In this article, we discuss 10 best mid-cap dividend aristocrats to buy. You can skip our detailed analysis of dividend stocks and their performance, and go directly to read 5 Best Mid-Cap Dividend Aristocrats To Buy.
Due to their limited volatility, mid-cap stocks have exhibited solid performance over the years. According to a report by Hennessy Funds, Russell Midcap Index delivered an annual average return of 57% and 67% over the past five years and ten years, respectively. In comparison, Russell 1000 Index gained 42% and 31% in the past five and ten years, respectively. The report also mentioned that in any given 1-year rolling period since 2000, mid-cap stocks outperformed 35% of the time.
Another report by S&P Dow Jones Indices shows the outperformance of midcap equities over the wider market. The report mentioned that the S&P 500 delivered an average monthly return of 0.82% from July 1991 through August 2015, underperforming the S&P Mid-Cap 400, which showed an average monthly return of 1.08% during the same period. The report further mentioned that the index outperformed the broad market and the S&P SmallCap 600 for most of the past 20 years that ended in 2015.
Analysts have also given a positive stance on the mid-cap stocks for 2023 because of their strong earnings potential. Bloomberg interviewed several analysts at the beginning of the year to analyze the economic landscape. Wells Fargo presented a positive stance on mid-cap equities over international stocks and also showed an inclination toward quality and defensive sectors. To know more about mid-cap companies, readers can also have a look at 15 Most Promising Mid-cap Stocks.
Mic-cap companies with solid dividend growth track records become the top choices for investors as these companies have strong fundamentals and growth potential. Dividend Aristocrats— companies that have raised their payouts for 25 years or more — are particularly attractive for investors during high-interest rate environments. The S&P MidCap 400 Dividend Aristocrats, which covers the performance of mid-cap companies consistently increasing dividends for 15 years or more, fell by 2.75% in the past year, compared with a much harsher decline of 8.45% for the S&P 500. Some of the best dividend stocks that are garnering attention include McDonald’s Corporation (NYSE:MCD), Roper Technologies, Inc. (NYSE:ROP), and Aflac Incorporated (NYSE:AFL). However, in this article we will discuss the best mid-cap dividend aristocrats to buy.
For this list we selected mid-cap stocks that belong to the elite group of Dividend Aristocrats, which means that they have raised their payouts consecutively for 25 years or more. Next, the hedge fund sentiment was measured using data from 943 hedge funds tracked by Insider Monkey in Q4 2022. The list is ranked in ascending order of the number of hedge funds having stakes in the companies.
New Jersey Resources Corporation (NYSE:NJR) is an American natural gas distribution company that provides safe and reliable energy services to its consumers. On April 5, the company declared a quarterly dividend of $0.39 per share, which was in line with its previous dividend. It has been paying regular dividends to shareholders since 1952 and has raised its payouts for consecutive 29 years. The stock's dividend yield on April 11 came in at 2.82%. The company is among the best dividend stocks on our list.
In addition to New Jersey Resources Corporation (NYSE:NJR), McDonald’s Corporation (NYSE:MCD), Roper Technologies, Inc. (NYSE:ROP), and Aflac Incorporated (NYSE:AFL) are some other popular dividend stocks with solid dividend growth track records.
In the first quarter of 2023, New Jersey Resources Corporation (NYSE:NJR) reported revenue of $723.5 million, which showed a 7.1% growth from the same period last year. The company's operating cash flow for the quarter came in at nearly $89 million, compared with $37.4 million during the same period last year.
At the end of Q4 2022, 11 hedge funds tracked by Insider Monkey reported having stakes in New Jersey Resources Corporation (NYSE:NJR), up from 10 in the previous quarter. These stakes have a collective value of nearly $45 million.
First Pacific Advisors mentioned New Jersey Resources Corporation (NYSE:NJR) in its Q4 200 investor letter. Here is what the firm has to say:
“New Jersey Resources Corporation (NYSE:NJR) is a regulated gas utility for Southern New Jersey. The company has slowly and prudently diversified into midstream, solar, marketing and services while continuing to grow the core utility. Shares performed well on the back of successive strong earnings reports and improved guidance.”
Donaldson Company, Inc. (NYSE:DCI) is a Minnesota-based filtration company that is engaged in the production and marketing of air filters used in a wide range of industries. In March, Baird raised its price target on the stock to $69 with an Outperform rating on the shares. The firm appreciated the company's defensive profile and reasonable valuation.
Donaldson Company, Inc. (NYSE:DCI), one of the best dividend stocks, currently pays a quarterly dividend of $0.23 per share. The company has been making uninterrupted dividend payments to shareholders for the past 67 years and has raised its payouts for 27 years in a row. The stock has a dividend yield of 1.48%, as recorded on April 11.
In fiscal Q2 2023, Donaldson Company, Inc. (NYSE:DCI) posted revenue of $828.3 million, up 3.2% from the same period last year. Year-to-date, the company has paid $56.2 million to shareholders in dividends.
As of the close of Q4 2022, 17 hedge funds tracked by Insider Monkey owned stakes in Donaldson Company, Inc. (NYSE:DCI), worth roughly $210 million collectively. With over 1.6 million shares, Impax Asset Management was the company's leading stakeholder in Q4.
Polaris Inc. (NYSE:PII) is an American automotive company that deals in the manufacturing of motorcycles and all-terrain vehicles. In the fourth quarter of 2022, the company reported revenue of $2.4 billion, which was up by 21% from the same period last year. The company's operating cash flow for FY22 came in at $535 million and its free cash flow stood at $199 million, up from $287 million and $22 million, respectively.
On February 2, Polaris Inc. (NYSE:PII) declared a 1.6% hike in its quarterly dividend to $0.65 per share. Through this increase, the company took its dividend growth streak to 28 years. Year-to-date, it has paid nearly $150 million to shareholders in dividends, which places it as one of the best dividend stocks on our list. The stock's dividend yield on April 11 came in at 2.43%.
RBC Capital mentioned that Polaris Inc. (NYSE:PII) offers a leading market share position across its core markets. Given this, the firm lifted its price target on the stock to $115 in March with a Sector Perform rating on the shares.
The number of hedge funds tracked by Insider Monkey owning stakes in Polaris Inc. (NYSE:PII) grew to 20 in Q4 2022, from 15 a quarter earlier. These stakes have a collective value of nearly $211.4 million.
Diamond Hill Capital made the following comment about Polaris Inc. (NYSE:PII) in its Q3 2022 investor letter:
“Other top contributors included Polaris Inc. (NYSE:PII), BOK Financial and Webster Financial. Polaris, a market leader in off-road vehicles, benefited from a restocking opportunity — inventory at dealers remains depleted, which can serve to offset near-term macroeconomic headwinds. The company also is perceived to be somewhat recession-resilient given its strong financial performance during and after the 2008 financial crisis. We took the opportunity to conclude our investment as we have increased concerns over rising competition, supply chain issues related to sourcing semiconductors and the business’s higher-than-perceived cyclicality.”
UGI Corporation (NYSE:UGI) is a natural gas and electric power distribution company. The company is one of the best dividend stocks on our list as it has raised its dividends for 35 years straight. Moreover, it has been paying regular dividends to shareholders for 138 years. The company currently pays a quarterly dividend of $0.36 per share and has a dividend yield of 4.11%, as of April 11.
At the end of December 2022, 20 hedge funds tracked by Insider Monkey reported owning stakes in UGI Corporation (NYSE:UGI), worth roughly $120 million collectively.
Diamond Hill Capital mentioned UGI Corporation (NYSE:UGI) in its Q3 2022 investor letter. Here is what the firm has to say:
“UGI Corporation (NYSE:UGI), a natural gas and electric power utility, generates approximately one-third of its revenue through its European propane distribution business. The European energy market dislocation and subsequent inflation have raised fears of significant volume and price contraction, pressuring UGI’s share price. Longer term, we believe UGI’s investments into renewable/alternative energy sources position it well. In the nearer term, it should continue to have an advantage delivering fuel to rural locations that are not easily served by gas pipelines — whether that fuel is propane, liquified petroleum gas (LPG), renewable natural gas (RNG) or other alternative fuels.”
Lancaster Colony Corporation (NASDAQ:LANC) is an American food company that manufactures and markets specialty food products for retailers. In the fourth quarter of 2022, the company posted revenue of $477.4 million, which saw an 11.4% growth from the prior-year period. The company's cash position remained strong as it had over $95.4 million available in cash and cash equivalents, compared with $60.2 million in 2021.
Lancaster Colony Corporation (NASDAQ:LANC) currently pays a quarterly dividend of $0.85 per share and has a dividend yield of 1.70%, as of April 11. In 2022, the company stretched its dividend growth streak to 60 years, which makes it one of the best dividend stocks on our list. McDonald’s Corporation (NYSE:MCD), Roper Technologies, Inc. (NYSE:ROP), and Aflac Incorporated (NYSE:AFL) are some other dividend stocks to consider.
At the end of Q4 2022, 22 hedge funds tracked by Insider Monkey owned stakes in Lancaster Colony Corporation (NASDAQ:LANC), up from 19 a quarter earlier. The consolidated value of these stakes is nearly $194 million.
Diamond Hill Capital mentioned Lancaster Colony Corporation (NASDAQ:LANC) in its Q4 2022 investor letter. Here is what the firm has to say:
“Other top contributors included AIG, Freeport-McMoRan and Lancaster Colony Corporation (NASDAQ:LANC). Diversified foods manufacturer and retailer Lancaster Colony Corporation has done a fairly effective job of offsetting inflation with a combination of price increases and cost-cutting measures, contributing to higher profits and improved margins.”
