We recently compiled a list of the Dividend Aristocrats Ranked By Yield: Top 10. In this article, we are going to take a look at where Federal Realty Investment Trust (NYSE:FRT) stands against the other dividend aristocrats.
Investors have always put income at the top of their list. And when it comes to raking in money, you can’t beat dividend stocks. Research by S&P Dow Jones Indices has demonstrated that over the long haul, dividend-paying companies have outperformed non-dividend companies and the broader market on a risk-adjusted basis. Though investing in high dividend yields is not advised by analysts, recent research indicates that dividend yield is a risk factor that pays off, historically earnings higher returns than a market-cap-weighted benchmark. When paired with other factors like volatility, quality, momentum, size, and value, dividend yield strategies can potentially tap into systematic sources of returns.
Dividend yield and dividend growth have always been a hot topic among investors. But little did they realize that dividend yield is a key piece of the puzzle when it comes to dividend growth. When it comes to the Dividend Aristocrats Index, the knack for increasing dividends for 25 straight years doesn’t mean sacrificing yield. The index has consistently outshone its benchmark by delivering higher yields, typically between 2% and 2.9% over the past 26 years ending 2023. On average, the index’s yield was 2.5%, compared to the market’s 1.8%. To read more about high dividend stocks, have a look at Best Dividend Stocks Yielding at Least 7% According to Hedge Funds.
In addition to offering solid yields, dividend aristocrats are also less volatile than other asset classes. According to a report by S&P Dow Jones Indices, the Dividend Aristocrats Index has outpaced the broader market over the long haul with less volatility, which is indicated by its higher risk-adjusted returns. The index’s ability to provide downside protection is evident in its upside and downside capture ratio. These stocks have outperformed the market in 69.34% of down months and 43.61% of up months. Moreover, the Dividend Aristocrats Index has experienced lower drawdowns compared to the benchmark index. The report further mentioned that the index delivered an average excess return of 1.05% during down months compared to the broad-based benchmark.
Data from 2023 highlights how eager companies are to boost their dividends. This isn’t just a knee-jerk move to lure investors; it’s backed by robust corporate balance sheets, with companies raking in more cash flows than ever before. According to Janus Henderson, corporate cash flow remained strong in 2023 across most sectors, giving companies ample resources for dividends and share buybacks. As a result, global dividend growth saw a 5% increase for the year, aligning with the long-term trend. The firm also gave a positive outlook for dividends in 2024. It said that dividends appear solidly supported this year, although one-time special dividends are expected to decrease from the record levels observed over the past three years. The firm’s forecast predicts $1.72 trillion in dividends for 2024, marking a 3.9% increase on a headline basis, which translates to a 5% growth rate on a headline basis.
There are many dividend aristocrats that offer solid yields to shareholders. In this article, we will take a look at some of the best dividend aristocrat stocks with high yields.
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 the highest dividend yields as of June 25 and arranged them in order from lowest to highest yield. We also measured hedge fund sentiment around each stock according to 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).
A wide-angle view of an urban skyline, representing the company’s investments in urban neighborhoods.
Federal Realty Investment Trust (NYSE:FRT)
Dividend Yield as of June 25: 4.34%
Federal Realty Investment Trust (NYSE:FRT) ranks fifth on our list of the best dividend aristocrat stocks. The American real estate investment trust company mainly invests in shopping centers and other entertainment properties. The company follows a different business approach compared to its peers. Unlike some of its competitors who aim to amass large property portfolios, Federal Realty Investment Trust (NYSE:FRT) prioritizes quality over quantity. As of the end of March 2024, the company maintains ownership of only 102 properties. However, these properties are highly attractive. It strategically acquires properties in and around major metropolitan areas characterized by substantial population density and high incomes. This has several benefits for the company. For example, during the pandemic, while many properties faced occupancy challenges, it received inquiries from tenants seeking to relocate from nearby locations to secure space within its properties.
Federal Realty Investment Trust (NYSE:FRT)’s strong performance in early 2024 is highlighted by achieving its highest first-quarter leasing volume ever, with over 566,000 square feet of comparable retail space leased. Moreover, the company successfully finalized leases for approximately 190,000 square feet of office space at its premier mixed-use destinations during the quarter. This demand highlights the company’s position as a leader in the shopping center industry.
In addition to maintaining a strong portfolio, Federal Realty Investment Trust (NYSE:FRT) has established an impressive track record of dividends. The company offers a quarterly dividend of $1.09 per share and has boosted its payouts for 56 consecutive years. With a dividend yield of 4.34% as of June 25, FRT is one of the best dividend aristocrat stocks on our list.
As of the end of the March quarter of 2024, 22 hedge funds in Insider Monkey’s database owned stakes in Federal Realty Investment Trust (NYSE:FRT), which remained unchanged from the previous quarter. The consolidated value of these stakes is over $244 million.
Overall FRT ranks 5th on our list of the best dividend aristocrats ranked by yield. You can visit Dividend Aristocrats Ranked By Yield: Top 10 to see the other dividend stocks that are on hedge funds’ radar. While we acknowledge the potential of FRT 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 FRT 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.