. (NASDAQ:TROW) was included in 24 hedge fund portfolios at the end of Q1 2024, down from 32 in the previous quarter, as per Insider Monkey’s database. The stakes held by these hedge funds have a collective value of over $938 million.
5. Kenvue Inc. (NYSE:KVUE)
Dividend Yield as of July 17: 4.30%
Kenvue Inc. (NYSE:KVUE) is a New Jersey-based consumer health company. Last year, the company completed its separation from Johnson & Johnson, marking its transition to a fully independent company. It’s a given that corporate breakups and restructurings often bring uncertainty, which has understandably affected both Kenvue and Johnson & Johnson’s recent stock performance. Despite these challenges, Kenvue has the potential to emerge as a strong high-yield dividend stock suitable for long-term investment.
That said, analysts are concerned that buying Kenvue Inc. (NYSE:KVUE) could result in the possibility of encountering sluggish growth, potentially resulting in a stagnant stock price. This scenario could undermine an investment strategy focused on dividend payouts, despite Kenvue’s strong brands facing competition in their respective markets. Since its separation from J&J in August 2023, the stock has declined by over 21%. However, it has a strong portfolio of leading brands such as Band-Aid, Tylenol, Listerine, Neutrogena, and Aveeno, among others. These products typically exhibit resilient performance, demonstrating stability regardless of economic conditions. Harris Associates also highlighted the potential of Kenvue Inc. (NYSE:KVUE) in its Q1 2024 investor letter. Here is what the firm has to say:
“Kenvue Inc. (NYSE:KVUE) became the largest standalone consumer health company following its split-off from Johnson & Johnson in May 2023. The company’s highly recognizable brands, such as Neutrogena, Listerine, Tylenol and Band-Aid, have been market share leaders in their respective categories for generations. However, Kenvue’s first year as a public company was clouded by litigation and market share losses in certain categories. As a result, Kenvue now trades for just 16.5x trailing earnings, a substantial discount to the market and other consumer health and packaged goods companies. We see an opportunity for the company to improve efficiency and re-invest the cost savings into increased product development and marketing, which should help improve its growth and brand equity.”
Kenvue Inc. (NYSE:KVUE) offers a quarterly dividend of $0.20 per share. As long as the company announces a dividend increase by the end of the year, it will maintain its status as a Dividend King, a title it inherited from J&J. For now, the company maintains a 62-year streak of consistent dividend growth, which makes KVUE one of the best dividend aristocrat stocks on our list. The stock sports a dividend yield of 4.30%, as recorded on July 17.
At the end of March 2024, 47 hedge funds in Insider Monkey’s database owned stakes in Kenvue Inc. (NYSE:KVUE), down from 64 in the preceding quarter. These stakes are collectively valued at over $1.3 billion. With nearly 18 million shares, Harris Associates was the company’s leading stakeholder in Q1.
4. Amcor plc (NYSE:AMCR)
Dividend Yield as of July 17: 4.84%
Amcor plc (NYSE:AMCR) is a global multinational packaging company that offers a wide range of related products for different industries. The company’s revenue declined by 7% YoY in fiscal Q3 2024 at $3.41 billion. The decrease in revenue includes a 1% favorable impact from foreign exchange rate movements, but this was offset by a 2% unfavorable impact due to lower raw material costs, which amounted to approximately $60 million being passed through. Year-to-date, its net income of $710 million also declined by 12% year-over-year. Though these results are not encouraging for investors, these challenges are temporary.
Amcor plc (NYSE:AMCR) has showcased its resilience on a global scale over the years. The company was originally founded in the 1860s as Australian Paper Manufacturers. Over time, it has undergone significant transformations. In 2000, it divested its paper goods operations, marking a strategic shift. Subsequently, through a series of strategic acquisitions, including the $7 billion purchase of Bemis in 2019, the company solidified its position as a global leader in packaging.
Amcor plc (NYSE:AMCR) has been reassuring income investors with strong free cash flow generation. In the first nine months of FY24, it reported an adjusted free cash flow of $115 million, a significant increase from $14 million during the same period last year. This improvement aligns with the company’s expectations and is mainly due to better working capital management. Management still expects adjusted free cash flow to range between $850 million to $950 million for the fiscal year.
On May 1, Amcor plc (NYSE:AMCR) declared a quarterly dividend of $0.125 per share, which was in line with its previous quarter. In the first nine months of the year, the company returned $570 million to shareholders in dividends and share repurchases. It is one of the best dividend aristocrat stocks on our list as the company has been growing its dividends consistently for the past 40 consecutive years. The stock has a dividend yield of 4.84%, as of July 17.
Of the 920 hedge funds tracked by Insider Monkey at the end of Q1 2024, 17 funds owned stakes in Amcor plc (NYSE:AMCR), down from 21 in the previous quarter. These stakes are collectively valued at over $65.6 million. Among these hedge funds, Ken Griffin’s Citadel Investment Group was the company’s leading stakeholder in Q1.
3. Franklin Resources, Inc. (NYSE:BEN)
Dividend Yield as of July 17: 5.16%
Franklin Resources, Inc. (NYSE:BEN) is an American multinational asset management company that offers a wide range of investment solutions and services. The company gains substantial advantages from its acquisitions. Through these strategic moves, it achieves cost efficiencies and expands its customer base. The January acquisition of Putnam Investments notably boosted the company’s investment capabilities, highlighted by impressive investment performance. This deal also expanded the company’s influence in essential insurance and retirement markets, raising its assets under management (AUM) in this area to over $650 billion.
Overall, Franklin Resources, Inc. (NYSE:BEN) reported a 0.7% hike in its assets under management (AUM) in June to $1.65 trillion due to positive markets and flat long-term net inflows. In fiscal Q2 2024, the company reported operating revenues of $2.1 billion, which showed a 12% growth from the same period last year. Not only this, the revenue also beat analysts’ expectations by over $96 million. The company’s cash position provides a welcome relief for income investors. In the most recent quarter, it returned $169 million to shareholders through dividends.
Franklin Resources, Inc. (NYSE:BEN) pays a quarterly dividend of $0.31 per share for a dividend yield of 5.16%, as of July 17. It is one of the best dividend aristocrat stocks as the company maintains a 48-year streak of consistent dividend growth.
The number of hedge funds tracked by Insider Monkey owning stakes in Franklin Resources, Inc. (NYSE:BEN) jumped to 31 in Q1 2024, from 26 in the previous quarter. The total value of these stakes is nearly $200 million. Israel Englander and Cliff Asness were the company’s most prominent investors in Q1.
2. Realty Income Corporation (NYSE:O)
Dividend Yield as of July 17: 5.52%
Realty Income Corporation (NYSE:O) is a California-based real estate investment trust company that invests in single-tenant commercial properties in the US. Though the stock has dipped by almost 1% since the start of 2024, interest rates are likely to decrease in the upcoming months. So, the company is well-positioned to benefit from this new normal.
The stability of Realty Income Corporation’s (NYSE:O) high-quality portfolio continues to support its balance sheet. In the first quarter of 2024, the company maintained a steady occupancy rate of 98.6%. It achieved a rent capture rate of 104.3% on re-leased properties and saw a same-store rental revenue growth of 0.8%. The company’s portfolio, consisting of single-tenant, net-leased properties, mainly reduces its financial burden. Tenants include high-profile, stable businesses such as Wynn Resorts, Dollar General, and FedEx, ensuring a reliable revenue stream. In addition, the company has over 15,000 commercial properties across 89 industries. Its resilience during recessions is evident, as its largest sectors include supermarkets and convenience stores, which perform well in all economic conditions.
Realty Income Corporation (NYSE:O) is a reliable option from a dividend point because being a REIT, the company is expected to pay 90% of its net income to shareholders in dividends in order to avoid paying income tax on its operational profits. On July 9, the company declared a monthly dividend of $0.263 per share, which was in line with its previous dividend. It has raised its payouts every year since its listing on the NYSE in 1994, which makes O one of the best dividend aristocrat stocks on our list. As of July 17, the stock has a dividend yield of 5.52%.
According to Insider Monkey’s database of Q1 2024, 25 hedge funds held stakes in Realty Income Corporation (NYSE:O), compared with 27 in the previous quarter. These stakes are worth over $250.5 million in total. With over 1.4 million shares, AEW Capital Management was the company’s leading stakeholder in Q1.
1. Altria Group, Inc. (NYSE:MO)
Dividend Yield as of July 17: 8.02%
An American manufacturing company, Altria Group, Inc. (NYSE:MO) tops our list of the best dividend aristocrat stocks. The company specializes in the manufacturing and production of cigarettes, tobacco, and other nicotine products. The tobacco industry has enjoyed steady profits thanks to the persistent smoking habit among people. Despite a long-term decline in smoking rates in the US, the industry’s pricing power has sustained its cash flow for years. Altria Group, Inc. (NYSE:MO), which owns Marlboro—the leading cigarette brand in the country—holds around 42% of the total retail market and dominates 60% of the premium segment. In the first quarter of 2024, the company reported a revenue of $4.7 billion, a slight decrease of 0.9% compared to the same period last year.
In June, the FDA approved the marketing of four of Altria Group’s, Inc. (NYSE:MO) e-cigarette products following a detailed scientific review. This decision is significant because it marks the first time the agency has granted marketing orders for non-tobacco flavored vapor products through the premarket tobacco application process. The FDA noted that evidence from the company demonstrated these menthol-flavored products provide substantial benefits for adult smokers by encouraging them to completely switch from traditional cigarettes, which outweighs the risks, including the potential appeal to youth.
Altria Group, Inc. (NYSE:MO), one of the best dividend aristocrat stocks on our list, has been rewarding shareholders with growing dividends for the past 54 years. The company currently pays a quarterly dividend of $0.98 per share and has a dividend yield of 8.02%, as of July 17.
Insider Monkey’s database of Q1 2024 showed that 38 hedge funds owned stakes in Altria Group, Inc. (NYSE:MO), compared with 42 in the previous quarter. These stakes are collectively valued at over $823.3 million.
While we acknowledge the potential of MO as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued dividend stock that is more promising than MO but that trades at less than 7 times its earnings and yields nearly 10%, check out our report about the dirt cheap dividend stock.
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Disclosure: None. This article is originally published at Insider Monkey.
