Performance of the Top 10 Dividend Aristocrats 2019

This article should be interesting.  The stock market is just crushing it and there is just not much room for opportunity.  You can reach for value, but are you reaching for true value or are you reaching at a poor company that has, what appears to be, strong dividend metrics?  I thought to rewind the tape back and really take a hard look at the Dividend Aristocrats.  You know, those companies that increase their dividend EVERY YEAR for at least 25 years+?  Yes, that is who I am talking about.  Therefore, I peeled back the curtain on the top 10 yielding dividend aristocrats out there, seeing their performance and hey – maybe even find some value.

With the December month of 2018 dropping like a brick, I took the top 10 yielding stocks that are dividend aristocrats, to see what they’ve done on a stock performance and dividend increase standpoint, as well as a quick snapshot of what they’v been up to.  The prices are as of 3/13/2019 and will reflect the year-to-date activity and large news events.

1.) AT&T (T) – $30.28 (+6.10%) – Though the yield alone placed AT&T at #1, but I am surprised by their 2019 performance.  They are a Top 5 Foundation Dividend Stocks, but their headwinds have been harsh lately.  Comments such as, Yield is Too High!  There is too much debt on their balance sheet.  Cable subscribers are declining, increasing streaming prices by 25%.  However, their stock price is up over 6% this year.  They had a bad 2018 and they are firing on cylinders in 2019, though.  At these levels, the yield still stands strong at 6.74%, holding the top spot.

2.) AbbVie (ABBV) – $78.93 (-14.38%) – Down almost 15% this year, in 2019, AbbVie, inc., comes in at #2 due to the yield swelling to 5.42%.  Another cmpany feeling headwinds.  Headwinds, such as, patent expiring, engineering it’s way to secure Humira’s patent and even jacking up the price on patients.  They were a result of a spin-off and I even purchased a nice chunk of them earlier this year.  Could they be hear to stay?  At a yield of 5.42%, and grandfathered into an aristocrat status, is the dividend safe going forward?

3.) ExxonMobil (XOM) – $80.71 (+18.36%) – ExxonMobile is BACK BABY!  Talk about price appreciation, WOW.  They are up and closing in on 20% and it is NO question, they were a dog of the DOW last year and like they say, “what goes up, must come down”.  Well, looks like it’s reversing now, so what was once down is now sky rocketing.  Further, their yield is holding strong at 4.06%, which is above the market as a whole.  They are looking to push through in Alaska , and it’s no question, they are smarter since the downturn in oil pricing, as the barrel is holding at $58, which is not too far from where they were.  I wonder if their announcement of expectations for earnings to grow…. by more than 140% by 2025 has anything to do with it..

4.) Chevron (CVX) – $124.67 (+14.60%) – Not too far behind XOM, Chevron is also spiking in 2019.  This has been quite the year for oil.  Not to sound like a broken record, but they are optimistic about the Permian Basin, as well as announced that at $60 per barrel, they are increasing their dividend 6%, which has been above average, as of late.  Yielding over 3.90%, do you go with CVX, XOM or… both?

5.) ConsolidatedEdison (ED) – $85.18 (+11.40%) – Oh my goodness!  Another top 5 foundation stock that is blistering the charts into 2019.  Their yield stands strong at 3.47%, above average, and they recently increased their divided by 3.50%.  Not a ton, but an expected raise from this reliable utility company. It doesn’t appear they are doing anything special, just trying to reduce expenses, increase technology and continue delivering their historical service of electricity.

6.) Target (TGT) – $77.12 (+16.69%) – Yep, and another one.  What was a dog of a company in 2018, has blossomed in 2019, reporting record adjusting earnings and also shares where they stand in their transformation.  They now have a full year of Shipt, which offers same day delivery, as well as specific areas for pick-up/drive-up service, to cater to their customers.  Further, they redesigned more than 300 stores in 2018 and are continuing to do so in 2019, to re-kindle their guests appetite.  Sounds like 2019 could be a consistent year of growth for Target.

7.) Cardinal Health (CAH) – $50.65 (+13.56%) – They have been hammered in 2017-2018, due to the Amazon (AMZN) effect of the healthcare and the opioid crisis.  However, CAH has sky rocketed back, to the tune of being up almost 14%, yikes.  However, their yield still is strong at 3.76% yield and recently reported earnings that had okay highlights.  Items such as – increased annual revenue versus prior year, in fact even (as I quote) are, “..we are raising our guidance for the full fiscal year.”  Talk about a turnaround.  Still think this company has what it takes to survive?  They are still far from any highs, but boy, have they battled back.

8.) Coca-Cola (KO) – $46.22 (-2.40%) – About time we have one that is down this year!  Coke has seen better days, but at least they put together a nice video on their year, in case you don’t like reading.  Further, they are still sporting a 3.46% yield, which is very rare for them.  They are further closing in on Costa, the acquisition of a premier coffee brand/company.  Scary part here is that they had earnings of $1.51 per share but are currently paying out $1.60, based on their latest 2.5% dividend increase.   I believe there are low years of dividend growth to come, can you wait for that?

9.) Kimberly Clark (KMB) – $118.46 (+3.98%) – Currently yielding 3.48%, they also announced a 3% dividend increase, which is similar/consistent amongst the group in the list (i.e. the 2%-3% dividend increase players).  In their earnings, they are expecting declines in revenue, but expected to continue cost savings.  Their dividend appears safe and secure, no concerns there.  However, their earnings per share appears stagnant, at around $6.60 on a go forward basis.  The price to earnings doesn’t appear awful, based on that, at roughly 18x earnings.  Could be one to look at further.

10.) Leggett & Platt (LEG) – $43.64 (+21.76%) – Good old LEG!  Bert and I were scooping them up in 2018, and thankfully we did.  They have performed the best in 2019, pushing beyond the 20% increase plateau, making it extremely difficult to buy their stock, that’s for sure.   LEG is sporting a 3.48% yield and a P/E below 17, based on expected earnings of $2.54.  They recently acquired a public company for $1b in cash, to further enhance their private label channel.  May not be a bad price for some to initiate here, but I’ll hold, for now, due to my current position.

Dividend Aristocrat conclusion

How about that everyone?  Those are the top 10 yielding dividend aristocrats and all are doing OK in 2019, except for Coke and AbbVie, Inc.  I do see ABBV on quite a few watch lists and I have even purchased them myselves.  How about Coke (KO) though?  Do you see any future/promise from KO, in coming back to their dividend growing days?  OR – do you anticipate low single digits for many years to come?

Personally, I would be interest in Coke, if they dipped into the upper $30’s again.  I could see a position initiated and to collect dividends, as I watch them transform themselves.  However, at current prices, I will not be buying.

What do you think?  Seeing any value above?  Any on your watch list?  Please share, curious to see what you think of these Dividend Aristocrats!

-Lanny

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13 thoughts on “Performance of the Top 10 Dividend Aristocrats 2019

  1. I have 5 out of 10 of those companies already in my portfolio. The remaining 5 are on my watchlist. I would like to add to my ABBV position in a couple of weeks. I tend to shy away from energy (oil) companies, but if the price is right I will pull the trigger. Same thing with KO. Of course, anything can happen in 2 weeks (once my cash stockpile is fully reloaded), so we will see what opportunities there are once April arrives. Thanks for the awesome post Lanny! 🙂

  2. Nice article guys. I have taken my lumps with AbbVie, but do not intend to sell. As for Coke, I just refreshed my analysis on the company last month and have a similar conclusion. I put my add on buy price at $39. With the refranchising complete, I think they have better days in front of them for an investor with a long time horizon like us. I have been accumulating cash recently. Better prices will come, unfortunatly. Tom

  3. I own 5 of the 10 you have listed and all but KO are up nicely. I still expect KO to have another year or two of low dividend growth but could see them returning to the mid single digits in a few years. Where’s the growth is the big problem for KO since they’re sold pretty much everywhere. Now they’re going to be reliant on strategic acquisitions which can work out well if done right or can go horribly wrong if not…KHC anyone? I need to review KO again to get an update on their business, but I have no intentions of selling at this time, but won’t be adding any either. I also need to take a deeper look at ABBV it keeps popping up on a lot of recent buy posts but I just haven’t checked them out yet. That yield is really juicy if they can maintain the dividend which I think they would because IIRC they recently raised it by a pretty hefty amount. UNP looks somewhat attractive but overall I think it’s in the fair value range but their moat is ridiculously strong, ADM looks to be on the low end of fair value to me, HD would be better in the low $170’s. With the market rally thus far in 2019 there’s nowhere near as many value possibilities as there were just a few short months ago. Almost everything appears to be back in the fair value to upper fair value range so I’m in no real hurry to make any purchases and will be trying to raise some cash via cash dividends and possibly looking to exit some positions that crept into my portfolio during the bull run that I’m not 100% sold on now.

  4. Lanny,
    Long all of those except CVX, ED, and ABBV. Can’t say I don’t want more of these Kings and Aristocrats!
    There is so much good value out there right now and great evaluations of that value. My current favorite might be the one called PAAY that pops up on Seeking Alpha. Either way the more positions and shares the merrier.
    – Gremlin

  5. Great article. I own 5 of the 10 names mentioned. Abbvie and Cardinal Health are the two names that stick out as the biggest value plays to me. A near 5.5% yield on a company like Abbvie is insane.

  6. Hi Lanny,
    Personally, I don’t plan to add to my KO position anytime soon. Unfortunately, KO’s revenue has declined every year since 2012. I doubt that we will see substantial dividend growth as long as they can’t solve this issue.
    With my next purchases I might focus on some names that have enough FCF to boost dividend growth. Even though it means accepting a lower yield sometimes.
    In this regard I look at HD, BA and TXN
    -SF

  7. Nice read, Lanny.

    CAH is on my watchlist as I want to continue adding to my healthcare sector holdings. That said, it’s unfortunate the stock had a run-up in price for when I am ready to make a purchase.
    KO has been in my portfolio since 2009 or 2010 and I’m likewise concerned with the payout ratio and debt load. That said, the company has incredible brands that I believe have staying power. They are making moves to transition into healthier offerings, which should eventually lead to eventually paying off in a big way. That said, this year’s dividend increase sends a signal of what is to come in the near term.

    Take care,
    Ryan

    • GRB –

      Interesting. I do not see many that have CAH on the list. They are still beat up pretty bad and you can easily add to your position, if need be. Debating on doing the same, actually.

      Also, KO reminds me a lot of PG. PG spent a few years trying to clean up and re-focus, which they are starting to get back to better earnings and thus better dividends (they increased theirs by 4%, which is getting better-ish). I think KO is 2-3 years away from getting back on the right foot, with their legendary brands.

      -Lanny

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