Worst Performing Dividend Aristocrats Over The Past 5 Years

|
 |  Includes: ED, NUE, T, WMT, XOM
by: Stan Stafford

Summary

The Dividend Aristocrats are a list of dividend paying stocks that have increased their payouts for 25 consecutive years or longer.

Out of 54 qualified stocks, Nucor, AT&T, Consolidated Edison, Exxon Mobil, and Walmart are the worst performing stocks over the past five years.

Even though these are the worst performing aristocrats over the past five years, I believe they should still be considered by long term investors, especially AT&T and Exxon Mobil.

Overview

Recently, I wrote an article discussing the best performing dividend aristocrats over the past five years. In this article, I will be looking at the worst performing dividend aristocrats over the past five years to see if the stocks are likely to continue their poor performance or if now is a good time to consider adding these stocks to your portfolio.

As most already know, the dividend aristocrats make up a list of dividend paying stocks published by S&P that have increased their dividend payouts for 25 consecutive years or longer. In order to be included in this list, a company has to meet the following criteria:

  • Has to be a member of the S&P 500
  • Must have increased dividends for at least 25 consecutive years
  • Must have at least $3 billion in market capitalization
  • Must have an average trading volume of $5 million over the past six months

Currently there are 54 stocks that meet this criteria. The following five stocks have seen the worst price returns over the past five years:

  • Nucor (NYSE:NUE)
  • AT&T (NYSE:T)
  • Consolidated Edison (NYSE:ED)
  • Exxon Mobil (NYSE:XOM)
  • Walmart (NYSE:WMT)

Nucor

Nucor Corporation is one of the largest steel producers in the country and operates in the following segments: Steel Mills, Steel Products, and Raw Materials. The company was founded in 1940 and is headquartered in Charlotte, North Carolina.

Despite it's mediocre stock performance, Nucor has a fairly solid overall financial position.

Gross Profit Margin (quarterly) 7.88%
Profit Margin (quarterly) 3.48%
Return on Assets ((NYSE:TTM)) 3.38%
Return on Equity 6.42%
PE Ratio 34.47x
Revenue $19.05B
Quarterly Revenue Growth (yoy) 9.96%
EPS Quarterly Growth (yoy) 24.12%
Click to enlarge

Looking at the chart below, you can see that while Nucor has been one of the worst performing dividend aristocrats over the past five years, it has returned just slightly under the S&P 500. If you factor in total returns (including dividends), then Nucor has slightly outperformed the S&P 500 over the past five years.

Click to enlarge

NUE data by YCharts

AT&T

AT&T is one of the large telecommunications companies in the world. The company provides landline telephone services, mobile services, broadband internet services, and subscription televisions services. The company was founded in 1876 and is currently headquartered in Dallas, Texas.

While AT&T has some issues maintaining positive earnings growth, recent quarters have shown a significant improvement which has helped lead to an overall solid financial situation for the company.

Gross Profit Margin (quarterly) 63.10%
Profit Margin (quarterly) 20.85%
Return on Assets 6.67%
Return on Equity 20.60%
PE Ratio 10.28x
Revenue $128.75B
Quarterly Revenue Growth (yoy) 1.80%
Click to enlarge

Click to enlarge

T EPS Basic (Quarterly) data by YCharts

Looking at the chart below, you can see that even AT&T's total return was significantly worse than the S&P 500's price return over the past five years.

Click to enlarge

T data by YCharts

Consolidated Edison

Consolidated Edison is one of the largest energy companies in the country, providing a wide range of energy-related products and services to its customers. The company was founded in 1884 and is headquartered in New York, New York.

Despite seeing flat revenue growth over the past five to six years, the overall financial stability of Consolidated Edison remains strong.

Gross Profit Margin (quarterly) 67.60%
Profit Margin (quarterly) 8.16%
Return on Assets 2.56%
Return on Equity 8.84%
PE Ratio 15.29x
Revenue $12.35B
Quarterly Revenue Growth (yoy) -1.17%
EPS Quarterly Growth (yoy) 12.85%
Click to enlarge

Consolidated Edison has done a great job of not letting its stalled revenue growth prevent it from seeing increases in earnings.

Click to enlarge

ED Revenue (TTM) data by YCharts

Looking at the chart below, you can see that just like with AT&T, Consolidated Edison has significantly underperformed the S&P 500 over the past five years even when factoring in total returns.

Click to enlarge

ED data by YCharts

Exxon Mobil

Exxon Mobil Corporation is an American oil and gas company that operates multinationally in the following three segments: Upstream, Downstream, and Chemicals. The company was founded in 1870 and is headquartered in Irving, Texas.

Exxon Mobil has seen some recent struggles in regards to revenue and earnings growth.

Gross Profit Margin (quarterly) 27.84%
Profit Margin (quarterly) 7.53%
Return on Assets 9.53%
Return on Equity 19.35%
PE Ratio 13.19x
Revenue $438.51B
Quarterly Revenue Growth (yoy) -3.35%
EPS Quarterly Growth (yoy) -12.64%
Click to enlarge

Looking at the chart below, you can see that the total return of Exxon Mobil over the past five years has been less than 50% of the S&P 500's price return.

Click to enlarge

XOM data by YCharts

Walmart

Walmart Stores, Inc. is one of the largest retailers in the world operating in three segments: Walmart U.S., Walmart International, and Sam's Club. Walmart was founded in 1945 and is headquartered in Bentonville, Arkansas.

Walmart operates in a low margin industry, but has been able to maintain a strong financial position for years. Walmart continues to see revenue growth, while at a slow rate, and has seen several instances of short term earnings declines.

Gross Profit Margin (quarterly) 24.47%
Profit Margin (quarterly) 3.42%
Return on Assets 7.85%
Return on Equity 21.77%
PE Ratio 15.97x
Revenue $476.53B
Quarterly Revenue Growth (yoy) 1.51%
EPS Quarterly Growth (yoy) -18.46%
Click to enlarge

Looking at the chart below, you can see how Walmart has performed compared to the S&P 500 over the past five years.

Click to enlarge

WMT data by YCharts

Conclusion

While the purpose of the article I wrote related to the best performing aristocrats over the past five years was to give a quick look at whether the stocks that have seen the most success over the past five years are likely to repeat their performance, the purpose of this article is a little different. I wanted to make it clear that while looking at past performance is one important factor, it shouldn't be valued too highly. The current financial condition of each company along with its current valuation and future outlook are more important.

So while Coca-Cola, McDonald's, Johnson & Johnson, Walmart, and AT&T are some of the more popular and discussed dividend aristocrats, they do not necessarily offer the best long term returns, and in some instances perform worse than the market in general. That doesn't mean that some of the worst performers in the past, might not be the best performing stocks over the next five years.

While I think that each of the five stocks mentioned above are worth considering as long term buys, I believe that AT&T and Exxon Mobil are the two most attractive stocks out of the five. Even though AT&T and Exxon Mobil operate in competitive markets, I feel that each company is positioned strongly for future long term returns and both are currently attractively priced based on historical PE ratios.

I recently wrote an article related to Exxon Mobil and described it as what I like to call a "Real Deal" stock. And several months ago, AT&T was included in an article in which I listed high yielding stocks, investors should be dripping. As always, I suggest individual investors perform their own research before making any investment decisions.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.