We recently published a list of the 15 Best Dividend Aristocrat Stocks with Over 3% Yield. In this article, we are going to take a look at where Eversource Energy (NYSE:ES) stands against other best dividend aristocrats with a high yield.
Dividend Aristocrats are the companies that have raised their payouts for 25 consecutive years or more. Dividends have been an important part of the overall market return for a very long time. According to a report by S&P Global, dividends have represented approximately 31% of the total return of the broader market from 1926 to February 2025, while capital appreciation has accounted for 69%.
Growing dividends consistently highlight the companies’ confidence in their firms’ prospects as market participants see this as a sign of corporate maturity and strong balance sheets. Dividend aristocrats reveal characteristics of both capital growth and dividend income, as opposed to alternative income strategies that mainly pay attention to pure yield or pure capital appreciation.
Investors are more inclined toward dividend growth stocks, and the performance of these equities has also remained stable over the years. According to a report by S&P Global, dividend aristocrats have reported higher returns with lower volatility over the long run as compared to the broader market, which eventually resulted in higher risk-adjusted returns.
In addition to dividend growth, dividend yield is also an important component of total return. The ability to increase dividends does not come at the expense of lower yields; in fact, the dividend aristocrats index has consistently delivered higher yields than its benchmark. The index had dividend yields within the range of 2.0% to 2.8% over the 28-year period, as reported by S&P Global. Moreover, the average dividend yield of the index was 2.5%, compared with a 1.8% dividend yield of the broader market.
As highlighted above, dividend aristocrats have shown lower volatility as compared to the broader market index. Their ability to provide downside protection can be seen in the upside and downside capture ratios. The S&P report highlighted that the dividend aristocrats index has outperformed the market index 66.67% of the time in down months and 43.88% of the time in up months. Notably, the index also has a lower drawdown level compared with the benchmark index. In addition, the dividend aristocrats index provided an average excess return of 0.87% in down months over the broader market. To further emphasize their low volatility, the report mentioned that the dividend aristocrats had a market beta of 0.8 between December 29, 1989, and February 28, 2025.
With the AI boom and tech stocks taking center stage, dividend stocks are somehow overlooked by the market. However, the recent market sell-off has restored their importance, as the Dividend Aristocrats Index has surged by over 2% since the start of 2025, compared with a nearly 5% decline in the broader market. The significance of these equities is much more apparent over long periods of time. According to the S&P Global report, the dividend aristocrats index outperformed its benchmark by an average of 1.59% per year between January 2000 and February 2025. This outperformance was because of the fundamental characteristics of the constituents of the index.
An aerial view of a modern industrial plant with pollution control equipment visible in the frame.
Our Methodology
For this article, we scanned a list of the Dividend Aristocrat index, which tracks the performance of companies that have raised their payouts for 25 consecutive years or more. From that list, we picked 15 stocks with dividend yields above 3%, as of March 29. The stocks are ranked in ascending order of their dividend yields.
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Eversource Energy (NYSE:ES)
Dividend Yield as of March 29: 4.92%
Eversource Energy (NYSE:ES) is a Boston-based electric services company that offers essential energy services to its consumers. By opting to divest Aquarion, a transaction expected to be finalized by late 2025, the company aims to enhance its balance sheet while maintaining its focus on regulated electric and natural gas utility operations. Although certain challenges are expected in 2025, the company also sees substantial and appealing prospects for system investments. This is reflected in a 10 percent increase in its five-year investment plan through 2029, which is expected to reinforce regional infrastructure and contribute to the expansion of clean energy. These opportunities are seen as key drivers in achieving the company’s long-term growth target of 5 to 7 percent.
In the fourth quarter of 2024, Eversource Energy (NYSE:ES) reported a revenue of $2.97 billion, which showed a 10.2% growth from the same period last year. The company’s transmission segment generated $724.6 million in 2024, compared with $643.4 million in 2023. Its operating income and interest expense for the quarter came in at $347.8 million and $288.7 million, respectively.
Eversource Energy (NYSE:ES) is one of the recent additions to the Dividend Aristocrat Index. In January, the company announced a 5.2% hike in its quarterly dividend to $0.7525 per share. This marked the company’s 25th consecutive year of dividend growth, which makes it one of the best dividend aristocrat stocks on our list. As of March 29, the stock has a dividend yield of 4.92%.
Overall, ES ranks 2nd on our list of the best dividend aristocrat stocks. While we acknowledge the potential of ES 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 time frame. If you are looking for a deeply undervalued dividend stock that is more promising than ES but that trades at 10 times its earnings and grows its earnings at double digit rates annually, check out our report about the dirt cheap dividend stock.
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Disclosure: None. This article is originally published at Insider Monkey.
