Top US Aristocrat Stocks – August 2020

While we know that the stock market will grow over time, on a day-to-day or even month-to-month basis, the stock market is always changing value due to the daily fluctuation of all the stocks.

The opportunities will vary every month and that’s why it’s important to have a systematic approach to understanding which dividend stocks are an opportunity. An opportunity can be for a stock you already own or simply for a new addition to your portfolio. It is important to note that the rankings below do not assess the viability of the business.

Top 5 S&P500 Dividend Aristocrat Stocks

Here are the top 5 US aristocrat stocks for this month, see below for the details. This is obviously a snapshot in time at the time of writing, many factors could change the rankings.

Here is a quick excerpt on the top 5 dividend aristocrats stocks opportunities identified by the US Aristocrats List. The list includes the US Dividend Aristocrats and Kings.

Stay on top of your next investment decision with the Dividend Snapshot US Aristocrats List. Review the Chowder Rule along with the 3, 5, and 10 year ratios for dividend growth, EPS growth and the payout ratio to pick a solid investment for your portfolio.

Automatic Data Processing

ADP - SmallAutomatic Data Processing is a comprehensive global provider of cloud-based human capital management solutions. The company provides a host of services ranging from recruitment to talent management to retirement that help customers improve their business results. It is also a leader in providing business outsourcing services, analytics, and compliance expertise. Automatic Data Processing’s business can be categorized into two reportable segments - Employer Services (70% of 2019 revenue) and Professional Employer Organization Services (30%). By geography, the U.S. is its largest market accounting for nearly 85% of revenues followed by Europe (9%), Canada (2%) and others (4%). The company serves a large base of 810,000 clients ranging from small and mid-sized to large organizations operating in 140 countries. It caters to the needs of more than 70% of the Fortune 500 companies. Automatic Data Processing is responsible for making payments to approximately 1 out of every 6 U.S. workers, and nearly 15 million workers internationally. With six decades of experience, Automatic Data Processing has developed deep insights and cutting-edge technology that have positively transformed human resources functionalities.

Investment Data

Medtronics

MDT - MedtronicComing from humble beginnings, Medtronic was founded in 1949 as a medical equipment repair shop by Earl Bakken and his brother-in-law, Palmer Hermundslie. Over the years, Medtronic developed additional core technologies, including implantable mechanical devices, drug and biologic delivery devices, and powered and advanced energy surgical instruments. Today, Medtronic's technologies are used to treat nearly 40 medical conditions.

Investment Data

Essex Property Trust Inc.

Essex Property is a fully integrated REIT that acquires, develops, redevelops, and manages multifamily apartment communities located in supply-constrained markets. It is a leader in West Coast apartments and has commercial space for rent in the leading markets like Southern California, the San Francisco Bay Area and the Seattle metropolitan area. With nearly five decades of experience, Essex is known for providing flexible lease terms and great locations to meet its customers’ needs. The company focuses on adding value through strategic redevelopments and acquisition of properties in submarkets with high connectivity and high expected rent growth. It is the only public multi-family REIT dedicated to the West Coast having favorable long-term supply/ demand dynamics. Essex has a unique and growing footprint that sets it apart from peers. It owns or has interests in 245 operating apartment communities, totaling 59,661 apartment homes. The company has a 25-year history of paying increasing dividends.

Investment Data

Federal Realty Investment Trust

Federal Realty Investment Trust is one of the oldest, fully integrated retail real estate investment trusts in the U.S. It owns, manages and redevelops retail and mixed-use properties. Federal Realty’s portfolio consists of 104 properties with a combined area of 24 million square feet. Its portfolio comprises high-quality retail properties such as shopping centers, office, residential and hotel complexes, etc. and 2,600 residential properties with a 94% occupancy rate and 3,000 tenants. The company owns properties located in densely populated, affluent communities in Washington, Boston, San Francisco, and Los Angeles. High occupancy levels and a diverse base of tenants provide strong cash flow visibility. With a long history of operation, Federal Realty is in a good position to maintain steady rent increases with its landlord-friendly leases and high rollover growth. Federal Realty has paid quarterly dividends to its shareholders continuously since it was founded in 1962. It has also increased dividends for 52 consecutive years, which is a record in the REIT industry.

Investment Data

General Dynamics Corporation

GD - General Dynamics CorporationGeneral Dynamics is a leading global aerospace and defense company providing a wide range of products and services in business aviation; combat vehicles, weapons systems and munitions; IT services and C4ISR solutions; and shipbuilding. General Dynamics is a global leader in combat systems and is at the forefront of the business-jet industry. The company carries out its operations through four business groups: Aerospace (23% of 2Q19 revenue), Combat Systems (17%), Information Technology (23%), Mission Systems (13%) and Marine Systems (24%). The U.S. Department of Defense (DoD) is General Dynamics’ primary customer accounting for 65% of the company’s total revenues. U.S. commercial customers constitute ~14% of total revenues followed by non-U.S. commercial and government customers. General Dynamics is the proud owner of some of the world's most technologically advanced business-jet aircraft, wheeled combat vehicles, command and control systems, and nuclear submarines. Most of General Dynamics businesses are leading global providers of mission-critical products and systems. Gulfstream and Jet Aviation, two of General Dynamics businesses, are global leaders in business aviation services and have powerful brand recognition.

Investment Data

Top 10 Canadian Dividend Stocks – August 2020

Opportunity Score Formula

The top 5 US aristocrats stocks identified above are based on a score calculated using a number of financial data points from the companies. In the end, the score is generated from following five key indicators:

  • 52-Week Range: Trend over the past 52 weeks. Is the stock pulling back from a 52 week high?
  • P/E Ratio: Is the stock price running away from its earnings?
  • Revenue Growth: Is the revenue growing? Growing revenue is important. We don't want to be fooled by share buybacks and cost management only.
  • Dividend Yield: Is the yield attractive? Usually could identify a pullback if the yield starts to go up or major trouble if it goes too high.
  • Dividend Growth: Uses dividend growth and the Chowder Rule. Is the company capable of growing the dividend consistently?
  • Dividend Payout Ratio: Uses historical averages to put today's ratio in perspective. Is the company able to grow the dividend at the same rate it increases its earnings?

The generated score is meant to assess an entry point opportunity based on historical and today's numbers. It completely ignores the business quality, the quality of the company is for every investor to assess. My stock selection process breaks down the quantitative and qualitative assessments investors should establish to pull the trigger before buying.

If you are interested in more details, the S&P500 Dividend Aristocrats List provides many more data points to help make your investment decision.

DISCLOSURE: Please note that I may have a position in one or many of the holdings listed. For a complete list of my holdings, please see my Dividend Portfolio.

DISCLAIMER: Please note that this blog post represents my opinion and not an advice/recommendation. I am not a financial adviser, I am not qualified to give financial advice. Before you buy any stocks/funds consult with a qualified financial planner. Make your investment decisions at your own risk – see my full disclaimer for more details.
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