In this article, we will take a look at some of the best mid-cap dividend aristocrat stocks.
Investors often overlook mid-cap stocks, assuming they are more volatile than large-cap equities. However, this perception is not entirely accurate, and analysts are increasingly favoring mid-caps. A recent analysis by Goldman Sachs suggested that instead of debating between large-cap and small-cap stocks, investors should prefer mid-caps. Historical data also supports this perspective, with the mid-cap benchmark achieving an 11% compound annual growth rate since 1985, compared to 9% for the broader market and 8% for the small-cap Russell 2000, according to strategist Jenny Ma. Here are some other comments from the analyst:
“Today, mid-cap equities offer investors superior earnings growth at a reasonable price compared with large-caps. Mid-cap stocks have typically outperformed both large-caps and small-caps during the 12 months following the first Fed rate cut in an easing cycle.”
A Bloomberg analysis also revealed that over the past 30 years, mid-cap stocks have significantly outperformed both the broader market and small-cap stocks in cumulative returns. Mid-caps achieved a compound annual growth rate exceeding 12%, compared to approximately 11% for large-caps. This seemingly small difference has a substantial impact over time. For example, a $100,000 investment in mid-cap stocks at the end of 1994 would now be worth around $3 million—about $700,000 more than an equivalent investment in the market. The report also mentioned that between 2000 and 2005, mid-cap stocks outshone all other categories, outperforming not only the broader market but also small-caps and the equal-weighted large-cap index. Their ability to weather the fallout from the internet bubble played a significant role in driving their long-term outperformance over the years.
Also read: 12 Best Long-Term Dividend Stocks to Invest in Right Now
A common misconception about mid-cap stocks is that these companies reinvest most of their earnings into growth initiatives like expansion and R&D, leaving little for dividends. However, analysts suggest that this view may cause investors to overlook valuable opportunities. Mid-cap and small-cap (SMID) dividend-paying stocks, in particular, deserve attention. According to a Wall Street Journal report, SMID dividend stocks have delivered an impressive annual return of 15.68% from 1975 to June 2023, outperforming both large-cap dividend payers and the broader market. In addition, their volatility is about 15% lower than the average SMID stock. The advantages are even greater for SMID stocks that consistently grow their dividends, as these have demonstrated higher annualized returns with lower risk over the past 35 years compared to typical SMID dividend payers.
The MidCap 400 Dividend Aristocrats Index monitors the performance of companies that have consistently increased their dividends for at least 15 consecutive years. A ProShares report highlighted that, since its launch in 2015 through 2022, the index has delivered annualized returns 177 basis points higher than the broader MidCap 400, all while maintaining lower volatility. These mid-cap Dividend Aristocrats have shown resilience during market turbulence by capturing much of the upside during rising markets while limiting losses during downturns—an especially valuable trait during periods of uncertainty. The report further mentioned that during this period, mid-cap Dividend Aristocrats have increased their payouts at an annualized rate exceeding 12%, outpacing both large-cap dividend growth and recent inflation rates. Given this, we will discuss some of the best mid-cap dividend aristocrat stocks.
Image by Steve Buissinne from Pixabay
Our Methodology:
For this list, we scanned the holdings of MidCap 400 Dividend Aristocrats, which tracks the performance of mid-sized companies within the MidCap 400 index that have maintained a consistent track record of increasing dividends annually for at least 15 years. From the index, we picked 10 dividend stocks that have garnered the most attention from hedge fund investors by the conclusion of Q3 2024, using data from Insider Monkey’s 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. United Bankshares, Inc. (NASDAQ:UBSI)
Number of Hedge Fund Holders: 14
United Bankshares, Inc. (NASDAQ:UBSI) is a West Virginia-based bank holding company that offers a wide range of related services. The stock has surged by nearly 9% since the start of 2024 and has gained investors’ confidence after delivering strong results this year. The company’s recent quarterly earnings reflected steady and reliable performance. Profitability remained strong, growth trends continued to advance, and costs were efficiently controlled. Furthermore, the firm’s asset quality, liquidity, and capital levels remained significant strengths.
In the third quarter of 2024, United Bankshares, Inc. (NASDAQ:UBSI) reported revenue of $262.2 million, surpassing analysts’ projections by $2.32 million. Net interest income for the period rose 2% year-over-year, reaching $230.3 million. By the end of the quarter, the company held more than $1.6 billion in cash and cash equivalents, a significant increase from $1.13 billion in the same period last year.
United Bankshares, Inc. (NASDAQ:UBSI) declared a quarterly dividend of $0.37 per share on November 10, which was in line with its previous dividend. Overall, the company holds a strong dividend history, having raised its payouts for 50 consecutive years. It offers a dividend yield of 3.60%, as of December 16. UBSI is one of the best dividend stocks in the mid-cap space.
At the end of Q3 2024, 14 hedge funds tracked by Insider Monkey held stakes in United Bankshares, Inc. (NASDAQ:UBSI), up from 13 in the previous quarter. The consolidated value of these stakes is over $76.7 million. With over 1.2 million shares, Fisher Asset Management was the company’s leading stakeholder in Q3.
9. NNN REIT, Inc. (NYSE:NNN)
Number of Hedge Fund Holders: 20
NNN REIT, Inc. (NYSE:NNN) is an American real estate investment trust company, headquartered in Florida. The company adopts a simple investment strategy that has supported its steady performance over time. It specializes in single-tenant net lease retail properties, where tenants handle all operating expenses, including maintenance, property taxes, and insurance. This arrangement enables the company to secure reliable rental income, which grows annually at either a fixed rate or in step with inflation. The firm also focuses on acquiring properties in robust markets, ensuring their appeal to new tenants if the current leases are not renewed. In addition, it maintains a diversified portfolio spanning various regions, industries, and tenant types.
NNN REIT, Inc. (NYSE:NNN), one of the best dividend stocks, currently pays a quarterly dividend of $0.58 per share. The company boasts an impressive track record of dividend growth, with 35 consecutive years of increasing payouts—a feat matched by only two other REITs. As of December 16, the stock has a dividend yield of 5.45%.
In the third quarter of 2024, NNN REIT, Inc. (NYSE:NNN) reported $218.6 million in revenue, reflecting a 6.55% increase compared to the same period last year. Funds from operations (FFO) grew to over $154 million, from $147.2 million in the prior year. By September 30, 2024, the company maintained a strong occupancy rate of 99.3%, with an average remaining lease term of 10.0 years. During the quarter, it invested $113.6 million in properties, acquiring eight assets totaling approximately 626,000 square feet of leasable space at an initial cash cap rate of 7.6%. Moreover, the company sold nine properties for $20.0 million, earning $7.8 million in gains from these transactions.
The number of hedge funds tracked by Insider Monkey owning stakes in NNN REIT, Inc. (NYSE:NNN) grew to 20 in Q3 2024, from 16 in the previous quarter. The collective value of these stakes is more than $230.5 million.
8. National Fuel Gas Company (NYSE:NFG)
Number of Hedge Fund Holders: 21
National Fuel Gas Company (NYSE:NFG) is an American natural gas distribution company that engages in the exploration and development of natural gas and oil reserves. In the most recent quarter, the company reached significant milestones aimed at supporting long-term growth in earnings and free cash flow. Distribution Corporation finalized a multi-year settlement for its New York rate case, which is anticipated to receive approval in the coming months. In addition, Supply Corporation submitted a certificate application for the 190,000 dekatherms per day Tioga Pathway Project, expected to commence operations by late 2026. The stock has surged by over 20% since the start of 2024.
In fiscal Q4 2024, National Fuel Gas Company (NYSE:NFG) reported revenue of $372 million, which grew modestly by 0.85% from the same period last year. Pipeline & Storage segment revenues rose by $33.2 million, or 9%, compared to the previous year, mainly driven by the settlement of the Supply Corporation rate case, which resulted in higher rates starting in February 2024. In the E&P segment, hedging-related gains of $61 million contributed to a $0.07 per Mcfe boost in natural gas price realizations, even as NYMEX prices dropped by $0.40 per MMBtu compared to the previous year.
In FY24, National Fuel Gas Company (NYSE:NFG) generated over $1 billion in operating cash flow. This strong cash position makes the company one of the strongest dividend payers. It currently offers a quarterly dividend of $0.515 per share and has stretched its dividend growth streak to 54 years. With a dividend yield of 3.37% as of December 16, NFG is one of the best dividend stocks in the mid-cap space.
National Fuel Gas Company (NYSE:NFG) was included in 21 hedge fund portfolios at the end of Q3 2024, the same as in the previous quarter, as per Insider Monkey’s database. The stakes held by these hedge funds have a collective value of roughly $214 million. Among these hedge funds, GAMCO Investors was the company’s leading stakeholder in Q3.
7. Silgan Holdings Inc. (NYSE:SLGN)
Number of Hedge Fund Holders: 25
Silgan Holdings Inc. (NYSE:SLGN) is a Connecticut-based manufacturing company that specializes in packaging for consumer goods. The company recently completed the acquisition of Weener Plastics, welcoming 4,000 new members to the Silgan team. This acquisition enhances the scope and scale of its leading global dispensing business. Earlier this year, the company finalized an agreement to acquire Weener Plastics Holdings, a German packaging company previously majority-owned by U.K. investment manager 3i Group, for an enterprise value of €838 million, approximately $908 million. Since the start of 2024, the stock has surged by 20%.
Silgan Holdings Inc. (NYSE:SLGN) reported mixed earnings in the third quarter of 2024. The company posted revenue of $1.75 billion, which fell by 3.22% from the same period last year. The revenue also missed analysts’ estimates by $83.4 million. That said, the company’s global dispensing business achieved another quarter of double-digit growth in dispensing products, solidifying its position as the preferred partner for the world’s most renowned brands, supported by its innovative solutions and superior service model. Meanwhile, the Metal Containers segment reached a significant milestone, recording high single-digit growth in pet food and renewing its long-standing relationship with its largest Metal Containers customer through an extended long-term contract.
In addition, Silgan Holdings Inc. (NYSE:SLGN) has a strong balance sheet. The company ended the quarter with $370 million available in cash and cash equivalents, up from $307 million in the same quarter last year. It started paying dividends in 2004 and has raised its payouts every year since then, which makes SLGN one of the best dividend stocks in the mid-cap space. Currently, it offers a quarterly dividend of $0.19 per share and has a dividend yield of 1.40%, as of December 16.
According to Insider Monkey’s database of Q3 2024, 25 hedge funds held stakes in Silgan Holdings Inc. (NYSE:SLGN), up from 23 in the preceding quarter. These stakes have a consolidated value of more than $121.4 million.
6. Flowers Foods, Inc. (NYSE:FLO)
Number of Hedge Fund Holders: 26
Flowers Foods, Inc. (NYSE:FLO) ranks sixth on our list of the best mid-cap dividend aristocrat stocks. The American company specializes in producing and marketing bakery products. With a strong presence in the Southeast and Southwest, where it holds more than 30% market share, FLO is home to well-known brands like Wonder, Nature’s Own, and Tasty Cake. The company follows a strategy centered on consistent revenue growth and margin expansion, targeting annual EBITDA growth of 4-6% while aiming for sales growth of 1-2%. By focusing on higher-margin product lines, such as organic and gluten-free options, the company is able to boost its earnings potential.
In the third quarter of 2024, Flowers Foods, Inc. (NYSE:FLO) reported revenue of $1.2 billion, down 0.73% from the same period last year. Net income rose by $111.7 million to reach $65.0 million, mainly driven by higher operating income from a reduction in legal settlements and related costs, though this was partly offset by increased net interest expenses. The company significantly outperformed the bread category, with tracked channel sales growing both in units and dollars. These results were achieved despite challenges from a strained consumer environment, which particularly affected its sweet baked goods and fast food businesses.
Flowers Foods, Inc. (NYSE:FLO) also has a strong cash generation. In the first nine months of the year, the company generated $282.4 million in operating cash flow. During this period, the company paid $152.5 million in dividends to shareholders. Moreover, it has raised its payouts for 22 years in a row. The company offers a quarterly dividend of $0.24 per share and has a dividend yield of 4.58%, as of December 16.
Insider Monkey’s database of Q3 2024 indicated that 25 hedge funds held stakes in Flowers Foods, Inc. (NYSE:FLO), compared with 26 in the previous quarter. The overall value of these stakes is over $313.3 million.
5. Portland General Electric Company (NYSE:POR)
Number of Hedge Fund Holders: 26
Portland General Electric Company (NYSE:POR) is an Oregon-based public utility company that transmits, generates, and distributes electricity. Although the company is not widely recognized in the utility sector, it benefits from a unique feature in Oregon: Transpacific communication cables connect in Portland General Electric’s service area. This makes the utility a key hub for the technology industry, particularly as a prime location for data centers. The company anticipates industrial demand to increase significantly, projecting a 7.5% annual growth rate. In the past 12 months, the stock has surged by just roughly 3%.
In the third quarter of 2024, Portland General Electric Company (NYSE:POR) posted revenue of $929 million, which showed a 16% hike from the same period last year. Total revenues rose driven by increased demand from semiconductor manufacturing and technology infrastructure customers, higher wholesale revenues, and the recovery of capital, operating, and power costs. The company is making significant progress in its ongoing RFP process to secure the next generation of reliable, clean, and cost-effective resources that will drive customer growth and further its shared decarbonization objectives.
Portland General Electric Company’s (NYSE:POR) cash generation makes it a strong dividend payer. Year-to-date, the company’s operating cash flow was $608 million, growing significantly from $331 million in the prior-year period. On October 21, it announced a quarterly dividend of $0.50 per share, which was consistent with its previous dividend. The company holds an 18-year track record of dividend growth, which makes POR one of the best dividend stocks in the mid-cap space. The stock’s dividend yield on December 16 came in at 4.52%.
Portland General Electric Company (NYSE:POR) was a popular buy among elite funds at the end of Q3 2024 as the hedge fund positions in the company grew to 26, from 21 in the previous quarter, according to Insider Monkey’s database. The stakes owned by these funds have a total value of approximately $200 million.
4. Graco Inc. (NYSE:GGG)
Number of Hedge Fund Holders: 27
Graco Inc. (NYSE:GGG) is an American industrial manufacturing company that specializes in fluid-handling systems and products. The company is highly committed to continuous innovation, consistently investing around 4% of its revenue in research and development (R&D), more than twice the average spent by its peers. By dedicating more resources to R&D, Graco collaborates closely with its customers to develop tailored products and accessories that meet their specific needs. This partnership fosters strong, lasting relationships, creating a significant competitive advantage for the company’s operations. In the past six months, the stock has surged by over 9%.
Graco Inc. (NYSE:GGG) reported revenue of $520 million in the third quarter of 2024, which fell by 4% from the same period last year. The company continued to face weak demand in its core end markets, particularly in the Asia Pacific region, which negatively impacted sales for the third quarter. The decline in demand was broad-based, with the Industrial and Process segments experiencing the most significant effects. However, despite the lower volume, the company’s gross margin remained strong.
Madison Investments highlighted the strengths of Graco Inc. (NYSE:GGG)’s business in its Q3 2024 investor letter. Here is what the firm has to say:
“During the quarter we added three new holdings: Graco Inc. (NYSE:GGG), Lithia Motors, and Asbury Automotive. Graco is the leading manufacturer of fluid handling equipment designed for difficult-to-handle materials with high viscosities, abrasive and corrosive properties, or precise ratio control. While the company has customers across several cyclical end-markets, around 40% of revenue is from parts and accessories, which have a more stable demand profile. Graco’s premium products provide a strong return on investment (ROI) for its customers, helping to reduce their use of labor, material, and energy as well as improve quality and environmental performance. The company’s products also represent a small portion of an end users’ total expense. As a result, Graco has strong pricing power and best-in-class margins, including gross margin above 50% and earnings before interest and taxes (EBIT) margin approaching 30%. We’ve long admired this business and their exceptional management team. With the stock underperforming on general economic weakness, valuation in the shares appeared reasonable, providing a good entry point.”
On December 6, Graco Inc. (NYSE:GGG) declared a 7.8% hike in its quarterly dividend to $0.275 per share. This marked the company’s 23rd consecutive year of dividend growth, which makes GGG one of the best dividend stocks on our list. The stock has a dividend yield of 1.15%, as of December 16.
With a collective stake value of over $375.6 million, 27 hedge funds tracked by Insider Monkey held stakes in Graco Inc. (NYSE:GGG) at the end of Q3 2024. With over 1.1 million shares, Fundsmith LLP was the company’s leading stakeholder in Q3.
3. Donaldson Company, Inc. (NYSE:DCI)
Number of Hedge Fund Holders: 29
Donaldson Company, Inc. (NYSE:DCI) is a Minnesota-based filtration company that is engaged in the production of air filters used in a wide range of industries. The company is focused on growing its market presence, strengthening its customer base, and improving its product offerings through acquisitions. In August 2024, Donaldson acquired a 49% minority stake in Medica S.p.A. The addition of Medica’s technology and expertise in filtration products will allow the company to enter new markets and expand its offerings in the medical device and water purification industries. The stock is up by nearly 11% since the start of 2024.
In fiscal Q1 2025, Donaldson Company, Inc. (NYSE:DCI) reported revenue of over $900 million, which showed a 6.3% growth from the same period last year. Nearly all the segments of the company showed growth during the quarter, with the Aerospace and Defense category emerging as the winner. The segment reported a 26.8% growth on a YoY basis.
Heartland Advisors made the following comment about Donaldson Company, Inc. (NYSE:DCI) in its Q1 2024 investor letter:
“Industrials. Donaldson Company, Inc. (NYSE:DCI), a filtration manufacturer with more than a century of experience in air, lubricant, hydraulic, and fuel filtration applications, is a new position this quarter.
DCI, an example of a stock in our quality value bucket, typically trades at a premium to its peers, an indication of the market’s appreciation for its economically resilient revenues and high profit margins. However, the company has faced margin headwinds lately, in part owing to heavy upfront investment in its fast-growing life sciences segment. Moreover, several of DCI’s cyclical end markets, including agricultural, mining, and construction equipment, have been under pressure as lower equipment utilization has translated into fewer filter replacements.
We think investors have already incorporated the life sciences operating losses in the company’s valuation, but we believe the segment will ultimately be accretive to revenue growth and margins. If life sciences operating margin approaches the corporate average of around 15% over the next two years, that could translate to a 10-15% lift in total earnings power. For context, this segment’s operating margin exceeded 20% prior to the current investment phase…” (Click here to read the full text)
Donaldson Company, Inc. (NYSE:DCI) ended the quarter with over $221 million available in cash and cash equivalents, compared with $232.7 million last year. Its operating cash flow for the quarter came in at $73 million. This cash generation was sufficient to support dividend payments worth $32.4 million. The company’s quarterly dividend comes in at $0.27 per share and has a dividend yield of 1.50%, as of December 16. It is one of the best mid-cap dividend aristocrats on our list as the company has raised its payouts for 29 consecutive years.
As per Insider Monkey’s database of Q3 2024, 29 hedge funds owned stakes in Donaldson Company, Inc. (NYSE:DCI), growing from 26 in the previous quarter. These stakes have a total value of over $308.4 million. Among these hedge funds, Impax Asset Management was the company’s leading stakeholder in Q3.
2. The Toro Company (NYSE:TTC)
Number of Hedge Fund Holders: 33
The Toro Company (NYSE:TTC) ranks second on our list of the best mid-cap dividend aristocrat stocks. The American company manufactures outdoor products for residential, commercial, and agricultural use. The company’s sales include a variety of products, such as mowers, turf maintenance equipment, irrigation systems, underground construction tools, and snow and ice management solutions.
According to analysts, cyclical inventory fluctuations will always impact The Toro Company’s (NYSE:TTC) stock, but with most of its products having a replacement cycle of three to five years, the effects tend to balance out over time. Trusted to maintain some of the world’s most prestigious fields, the company’s equipment continues to be considered best in class. The stock is down by over 8% since the start of 2024.
In the third quarter of 2024, The Toro Company (NYSE:TTC) reported revenue of $1.16 billion, which saw a 7% growth from the same period last year. The company experienced significant growth in its residential segment, driven by a strong performance in the mass channel, as anticipated following last year’s aggressive destocking, along with the strategic addition of Lowe’s this year. In its professional segment, which includes underground construction, golf, and grounds businesses, the company successfully boosted output and shipments to meet sustained demand and address the high order backlog. However, as the summer went on, both segments saw increased caution from homeowners and lawn care dealers due to macroeconomic factors, leading to lower-than-expected shipments of residential and professional lawn care products to the dealer channel.
In the first nine months of the year, The Toro Company (NYSE:TTC) generated $330 million in operating cash flow, up from $154.7 million in the same period last year. On December 10, the company declared a 5.6% increase in its quarterly dividend to $0.38 per share. Through this increase, the company stretched its dividend growth streak to 16 years. The stock offers a dividend yield of 1.76%, as of December 16.
Of the 900 hedge funds tracked by Insider Monkey at the end of Q3 2024, 33 hedge funds held stakes in The Toro Company (NYSE:TTC), the same as in the previous quarter. These stakes have a total value of over $1 billion. Select Equity Group owned the largest stake in the company in Q3.
1. Williams-Sonoma, Inc. (NYSE:WSM)
Number of Hedge Fund Holders: 35
Williams-Sonoma, Inc. (NYSE:WSM) is a specialty retailer that owns a portfolio of premium home goods brands, such as its flagship Williams-Sonoma, Pottery Barn, Pottery Barn Kids, West Elm, and Rejuvenation. Like many other retailers in the discretionary and home goods sectors, the company has experienced a decline in sales due to inflation in the post-pandemic period, following the surge in home goods demand during the pandemic. However, the stock is generating strong returns this year, surging by nearly 91% since the start of 2024.
Williams-Sonoma, Inc. (NYSE:WSM) generated $1.8 billion in revenues in the third quarter of 2024, which, though fell by 3% on a YoY basis, beat analysts’ estimates by $16 million. The company is attracting investors’ attention as it raises its full-year guidance. It now expects full-year revenues to decrease by between 3% and 1.5% and is increasing its operating margin guidance by 40 basis points, projecting a range of 17.8% to 18.2%.
From a dividend point of view, Williams-Sonoma, Inc. (NYSE:WSM)’s cash generation is very strong. In Q3 2024, the company posted an operating cash flow of $254 million and returned $73 million to shareholders through dividends. It offers a quarterly dividend of $0.57 per share and has a dividend yield of 1.18%, as of December 16. The company has raised its payouts for 15 consecutive years.
Williams-Sonoma, Inc. (NYSE:WSM) was a part of 35 hedge fund portfolios at the end of Q3 2024, as per Insider Monkey’s database. The stakes held by these funds have a collective worth of more than $968 million.
Overall, Williams-Sonoma, Inc. (NYSE:WSM) ranks first on our list of the best dividend stocks. While we acknowledge the potential for WSM 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 time frame. If you are looking for an AI stock that is more promising than WSM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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