Top US Aristocrat Stocks – July 2020

Dividend Aristocrats - Top 5While 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. Some of the companies are strong blue chip stocks while others can be smaller companies with growth.

Top 5 US Dividend Aristocrats Stocks

The monthly top US Dividend Aristocrats are not always the same for an extended period. It’s the reality of the stock markets. To that end, it’s important to always review your options when you are ready to invest. If you like monthly top stocks, you can review the Top Canadian Dividend Stocks.

The top 5 US Dividend Aristocrats are listed below with a summary of the company with some metrics provided.

In the short run, the market is a voting machine, but in the long run it is a weighing machine.
– Benjamin Graham

Methodology

The top stocks identified below 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?
  • Dividend Yield: Is the yield attractive? Usually could identify a pull back 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?

5. 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

4. 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

3. People’s United Financial Inc.

People's United Financial is a diversified financial services company with approximately $59 billion in assets. The bank operates through a network of 450 branches located in Connecticut, southeastern New York, Massachusetts, Vermont, New Hampshire, and Maine. New England and southeastern New York are the People’s United’s primary market areas. Its operations can be broadly classified into two reportable segments, commercial and retail banking. People’s United is the holding company for People’s United Bank and National Association a national bank in Bridgeport. The bank offers commercial banking, retail banking and wealth management services to individual, corporate and municipal customers. Traditional banking activities are provided within New England and southeastern New York. In addition, the bank also provides specialized financial services customized for specific markets like personal, institutional and employee benefit trust; cash management; and municipal banking. People’s United also provides brokerage, financial/ investment advisory services, investment management, insurance, and financing services.

Investment Data

2. Caterpillar

CAT - CaterpillarCaterpillar is a leading global manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. The company operates through Construction Industries (39% of sales), Resource Industries (17%), Energy & Transportation (38%) and Financial Products (6%) segments. It also provides financing and related services. Caterpillar has a huge brand portfolio consisting of over 20 well-known brands. Over the last 90 years in service, customers trust Caterpillar for their basic infrastructure, energy and natural resources needs. The company derives 59% of its revenues from outside the U.S. - Asia Pacific (23% of total 2018 sales); Europe, Africa, Middle East (22%); North America (47%) and Latin America (8%). Caterpillar operates through a network of 168 dealers in 193 countries. It has installed over 1.5 million construction machines and built more than 20 million engines globally. Caterpillar is favorably placed to gain from higher demand for oil and gas activities and increased mining production and commodity prices.

Investment Data

1. Essex Property Trust

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

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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