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The Federal Reserve maintained interest rates in February, providing no update on the next hike. The Fed’s reluctance in raising rates should stand in good stead for dividend aristocrats.
President Donald Trump’s travel ban, in the meanwhile, could result in a possible rise in erratic share price movement this month. The stock market has also, traditionally, seen weak results this month, especially after an election. In such a scenario, investing in dividend aristocrats seems prudent as they provide higher total returns with lower volatility, which are undoubtedly the ‘holy grail’ of investing.
Fed Leaves Rates Unchanged
As widely expected, the Fed has kept rates unchanged following a two-day policy meeting on Feb 1. The central bank kept its benchmark overnight lending rate target at a range of 0.5% to 0.75%. The bank had lifted rates by a quarter percentage point in December, marking the second hike in more than 10 years.
In fact, the central bank penciled three quarter-point moves this year in December. More importantly for investors, the central bank didn’t drop any hints of raising rates in the March meet, placing the probability of such a move at only 18%, according to CME Group.
In this case, high quality dividend stocks have become more appealing as their stock prices don’t suffer when rates aren’t rising. Conversely, bond markets, which tend to benefit from a rise in interest rates, have lost its lure.
Trump Stirs Up a Tempest
The Fed’s positive view of the economy and Apple Inc.’s (AAPL - Free Report) stellar earnings helped stocks rally a little higher on Feb 1. However, investors have not yet recovered from the blow of Trump’s immigration ban. An executive order by Trump banned immigration from seven Muslim-majority countries, including legal residents and visa holders. Trump had earlier fostered expectations that his administration will be business friendly and therefore should bode well for the equity market. This decision has drawn congressional criticism and widespread protests. These protectionist measures may also cloud the path for pro-business initiatives as several world and corporate leaders condemn the ban.
Airlines bore the brunt as well as several airports across the country saw violent protests, disrupting operations to a great extent. Tech firms also faced obstacles in sourcing labor from foreign lands. Trump’s first press conference since July also disappointed investors due to lack of policy detail. He severely criticized pharmaceutical companies over high drug prices, dealing a blow to leading biotech stocks.
Such uncertainties make dividend paying stocks more attractive as they tend to outperform when the broader markets are subject to gyrations. Notably, the month of February has traditionally seen weak numbers just after the election.
February: Traditionally a Weak Month
February has been the weakest month for stocks over the past four decades, averaging just a 0.06% gain. In fact, in post-election years, February tends to be weaker. The average return has decreased 1.85% since 1977.
Lest we forget, markets have gone 74 days without a 1% daily decline, hence, the seasonality pattern increases the odds of a wider decline in February.
Why Dividend Aristocrats? 5 Solid Choices
Dividend aristocrats outperform other dividend payers on better quality business. This category of stocks reflect a solid financial structure and healthy underlying fundamentals. Such stocks are immune to market vagaries and have also raked in excellent risk-adjusted returns over the last decade. In fact, in the last one year, the S&P High Yield Dividend Aristocrats Index rallied 19.6%, above the S&P 500’s 17.5%.
Dividend Aristocrats generated an annualized return of 9.7% over the past 10 years, easily topping the broader market’s 6.3% rate. During this period, dividends accounted for 31% of the market’s total return, highlighting their importance in determining total shareholder return.
We have, thus, selected five such dividend aristocrats to boost your returns. Such stocks also possess a Zacks Rank #2 (Buy). The favorable Zacks Rank should help these stocks gain further this year as well. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
C. R. Bard, Inc. designs, manufactures, packages, distributes and sells medical, surgical, diagnostic, and patient care devices. The company has raised its dividend for over 40 straight years. Bard has a dividend yield of 0.44% while its five-year average dividend yield is pegged at 6.45%. The company’s expected growth rate for the current year is 13%, way ahead of the industry’s estimated return of 6.7%.
Illinois Tool Works Inc. (ITW - Free Report) manufactures and sells industrial products and equipment. The company has increased its dividend for 52 consecutive years. Illinois Tool Works has a dividend yield of 2.04% while its five-year average dividend yield is pegged at 13.23%. The company’ expected growth rate for the current year is 9.5%, in contrast to the industry’s projected negative return of 2.8%.
The Sherwin-Williams Company (SHW - Free Report) manufactures and sells paints, coatings and related products. The company raised its dividend for 37 straight years. Sherwin-Williams has a dividend yield of 1.1% while its five-year average dividend yield is pegged at 19.22%. The company’s expected growth rate for the current year is 10.5%, higher than the industry’s estimated return of 3.7%.
Cintas Corporation (CTAS - Free Report) provides corporate identity uniforms and related business services. The company marked its 32nd consecutive annual dividend increase. Cintas has a dividend yield of 1.15% while its five-year average dividend yield is 18.2%. The company’s expected growth rate for the current year is 12.6%, way ahead of the industry’s estimated return of 1%.
S&P Global, Inc. (SPGI - Free Report) provides independent ratings, benchmarks, analytics and data to the capital markets. The company raised its dividend for more than 25 consecutive years. S&P Global has a dividend yield of 1.2% while its five-year average dividend yield is 8.56%. The company’s expected growth rate for the current year is 10.1%.
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5 Top Dividend Aristocrats to Buy in February
The Federal Reserve maintained interest rates in February, providing no update on the next hike. The Fed’s reluctance in raising rates should stand in good stead for dividend aristocrats.
President Donald Trump’s travel ban, in the meanwhile, could result in a possible rise in erratic share price movement this month. The stock market has also, traditionally, seen weak results this month, especially after an election. In such a scenario, investing in dividend aristocrats seems prudent as they provide higher total returns with lower volatility, which are undoubtedly the ‘holy grail’ of investing.
Fed Leaves Rates Unchanged
As widely expected, the Fed has kept rates unchanged following a two-day policy meeting on Feb 1. The central bank kept its benchmark overnight lending rate target at a range of 0.5% to 0.75%. The bank had lifted rates by a quarter percentage point in December, marking the second hike in more than 10 years.
In fact, the central bank penciled three quarter-point moves this year in December. More importantly for investors, the central bank didn’t drop any hints of raising rates in the March meet, placing the probability of such a move at only 18%, according to CME Group.
In this case, high quality dividend stocks have become more appealing as their stock prices don’t suffer when rates aren’t rising. Conversely, bond markets, which tend to benefit from a rise in interest rates, have lost its lure.
Trump Stirs Up a Tempest
The Fed’s positive view of the economy and Apple Inc.’s (AAPL - Free Report) stellar earnings helped stocks rally a little higher on Feb 1. However, investors have not yet recovered from the blow of Trump’s immigration ban. An executive order by Trump banned immigration from seven Muslim-majority countries, including legal residents and visa holders. Trump had earlier fostered expectations that his administration will be business friendly and therefore should bode well for the equity market. This decision has drawn congressional criticism and widespread protests. These protectionist measures may also cloud the path for pro-business initiatives as several world and corporate leaders condemn the ban.
Airlines bore the brunt as well as several airports across the country saw violent protests, disrupting operations to a great extent. Tech firms also faced obstacles in sourcing labor from foreign lands. Trump’s first press conference since July also disappointed investors due to lack of policy detail. He severely criticized pharmaceutical companies over high drug prices, dealing a blow to leading biotech stocks.
Such uncertainties make dividend paying stocks more attractive as they tend to outperform when the broader markets are subject to gyrations. Notably, the month of February has traditionally seen weak numbers just after the election.
February: Traditionally a Weak Month
February has been the weakest month for stocks over the past four decades, averaging just a 0.06% gain. In fact, in post-election years, February tends to be weaker. The average return has decreased 1.85% since 1977.
Lest we forget, markets have gone 74 days without a 1% daily decline, hence, the seasonality pattern increases the odds of a wider decline in February.
Why Dividend Aristocrats? 5 Solid Choices
Dividend aristocrats outperform other dividend payers on better quality business. This category of stocks reflect a solid financial structure and healthy underlying fundamentals. Such stocks are immune to market vagaries and have also raked in excellent risk-adjusted returns over the last decade. In fact, in the last one year, the S&P High Yield Dividend Aristocrats Index rallied 19.6%, above the S&P 500’s 17.5%.
Dividend Aristocrats generated an annualized return of 9.7% over the past 10 years, easily topping the broader market’s 6.3% rate. During this period, dividends accounted for 31% of the market’s total return, highlighting their importance in determining total shareholder return.
We have, thus, selected five such dividend aristocrats to boost your returns. Such stocks also possess a Zacks Rank #2 (Buy). The favorable Zacks Rank should help these stocks gain further this year as well. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
C. R. Bard, Inc. designs, manufactures, packages, distributes and sells medical, surgical, diagnostic, and patient care devices. The company has raised its dividend for over 40 straight years. Bard has a dividend yield of 0.44% while its five-year average dividend yield is pegged at 6.45%. The company’s expected growth rate for the current year is 13%, way ahead of the industry’s estimated return of 6.7%.
Illinois Tool Works Inc. (ITW - Free Report) manufactures and sells industrial products and equipment. The company has increased its dividend for 52 consecutive years. Illinois Tool Works has a dividend yield of 2.04% while its five-year average dividend yield is pegged at 13.23%. The company’ expected growth rate for the current year is 9.5%, in contrast to the industry’s projected negative return of 2.8%.
The Sherwin-Williams Company (SHW - Free Report) manufactures and sells paints, coatings and related products. The company raised its dividend for 37 straight years. Sherwin-Williams has a dividend yield of 1.1% while its five-year average dividend yield is pegged at 19.22%. The company’s expected growth rate for the current year is 10.5%, higher than the industry’s estimated return of 3.7%.
Cintas Corporation (CTAS - Free Report) provides corporate identity uniforms and related business services. The company marked its 32nd consecutive annual dividend increase. Cintas has a dividend yield of 1.15% while its five-year average dividend yield is 18.2%. The company’s expected growth rate for the current year is 12.6%, way ahead of the industry’s estimated return of 1%.
S&P Global, Inc. (SPGI - Free Report) provides independent ratings, benchmarks, analytics and data to the capital markets. The company raised its dividend for more than 25 consecutive years. S&P Global has a dividend yield of 1.2% while its five-year average dividend yield is 8.56%. The company’s expected growth rate for the current year is 10.1%.
Zacks' Best Investment Ideas for Long-Term Profit
Today you can gain access to long-term trades with double and triple-digit profit potential rarely available to the public. Starting now, you can look inside our stocks under $10, home run and value stock portfolios, plus more. Want a peek at this private information? Click here >>