In this article, we discuss 12 best dividend aristocrats with over 3% yield. You can skip our detailed analysis of dividend stocks and their strong performance over the years, and go directly to read 5 Best Dividend Aristocrats with Over 3% Yield.
Amid rising recession risks and sticky inflation, dividend stocks are becoming relevant again. According to a report by S&P Dow Jones Indices, dividends have made up about 32% of the overall returns of the S&P 500 since 1926, with the remaining 68% coming from capital appreciation. The S&P 500 Dividend Aristocrat Index, which tracks the performance of companies that have raised their payouts for 25 consecutive years or more, offers a combination of growing capital and regular dividend payments. This is different from other strategies that might focus solely on getting a high yield or only on capital growth. In the long run, the S&P 500 Dividend Aristocrats have shown better returns with lower volatility compared to the broader market, which means they offer a better balance between risk and reward. The S&P report highlighted that the S&P 500 Dividend Aristocrats have performed better than the S&P 500 69.34% of the time when the market was down and 43.61% of the time when the market was up. Additionally, they experienced smaller declines in value compared to the benchmark index.
Investors generally avoid stocks that have a history of reducing or cutting their dividends over time. A dividend cut is often seen as a red flag, signaling financial difficulties or challenges within the company. It may indicate that the company is struggling to generate enough profits to sustain its dividend payments. According to Fidelity research, stocks that reduce or completely stop paying dividends have typically performed 20% to 25% worse than the market in the year before making that decision. The report also highlighted the importance of payout ratios, which refers to the proportion of a company's net income or free cash flow that it distributes as dividends to shareholders. A low payout ratio is generally considered favorable because it indicates that the company has the potential to maintain its dividend payments and even increase them in the future.
When investing in dividend stocks, investors consider dividend yields, which measure how much income the stock can generate. It is calculated by expressing the annual dividend as a percentage of the stock's price. According to analysts, yields between 3% and 6% are healthy. Having an excessively high yield is generally a warning sign and not a good choice for investors. If a stock has a high yield, it could be because the company's financial troubles are pushing down its stock price. When this happens, the company might have to reduce or stop paying dividends due to its difficulties.
Some of the best dividend aristocrat stocks with strong balance sheets and consistent cash flows include The Procter & Gamble Company (NYSE:PG), Colgate-Palmolive Company (NYSE:CL), and PepsiCo, Inc. (NASDAQ:PEP). These companies have rewarded shareholders with growing dividends for decades, becoming top choices for them. In this article, we will discuss dividend aristocrat stocks with over 3% yield.
For this list, we looked at a group of 68 dividend aristocrat companies, which are known for raising dividends for 25 years or more. From this list, we chose companies with dividend yields above 3%, as of October 21, and arranged them in ascending order of the number of hedge fund investors having stakes in them, according to Insider Monkey's database of Q2 2023.
Amcor plc (NYSE:AMCR) is a global packaging company that specializes in developing and producing a wide range of packaging solutions for various industries. On August 16, the company declared a quarterly dividend of $0.1225 per share, which was consistent with its previous dividend. The company has been raising its dividends consistently for the past 39 years. As of October 21, the stock has a dividend yield of 5.76%.
At the end of Q2 2023, 24 hedge funds tracked by Insider Monkey reported having stakes in Amcor plc (NYSE:AMCR), up from 22 in the previous quarter. These stakes have a collective value of over $237 million. With over 14.6 million shares, Polaris Capital Management was the company's leading stakeholder in Q2.
T. Rowe Price Group, Inc. (NASDAQ:TROW) is a Maryland-based investment management firm that provides a wide range of financial services and products. The company's dividend growth streak currently stands at 37 years and it pays a quarterly dividend of $1.22 per share. With a dividend yield of 5.07% as of October 21, TROW is one of the best dividend aristocrat stocks on our list.
T. Rowe Price Group, Inc. (NASDAQ:TROW) was a part of 24 hedge fund portfolios at the end of Q2 2023, up from 21 in the previous quarter, as per Insider Monkey's database. The stakes owned by these hedge funds have a total value of over $309 million.
Kimberly-Clark Corporation (NYSE:KMB) is a multinational consumer goods company that specializes in the production of a wide range of products related to personal care, hygiene, and well-being. In the first six months of 2023, the company generated $1.4 billion in operating cash flow, compared with $944 million from the same period last year. It ended the quarter with over $580 million available in cash and cash equivalents.
Kimberly-Clark Corporation (NYSE:KMB), one of the best dividend aristocrat stocks, has been raising its dividends consistently for the past 51 years. It currently pays a quarterly dividend of $1.18 per share and has a dividend yield of 3.83%, as of October 21.
As of the close of Q2 2023, 38 hedge funds owned stakes in Kimberly-Clark Corporation (NYSE:KMB), compared with 40 in the previous quarter, according to Insider Monkey's database. The consolidated value of these stakes is over $817.5 million. Among these hedge funds, Two Sigma Advisors was the company's leading stakeholder in Q2.
Altria Group, Inc. (NYSE:MO) is a large American corporation primarily known for its involvement in the tobacco and related industries. The company currently pays a quarterly dividend of $0.98 per share, having raised it by 4.3% in August this year. This marked the company's 54th consecutive year of dividend growth, which makes MO one of the best dividend aristocrat stocks on our list. The stock has a dividend yield of 9.18%, as of October 21.
At the end of June 2023, 43 hedge funds in Insider Monkey's database owned investments in Altria Group, Inc. (NYSE:MO), down from 49 in the previous quarter. The overall value of these stakes is over $446.2 million.
Target Corporation (NYSE:TGT) is a Minnesota-based retail company with a diverse range of offerings. The company declared a quarterly dividend of $1.10 per share on September 20, which was in line with its previous dividend. Overall, it has been raising its payouts for 52 years running. The stock's dividend yield on October 21 came in at 4.04%.
According to Insider Monkey's database of Q2 2023, 45 hedge funds owned stakes in Target Corporation (NYSE:TGT), compared with 46 in the previous quarter. The consolidated value of these stakes is over $882.8 million.
3M Company (NYSE:MMM) is an American multinational conglomerate that operates in various industries. The company pays a quarterly dividend of $1.50 per share and has a dividend yield of 6.93%, as of October 21. It has raised its dividends for 65 years straight, which makes MMM one of the best dividend aristocrat stocks on our list. In fiscal Q1 2023, the company returned $856 million to shareholders through dividends and share repurchases.
At the end of Q2 2023, 49 hedge funds tracked by Insider Monkey owned stakes in 3M Company (NYSE:MMM), down from 51 in the previous quarter. The consolidated value of these stakes is over $726.7 million.
6. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 51
Dividend Yield as of October 21: 4.84%
An American multinational tech company, International Business Machines Corporation (NYSE:IBM) is next on our list of the best dividend aristocrat stocks. The company offers a quarterly dividend of $1.66 per share and has a dividend yield of 4.84%, as of October 21. Its dividend growth streak currently stands at 28 years.
Of the 910 hedge funds in Insider Monkey's database at the end of Q2 2023, 51 hedge funds owned stakes in International Business Machines Corporation (NYSE:IBM), up from 49 a quarter earlier. These stakes have a collective value of roughly $814 million.
