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Three Dividend Aristocrat Stocks for Investors to Consider

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For income investors, stocks that are considered dividend Aristocrats are surely viable options. These companies have raised their dividend for at least 25 consecutive years. Obviously, the dividend of stocks that meet the requirements to be an Aristocrat are secure. Dividend Aristocrat stocks may be a useful option for other investors as well. Having dividend paying stocks in the portfolio produces useful diversification, in addition to income returns.

Even better, is if these stocks also have good growth prospects, most notably in rising earnings estimates. Let’s take a look at three highly ranked dividend Aristocrats that fit the bill.

 Albemarle ((ALB - Free Report) )

Albemarle is a premier specialty chemicals company with leading positions in attractive end markets globally. Albemarle is a leader in the production of highly-engineered specialty chemicals geared to meet customer requirements across numerous end markets including petroleum refining, consumer electronics, energy storage, construction and automotive.

Dividend History: ALB has a 0.53% annual dividend yield at $1.58 a share. The annualized dividend growth over the last five years is 4.81%. ALB currently has a 20% payout ratio and has raised its dividend for 28 consecutive years. Albemarle’s dividend yield may not be high, but what it lacks in size is more than made up in safety, stability, and growth potential.

ALB currently sports a Zacks Rank #1 (Strong Buy) with EPS estimates on the rise. Albemarle’s earnings are expected to climb an impressive 425% to $21.22 a share in 2022, based on Zacks estimates. Fiscal 2023 calls for another 22% earnings growth. Top line growth is expected as well, with sales set to jump 123% this year and another 29% in FY23 to $9.63 billion.

Year to date, ALB is up +28% to outperform the S&P 500, which is down -14%. ALB has also outperformed its Zacks Sub Industry, which is down -7% YTD.  ALB is up an impressive +154% over the last five years, outperforming the benchmark at +83%. ALB has also drastically outperformed its Zacks Sub Industry in this time span.

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Image Source: Zacks Investment Research

ALB is clearly a leader in the Chemical – Diversified Industry. ALB currently trades around $297 a share. Despite trading near its 52-week highs, the reliable dividend and massive top and bottom line growth may be reason for investors to consider the stock. ALB has a forward P/E of 14.1X, above the industry average of 9.9X. However, ALB trades at a discount to its five-year median of 19.8X and well of its highs of 76.1X.

ALB is expected to have 32% EPS growth over the next five years. ALB has also beat earnings expectations for 10 consecutive quarters dating back to May of 2020.

Automatic Data Processing ((ADP - Free Report) )

Technology solutions leader Automatic Data Processing (ADP - Free Report) is also worth a look for dividend seekers. This dividend Aristocrat provides cloud-based Human Capital Management (HCM) technology which includes payroll, talent management, Human Resources and benefits administration. ADP services also include time and attendance management to employers around the world.

Dividend History: ADP has a 1.70% annual dividend yield at $4.16 a share. Automatic Data Processing’s dividend growth over the last five years is 12.23% with a payout ratio of 59%. ADP has raised its dividend for 47 consecutive years.

ADP’s year to date performance has been considerably better than its Outsourcing Industry peers. ADP is up about +0.4% YTD vs. its peer groups -14% drop. Over the last five years ADP is up an impressive +153% to outperform the benchmark and its peer group at +44%.

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Image Source: Zacks Investment Research

ADP is roughly 6% of its 52-week highs, trading around $244 a share. ADP has a forward P/E of 30.3X, above the industry average of 13.5X. However, this is below its five year high of 36.2X and close to the median of 31.3X. What is intriguing for the stock is the rising earnings estimates.

According to Zacks estimates, ADP earnings are expected to jump +15% to $8.05 a share in 2022. Fiscal 2023 earnings are expected to be up another 12%. Top line growth is expected as well with sales up +8% this year and another 7% in FY23 to $19.19 billion.

ADP currently lands a Zacks Rank #2 (Buy) and its Outsourcing Industry is in the top 27% of over 250 Zacks Industries.

Chubb Limited ((CB - Free Report) )

Another dividend Aristocrat for investors to consider is Chubb Limited (CB - Free Report) . Chubb Limited is one of the world’s largest providers of property and casualty (P&C) insurance and reinsurance. Chubb Limited is the largest publicly traded P&C insurer. Through acquisitions, Chubb Limited has diversified its specialty lines to include marine, medical risk, excess property, environmental and terrorism insurance and has operations in 54 countries and territories.   

Dividend History: CB has a 1.70% annual dividend yield at $3.32 a share. The annualized dividend growth over the last five years is 3.16% with a payout ratio of 23%. CB has raised its dividend for 29 consecutive years.

Chubb Limited is up roughly +3% in 2022 which has underperformed its peer groups +16% YTD performance. However, CB has outperformed the S&P 500 YTD and rising earnings estimates along with its reliable dividend make the stock worth a look. CB has a forward P/E of 12.3X, which is on par with the industry average of 12.6X. From the nearby chart, we can see that CB is trading at a modest discount to its five-year median of 14X and well off the highs of 22.2X. Currently trading around $197 a share, CB is 10% off its 52-week highs. Better still, the average Zacks price target of $227.64 suggests upside of 17% from current levels.

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Image Source: Zacks Investment Research

According to Zacks estimates, CB earnings are expected to jump +25% to $15.75 a share in 2022. Fiscal 2023 earnings are expected to climb another 8%. Top line growth is expected as well with sales projected to be up +4% in 2022 and another 9% in FY23 to $47.41 billion.

Chubb Limited is also expected to have 10% EPS growth over the next five years which may catch the attention of longer-term investors. CB currently lands a Zacks Rank #2 (Buy) and has also beat earnings expectations for 7 consecutive quarters.

Bottom Line

Positive earnings estimate revisions along with the safety and security of these dividend Aristocrats make them suitable investments to consider. Outside of income investing, these three dividend Aristocrats could also be an option for diversification in the portfolio.


In-Depth Zacks Research for the Tickers Above


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Automatic Data Processing, Inc. (ADP) - free report >>

Chubb Limited (CB) - free report >>

Albemarle Corporation (ALB) - free report >>

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