3 Dividend Aristocrats to Buy on Every Dip

The allure of dividend stocks is hard to resist, especially in the increasingly volatile market backdrop. Acting as a source of relative stability and regular income, dividend stocks are typically “safe haven”-type investments for investors who don't want their equity portfolios to resemble a roller coaster ride.

Notably, Dividend Aristocrat stocks can be an attractive option for investors seeking the best-in-class among dividend stocks. Dividend Aristocrats are members of the S&P 500 Index ($SPX) that have been paying and raising dividends consistently for at least 25 consecutive years, which means this group is generally comprised of fundamentally strong companies with market-leading positions in their respective industries. 

Here, we'll highlight three Dividend Aristocrats worth picking up anytime the market gets shaky.

Dividend Aristocrat #1: Exxon Mobil

With a mammoth market cap of $477.21 billion, Exxon Mobil (XOM) is one of the largest integrated oil and gas companies in the world. Based out of Irving, Texas, and founded in 1885, Exxon has a hand in every aspect of the oil and gas industry, from exploration and production to refining, transportation, and marketing of petroleum products.

XOM stock is up 21% on a YTD basis, outperforming the S&P 500's gain of 6.3%. Exxon's dividend yield of 3.14% is backed by 25 consecutive years of growth, and a modest payout ratio of 39.05%.

 

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As oil prices remained somewhat muted in 2023, Exxon's results for the latest quarter were marked by a yearly drop in both revenue and earnings. Revenues for the quarter came in at $84.34 billion - down 11.6% from the previous year, and just short of Wall Street's expectations. Meanwhile, EPS of $2.48 surpassed the consensus estimate of $2.19. 

The company closed the quarter with a cash balance of $31.5 billion, higher than the prior year's figure of $29.6 billion. Long-term debt was also reduced to $37.5 billion, compared to $40.6 billion in the prior year.

Notably, Exxon is slated to report its Q1 results this Friday, April 26.

Analysts remain unsurprisingly optimistic about the oil major, with a consensus rating of “Moderate Buy” and a mean target price of $129.18. This indicates an upside potential of about 7.4% from current levels. Out of 19 analysts covering Exxon stock, 11 have a “Strong Buy” rating and 8 have a “Hold” rating.

 

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Dividend Aristocrat #2: Walmart

Founded in 1962 and based out of Bentonville, Arkansas, Walmart (WMT) is the world's largest retail corporation by revenue. It operates a chain of hypermarkets, discount stores, and grocery stores. Walmart has also been investing heavily in its e-commerce business, which surpassed $100 billion in sales during FY 2024. Its market cap currently stands at a massive $486.61 billion.

WMT stock is also beating the market in 2024, up 13.9% on a YTD basis. The stock also offers a dividend yield of 1.40%, backed by 50 consecutive years of growth - elevating WMT to Dividend King status. The payout ratio of 43.5% indicates these dividends are well-covered by earnings.

 

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In fact, while Walmart's revenues have grown at a CAGR of 4.73% over the past five years, the retail behemoth's earnings have expanded at a CAGR of 20.45% over the same period.

The results for the holiday quarter beat expectations, as Walmart reported Q4 consolidated revenues of $173.4 billion, up 5.7%, while EPS rose by 5.3% to $0.60. Comparable store sales were up 4.0%, topping forecasts for 3.2%.

Walmart closed the quarter with a cash balance of $9.9 billion, an improvement from the previous year's figure of $8.6 billion. Net cash from operating activities improved by 24% to $35.7 billion in FY 2024.

Walmart's market-leading position bodes well for the company, as it has increased its market share of the U.S. grocery business from 23.7% in 2021, to just over 25% this year. The leading retailer also has 25.7% of the online grocery business, with Amazon second at 22%. 

To further bolster its e-commerce business, the retailer launched its Walmart+ plan with value-added free deliveries and returns, fuel savings, and video streaming with Paramount+ (PARA). The service recently added same-day delivery, which has been well-received by customers.

Overall, analysts deem WMT stock a “Strong Buy” with a mean target price of $64.90, which denotes an upside potential of about 8.4% from current levels. Out of 29 analysts covering the stock, 20 have a “Strong Buy” rating, 4 have a “Moderate Buy” rating, and 5 have a “Hold” rating.

 

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Dividend Aristocrat #3: Coca-Cola

A Warren Buffett favorite, Coca-Cola (KO) is one of the most recognizable beverage companies globally. Founded in 1886, they manufacture, distribute, and market a wide variety of non-alcoholic beverages across the globe. Their core product is the iconic Coca-Cola drink, but they also offer other soda varieties, juices, water, coffee, tea, and sports drinks. The Atlanta-based company currently commands a huge market cap of $261 billion.

Coca-Cola's share price is up 4.5% on a YTD basis, slightly behind the broader S&P. The stock offers a dividend yield of 3.2%, with a history of 61 years of consistent growth to back it up.

 

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In the fourth quarter, Coca-Cola reported a beat on both revenue and earnings. Revenues of $10.85 billion were up 7%, while EPS rose 8.9% from the year-ago period to $0.49, surpassing the consensus estimate. Notably, the company's EPS has topped expectations in each of the past five quarters.

KO exited 2023 with a cash balance of $9.37 billion, and reported 2023 net cash from operating activities of $11.6 billion, up from about $11 billion in 2022. Long-term debt also declined to $35.5 billion from $36.4 billion in the year-ago period.

To tap into the rapidly growing Gen Z market, Coca-Cola is increasingly adopting digital marketing methods. To that end, in 2023, the company launched Studio X, a digital ecosystem to recruit the next generation of drinkers. Their marketing has shifted from a TV-centric model to a digital-first organization that balances local intimacy, scale, and flexibility. So far, its Coke Studio has generated more than 1.2 billion YouTube views.

More recently, Coke announced it's partnering with Microsoft (MSFT) on generative artificial intelligence (AI), which could help boost efficiencies and productivity across various business functions.

Analysts have a consensus rating of “Strong Buy” for KO stock, with a mean target price of $65.64 - which indicates an upside potential of about 6.6% from current levels. Out of 17 analysts covering the stock, 12 have a “Strong Buy” rating, 1 has a “Moderate Buy” rating, and 4 have a “Hold” rating.

 

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On the date of publication, Pathikrit Bose did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

 

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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