In this article, we discuss 10 dividend aristocrats with over 3% yield. If you want to skip our detailed analysis of these stocks, go directly to 5 Dividend Aristocrats with Over 3% Yield.
Dividend aristocrats are S&P 500 constituents which have consistently increased their dividends for at least 25 years.
With the rising inflation globally, dividend stocks offer a unique hedge for investors. It is a good bet to diversify an investment portfolio with quality names that offer sustainable dividend payouts and strong cash flow positions, according to Wharton School’s finance professor, Jeremy Siegel. He described stocks as “real assets” that will be valued even during inflationary periods, and the only inflation-protected crop of stocks will be the dividend payers in the current market.
Siegel stated that inflation will erode the value of money that is just sitting in banks, whereas, treasuries, TIPS, and bonds offer menial returns. He reiterated that dividend paying stocks are the “way to go” in this market.
Dividend Investing Amid Rising Rates
Liz Young, head of investment strategy at SoFi, an American online personal finance company, stated in a CNBC interview on January 25 that investors need to focus on companies that offer strong earnings in the 2022 earnings season, and diversification of stocks is key. She pointed to strong valuations, solid cash flows, and resilient earnings as indicators of stable stocks in the rising inflationary environment. She also stated that markets are overreacting to the Fed’s announcements.
Similarly, Marc Lasry, founder of Avenue Capital Management, suggested that the Fed invested $3 trillion in the economy at the beginning of the COVID-19 pandemic and indulged in quantitative easing. Now, the market has run out of the $3 trillion relief package and the Fed is tightening its money controls. However, Lasry is of the opinion that the Fed will keep a keen eye on the market conditions, and if the rising interest and inflation rates put the market in correction or the US GDP slips, the Fed will once again take charge of the situation. He also believes that investors are overreacting to the impending news regarding elevated rates.
Since the stock market is in a decline, Tom Lee, the managing partner of Fundstrat Global Advisors, advised investors to take the opportunity and buy the dips in 2022.
Since dividend stocks are acknowledged to be strategic hedges against inflation, high yielding dividend aristocrats like Chevron Corporation (NYSE:CVX), International Business Machines Corporation (NYSE:IBM), and Exxon Mobil Corporation (NYSE:XOM) are smart investments heading into 2022.
Photo by Viacheslav Bublyk on Unsplash
Our Methodology
We used the S&P 500 dividend aristocrats list for 2022 and shortlisted 10 stocks that offer over 3% dividend yield. For additional context on each company, we have mentioned the latest dividend payouts, analyst ratings, and the hedge fund sentiment surrounding the holdings.
Dividend Aristocrats with Over 3% Yield
10. Kimberly-Clark Corporation (NYSE:KMB)
Dividend Yield as of January 25: 3.30%
Number of Hedge Fund Holders: 28
Number of Years of Consecutive Dividend Increases: 49
Kimberly-Clark Corporation (NYSE:KMB) is a Texas-based multinational corporation that manufactures personal care consumer products, which are mostly paper based. As of January 25, Kimberly-Clark Corporation (NYSE:KMB) offers a dividend yield of 3.30%.
On November 4, Kimberly-Clark Corporation (NYSE:KMB) declared a quarterly dividend of $1.14 per share, in line with previous. The dividend was paid on January 4, to shareholders of record on December 10. Kimberly-Clark Corporation (NYSE:KMB) has consistently increased its dividends for 49 years, and has been a notable long-term dividend aristocrat.
JPMorgan analyst Andrea Teixeira on January 13 raised the price target on Kimberly-Clark Corporation (NYSE:KMB) to $127 from $122 and kept an Underweight rating on the shares. The analyst expects Q4 “to be the worst from a profitability and sales point of view” with most household and personal care companies likely reporting sales deceleration on a two-year stack. However, she believes the “worst in cost pressures will be behind in Q4”.
Among the hedge funds monitored by Insider Monkey in the third quarter of 2021, 28 funds were bullish on Kimberly-Clark Corporation (NYSE:KMB), down from 37 funds in the preceding quarter. Holocene Advisors is the largest stakeholder of the company, with 945,712 shares worth $125.25 million.
Kimberly-Clark Corporation (NYSE:KMB) has a reliable dividend history that has gained the attention of the smart money, just like Chevron Corporation (NYSE:CVX), International Business Machines Corporation (NYSE:IBM), and Exxon Mobil Corporation (NYSE:XOM).
9. 3M Company (NYSE:MMM)
Dividend Yield as of January 25: 3.44%
Number of Hedge Fund Holders: 46
Number of Years of Consecutive Dividend Increases: 63
3M Company (NYSE:MMM) is an American multinational conglomerate that focuses its operations on multiple business segments including safety and industrials, transportation, electronics, health care, and consumer products.
3M Company (NYSE:MMM) on November 9 declared a quarterly dividend of $1.48 per share, in line with previous. The dividend was paid on December 12, to shareholders of record on November 19. 3M Company (NYSE:MMM) has delivered consecutively increasing dividends for 63 years, and the yield as of January 25 stands at 3.44%.
Bernstein analyst Brendan Luecke initiated coverage of 3M Company (NYSE:MMM) with a Market Perform rating and a $175 price target on January 11, citing inflation and PFAS Stewardship. The analyst observed that 3M Company (NYSE:MMM) stumbled in 2019 and it still hasn’t recovered. He does “not lose sleep” over its macro-driven topline but is concerned about margins and the company’s ability to deliver operating leverage in the long-term.
On December 14, Neogen Corporation (NASDAQ:NEOG), an American food safety company, and 3M Company (NYSE:MMM) announced that they have entered into a definitive agreement where 3M Company (NYSE:MMM) will separate its food safety business and simultaneously combine it with Neogen Corporation (NASDAQ:NEOG) in a transaction that is intended to be tax-efficient for 3M Company (NYSE:MMM) and its shareholders for U.S. federal income tax purposes.
In 3M Company (NYSE:MMM)’s press release on January 25, the company declared a Q4 GAAP EPS of $2.31, beating consensus estimates by $0.29. Revenue for the fourth quarter equaled $8.61 billion, outperforming estimates by $30 million. On a geographic basis, 3M Company (NYSE:MMM)’s total sales grew 2.1% in the Americas, but decreased 0.2% in Asia Pacific and 4.5% in Europe, Middle East, and Africa.
Among the hedge funds tracked by Insider Monkey in Q3 2021, AQR Capital Management is one of the leading stakeholders of 3M Company (NYSE:MMM), with 1.3 million shares worth approximately $231 million. Overall, 46 hedge funds were bullish on the stock in the third quarter of 2021.
8. Federal Realty Investment Trust (NYSE:FRT)
Dividend Yield as of January 25: 3.50%
Number of Hedge Fund Holders: 21
Number of Years of Consecutive Dividend Increases: 54
Federal Realty Investment Trust (NYSE:FRT) invests mainly in retail spaces in the Northeastern United States, the Mid-Atlantic states, California, and South Florida.
On August 5, Federal Realty Investment Trust (NYSE:FRT) declared a $1.07 quarterly per share dividend, which was paid on October 15, to shareholders of record on September 22. Federal Realty Investment Trust (NYSE:FRT) has increased dividends steadily for 54 years back-to-back.
JPMorgan analyst Michael Mueller upgraded Federal Realty Investment Trust (NYSE:FRT) on December 20 to Overweight from Neutral with a price target of $142, up from $135. The company could post “outsized” funds from operations growth over the next few years relative to the strip center group, the analyst told investors in a research note.
Federal Realty Investment Trust (NYSE:FRT) on December 2 announced its plans to reorganize into an umbrella partnership real estate investment trust, or an UPREIT. Under the UPREIT structure, a new holding company would become the publicly traded company, while Federal Realty Investment Trust (NYSE:FRT) will convert into a limited partnership that is controlled by the holding company. This will make it easier for Federal Realty Investment Trust (NYSE:FRT) to acquire properties in tax deferred structures without any significant impact to current shareholders, lenders, and other involved parties.
According to Insider Monkey’s Q3 data, Waterfront Capital Partners is the leading stakeholder of Federal Realty Investment Trust (NYSE:FRT), owning 605,515 shares worth $71.4 million. Overall, 21 hedge funds were bullish on the stock in the third quarter of 2021.
7. Walgreens Boots Alliance, Inc. (NASDAQ:WBA)
Dividend Yield as of January 25: 3.76%
Number of Hedge Fund Holders: 37
Number of Years of Consecutive Dividend Increases: 46
Headquartered in Illinois, Walgreens Boots Alliance, Inc. (NASDAQ:WBA) is a holding company that owns pharmacies, as well as multiple pharmaceutical manufacturing and distribution companies. Walgreens Boots Alliance, Inc. (NASDAQ:WBA) is a notable dividend aristocrat, offering a rich dividend history of 46 consecutive dividend increases.
Walgreens Boots Alliance, Inc. (NASDAQ:WBA) on October 20 declared a $0.4775 per share quarterly dividend, in line with previous. The dividend was paid on December 10, to shareholders of record on November 15.
Walgreens Boots Alliance, Inc. (NASDAQ:WBA) announced its fourth quarter results for 2021 on January 6, posting earnings per share of $1.68, exceeding estimates by $0.34. Revenue for the period equaled $33.90 billion, beating estimates by $946.75 million.
Citing an increased outlook of COVID-19 testing and vaccine benefits, Mizuho analyst Ann Hynes on January 10 raised the price target on Walgreens Boots Alliance, Inc. (NASDAQ:WBA) to $56 from $51 and kept a Neutral rating on the shares.
In the third quarter of 2021, Stephen Dubois’ Camber Capital Management, the largest stakeholder of the company, held 4 million shares of Walgreens Boots Alliance, Inc. (NASDAQ:WBA), worth $188.2 million. Overall, 37 hedge funds were bullish on the stock in Q3 2021.
Here is what Miller Howard Investments has to say about Walgreens Boots Alliance, Inc. (NASDAQ:WBA) in its Q3 2021 investor letter:
“While optimistic about a recovery, we continue to balance our cyclical holdings with dividend-payers in stable, less economically-sensitive industries. We took a position in Walgreens (WBA) based on its low valuation, high dividend yield, and stable business model.”
6. Consolidated Edison, Inc. (NYSE:ED)
Dividend Yield as of January 25: 3.85%
Number of Hedge Fund Holders: 24
Number of Years of Consecutive Dividend Increases: 47
Consolidated Edison, Inc. (NYSE:ED) is an American energy company that supplies electricity and gas throughout the New York metropolitan area. Consolidated Edison, Inc. (NYSE:ED) has consecutively raised its dividends for 47 years, making it a reliable dividend aristocrat.
Consolidated Edison, Inc. (NYSE:ED) on January 20 declared a $0.79 per share quarterly dividend, which is a 1.9% increase from its prior dividend of $0.78. The dividend will be paid on March 15, to shareholders of record on February 16.
On December 22, RBC Capital analyst Shelby Tucker raised the price target on Consolidated Edison, Inc. (NYSE:ED) to $85 from $78 but kept a Sector Perform rating on the shares. The analyst told investors that Consolidated Edison, Inc. (NYSE:ED) has the potential to capitalize on significant investment opportunities since the state has “ambitious” clean energy goals, but the regulatory environment in New York is not ideal.
Electron Capital Partners is the biggest Consolidated Edison, Inc. (NYSE:ED) stakeholder as of Q3 2021, owning 1.35 million shares worth $98.4 million. Overall, 24 hedge funds were long Consolidated Edison, Inc. (NYSE:ED) in the third quarter, down from 30 funds in the prior quarter.
Chevron Corporation (NYSE:CVX), International Business Machines Corporation (NYSE:IBM), and Exxon Mobil Corporation (NYSE:XOM) have been offering investors consistent dividend increases for over 25 years, just like Consolidated Edison, Inc. (NYSE:ED).
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Disclosure: None. 10 Dividend Aristocrats with Over 3% Yield is originally published on Insider Monkey.
