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6 Dividend Aristocrats to Buy as Trump Irks G7

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The U.S.-Canada trade dispute escalated after U.S. President Donald Trump called Canadian Prime Minister Justin Trudeau “very dishonest and weak.” Trump had accused Canada of “charging massive tariffs” to U.S. businesses.

The tiff involved France and Germany who criticized Trump’s decision to back out of the G7 communique. Trump, in the meanwhile, threatened to double auto tariffs, marring the G7 efforts to show a united front.   

With Trump refusing to endorse the G7 communique, stock market gains are likely to be capped. In fact, more uncertainty is lurking as Trump is set to meet North Korean President Kim Jong Un in Singapore. Amid such ambiguity, investing in dividend aristocrats seems prudent, as they provide higher total returns with lower volatility.

No Breakthrough at G7 Summit

Trump’s stinging attack on Canada jeopardized the G7’s efforts to maintain free and fair trade relationships. He specifically accused Canada of imposing a 270% tariff on dairy. This has forced many U.S. dairy products from making their way to Canada from the United States. Trump, in return, has decided to slap more import tariffs on the sensitive auto industry.

Trump tweeted “PM Justin Trudeau of Canada acted so meek and mild during our @G7 meetings only to give a news conference after I left saying that, ‘US Tariffs were kind of insulting’ and he ‘will not be pushed around.’ Very dishonest & weak. Our tariffs are in response to his of 270% on dairy!”

Meanwhile, Trudeau’s office added that the dairy tariffs were primarily a reaction to Trump’s decision to levy charges on steel and aluminum imports from Canada, Mexico and the EU. Moreover, protective measures like Canada’s dairy tariff are very common throughout the world. Lest we forget, the United States has imposed tariffs to protect several of its industries, starting from the 350% tariff on tobacco to 160% on shelled peanuts.

Trudeau said that Germany stood by the “jointly agreed communique” despite Trump’s decision to back out. France and Europe also continued to support the G7 communique and stated that anyone quitting the summit will be showing their “incoherence and inconsistency.”

Historic Trump-Kim Summit, Central Bank Meetings

Amid the G7 trade spat, investors are keeping an eye on the much-talked-about meet between Trump and Kim in Singapore. The stakes are high as the summit marks the first time when both the leaders will meet in person to reach a denuclearization agreement on the Korean Peninsula.

But, investors shouldn’t get their hopes up. Even if the meeting is successful, the stock market should brace for more gyrations as this week awaits outcome from central bank meetings.

Time to Buy Dividend Aristocrats

Such uncertainties make dividend paying stocks more attractive as they tend to outperform when the broader markets are facing gyrations. But, why dividend aristocrats? This is because this set of stocks outperforms other dividend payers on better quality business.

This category of stocks reflects 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 22 years, dividend aristocrats generated an annualized return of 12.9%, easily topping the broader market’s 10.7%.

6 Solid Choices

We have, thus, selected six such dividend aristocrats to boost your returns. Such stocks also possess a Zacks Rank #1 (Strong Buy) or 2 (Buy). The favorable Zacks Rank should help these stocks rally further this year.

Cintas Corporation (CTAS - Free Report) provides corporate identity uniforms and related business services, primarily in North America, Latin America, Europe, and Asia. Currently, the stock has a Zacks Rank #2. The company has raised its dividend for 34 straight years. Cintas has a dividend yield of 0.9% while its five-year average dividend yield is 1.1%. The company’s expected earnings growth rate for the current year is 28.7%, higher than the Uniform and Related industry’s estimated return of 12.9%.

Roper Technologies, Inc. (ROP - Free Report) designs and develops software, and engineered products and solutions. The stock currently has a Zacks Rank #2. The company has raised its dividend for over 25 straight years. Roper Technologies has a dividend yield of 0.6% while its five-year average dividend yield is 0.6%. The company’s expected earnings growth rate for the current quarter is 20.5%, way ahead of the Manufacturing - General Industrial  industry’s estimated return of 5.7%.

W.W. Grainger, Inc. (GWW - Free Report) distributes maintenance, repair, and operating (MRO) supplies; and other related products and services that are used by businesses and institutions in the United States, Canada, Europe, Asia, and Latin America. Currently, the stock has a Zacks Rank #1. The company has raised its dividend for 46 straight years. W.W. Grainger has a dividend yield of 1.7% while its five-year average dividend yield is almost 2%. The company’s expected earnings growth rate for the current year is 30.5%, ahead of the Industrial Services industry’s estimated return of 25.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Aflac Incorporated (AFL - Free Report) provides voluntary supplemental health and life insurance products. Recently, the stock has a Zacks Rank #2. The company has raised its dividend for 34 straight years. Aflac has a dividend yield of 2.3% while its five-year average dividend yield is 2.4%. The company’s expected earnings growth rate for the current year is 16.4%, in contrast the Insurance - Accident and Health industry’s estimated return is projected to decline 7.6%.

Praxair, Inc. (PX - Free Report) produces and distributes industrial gases. The stock, right now, has a Zacks Rank #2. The company has raised its dividend for over 25 straight years. Praxair has a dividend yield of 2.1% while its five-year average dividend yield is 2.3%. The company’s expected earnings growth rate for the current quarter is 16.4%, more than the Chemical - Diversified industry’s estimated return of 12.2%.

Automatic Data Processing, Inc. (ADP - Free Report) provides business process outsourcing services worldwide. Currently, the stock has a Zacks Rank #2. The company has raised its dividend for over 25 straight years. Automatic Data Processing has a dividend yield of 2% while its five-year average dividend yield is 2.3%. The company’s expected earnings growth rate for the current year is 16.8%, better than the Outsourcing industry’s estimated return of 7.7%.

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