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Seeking Income? 3 Top-Ranked Dividend Aristocrats to Buy
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Dividends provide many clear benefits, including a passive income stream, the ability to reap maximum returns through dividend reinvestment, and a buffer against drawdowns in other positions.
Many investors pivot to the Dividend Aristocrats when looking to generate an income stream. After all, it’s easy to understand why – these companies have upped their payouts for at least 25 consecutive years, which displays their reliability.
And currently, several members of the club, including Caterpillar (CAT - Free Report) , PepsiCo (PEP - Free Report) , and Aflac (AFL - Free Report) , have seen their earnings outlooks shift positively, indicating bullishness among analysts.
For those interested in consistent and reliable payouts, let’s take a closer look at each.
Caterpillar
Caterpillar is the world's leading manufacturer of construction and mining equipment, off-highway diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. The stock is a Zacks Rank #1 (Strong Buy), with earnings expectations shifting positively over the last several months.
Image Source: Zacks Investment Research
Caterpillar shares currently yield 1.9% annually, paired with a payout ratio sitting sustainably at 26% of the company’s earnings. The payout has grown by nearly 8% annually over the last five years, reflecting the company’s shareholder-friendly nature.
Image Source: Zacks Investment Research
And the company’s growth trajectory is certainly worth highlighting, with earnings forecasted to climb 43% paired with a 12% sales bump in its current fiscal year (FY23). The stock carries a Style Score of “B” for Growth.
PepsiCo
PepsiCo is an American multinational beverage, food, and snack corporation headquartered in New York. The stock is currently a Zacks Rank #2 (Buy), with earnings expectations rising modestly higher across several timeframes.
Some could consider PEP shares slightly expensive, with the current 23.9X forward earnings multiple reflecting a hefty premium relative to the Zacks Consumer Staples sector.
Still, the current value is beneath the 24.7X five-year median and highs of 27.8X in 2022, making shares somewhat cheap on a relative basis.
Image Source: Zacks Investment Research
PEP shares yield a solid 2.8% annually paired with a payout ratio sitting at 70% of the company’s earnings. Over the last five years, the company’s dividend increases have translated to a 6% five-year annualized dividend growth rate.
Image Source: Zacks Investment Research
Aflac
Aflac, a current Zacks Rank #1 (Strong Buy), is an American insurance company and a massive supplier of supplemental insurance within the U.S. The company has seen modest positive earnings estimate revisions among all timeframes.
Image Source: Zacks Investment Research
AFL shares currently yield 2.2% annually, with the company sporting a 12% five-year annualized dividend growth rate. In addition, the company’s 30% payout ratio sits on the sustainable side.
Image Source: Zacks Investment Research
The company has consistently posted bottom line results above expectations, exceeding the Zacks Consensus EPS Estimate by an average of 8% across its last four releases. Just in its latest print, Aflac posted an 11% EPS beat and reported sales nearly 15% above the consensus.
Bottom Line
Many investors pivot to the Dividend Aristocrats when looking to generate an income stream.
After all, it’s easy to understand why; these companies have upped their payouts for a minimum of 25 consecutive years, fully reflecting their reliability.
And all three members of the club above – Caterpillar (CAT - Free Report) , PepsiCo (PEP - Free Report) , and Aflac (AFL - Free Report) – have all seen their near-term earnings outlooks drift higher, indicating optimism among analysts.
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Seeking Income? 3 Top-Ranked Dividend Aristocrats to Buy
Dividends provide many clear benefits, including a passive income stream, the ability to reap maximum returns through dividend reinvestment, and a buffer against drawdowns in other positions.
Many investors pivot to the Dividend Aristocrats when looking to generate an income stream. After all, it’s easy to understand why – these companies have upped their payouts for at least 25 consecutive years, which displays their reliability.
And currently, several members of the club, including Caterpillar (CAT - Free Report) , PepsiCo (PEP - Free Report) , and Aflac (AFL - Free Report) , have seen their earnings outlooks shift positively, indicating bullishness among analysts.
For those interested in consistent and reliable payouts, let’s take a closer look at each.
Caterpillar
Caterpillar is the world's leading manufacturer of construction and mining equipment, off-highway diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. The stock is a Zacks Rank #1 (Strong Buy), with earnings expectations shifting positively over the last several months.
Image Source: Zacks Investment Research
Caterpillar shares currently yield 1.9% annually, paired with a payout ratio sitting sustainably at 26% of the company’s earnings. The payout has grown by nearly 8% annually over the last five years, reflecting the company’s shareholder-friendly nature.
Image Source: Zacks Investment Research
And the company’s growth trajectory is certainly worth highlighting, with earnings forecasted to climb 43% paired with a 12% sales bump in its current fiscal year (FY23). The stock carries a Style Score of “B” for Growth.
PepsiCo
PepsiCo is an American multinational beverage, food, and snack corporation headquartered in New York. The stock is currently a Zacks Rank #2 (Buy), with earnings expectations rising modestly higher across several timeframes.
Some could consider PEP shares slightly expensive, with the current 23.9X forward earnings multiple reflecting a hefty premium relative to the Zacks Consumer Staples sector.
Still, the current value is beneath the 24.7X five-year median and highs of 27.8X in 2022, making shares somewhat cheap on a relative basis.
Image Source: Zacks Investment Research
PEP shares yield a solid 2.8% annually paired with a payout ratio sitting at 70% of the company’s earnings. Over the last five years, the company’s dividend increases have translated to a 6% five-year annualized dividend growth rate.
Image Source: Zacks Investment Research
Aflac
Aflac, a current Zacks Rank #1 (Strong Buy), is an American insurance company and a massive supplier of supplemental insurance within the U.S. The company has seen modest positive earnings estimate revisions among all timeframes.
Image Source: Zacks Investment Research
AFL shares currently yield 2.2% annually, with the company sporting a 12% five-year annualized dividend growth rate. In addition, the company’s 30% payout ratio sits on the sustainable side.
Image Source: Zacks Investment Research
The company has consistently posted bottom line results above expectations, exceeding the Zacks Consensus EPS Estimate by an average of 8% across its last four releases. Just in its latest print, Aflac posted an 11% EPS beat and reported sales nearly 15% above the consensus.
Bottom Line
Many investors pivot to the Dividend Aristocrats when looking to generate an income stream.
After all, it’s easy to understand why; these companies have upped their payouts for a minimum of 25 consecutive years, fully reflecting their reliability.
And all three members of the club above – Caterpillar (CAT - Free Report) , PepsiCo (PEP - Free Report) , and Aflac (AFL - Free Report) – have all seen their near-term earnings outlooks drift higher, indicating optimism among analysts.