Best Performing Dividend Aristocrats Of The Past 5 Years

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 |  Includes: DOV, PNR, PPG, SHW, VFC
by: Stan Stafford

Summary

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

Out of 54 Dividend Aristocrats, PPG Industries, VF Corporation, Sherwin Williams, Dover Corporation, and Pentair are the best performing over the past five years.

While I believe all 5 companies should be considered as long term buys, I feel that PPG Industries and Dover Corporation are the two more fairly priced stocks currently.

Overview

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 are the five stocks that have seen the best price returns over the past five years:

  • PPG Industries (NYSE:PPG)
  • VF Corporation (NYSE:VFC)
  • Sherwin Williams (NYSE:SHW)
  • Dover (NYSE:DOV)
  • Pentair (NYSE:PNR)

In this article I will be taking a look at each of these stocks to see if similar returns are likely in their future or if these currently are overvalued stocks that investors may want to steer clear of for the time being. I will be looking at each company's current financials, valuation, recent trading activity, and earnings.

PPG Industries

PPG Industries supplies paints, coatings, optical products, specialty materials, chemicals, glass and fiber glass throughout various countries globally. The company was founded in 1883 and is currently headquartered in Pittsburgh, Pennsylvania.

The company has solid financials, strong earnings, and obviously an impressive dividend history.

Gross Profit Margin (Quarterly) 43.06%
Profit Margin (Quarterly) 6.86%
Return on Assets (NYSE:TTM) 20.24%
Return on Equity 67.21%
PE Ratio 8.82x
Revenue 15.11B
Quarterly Revenue Growth (YOY) 14.15%
EPS Quarterly Growth (YOY) 22.58%
Click to enlarge

Looking at the chart below, you can see just how impressive the long term price returns of PPG Industries has been compared to the returns shown by the S&P 500.

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PPG data by YCharts

VF Corporation

VF Corporation is an American apparel corporation that specializes in the manufacturing of jeanswear, intimate apparel, daypacks, and workwear. The company was founded in 1899 and is headquartered in Greensboro, North Carolina.

While VF Corporation's recent revenue and earnings growth isn't quite as impressive as PPG's, the overall financial condition of the company remains solid.

Gross Profit Margin (Quarterly) 48.19%
Profit Margin (Quarterly) 11.18%
Return on Assets 12.24%
Return on Equity 22.32%
PE Ratio 21.70x
Revenue $11.42B
Quarterly Revenue Growth (YOY) 8.47%
EPS Quarterly Growth (YOY) 10.14%
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Looking at the chart below, you can see that VF Corporation has easily outperformed the S&P 500 over the past five years, and has really taken off the past couple of years.

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^SPX data by YCharts

Sherwin Williams

Sherwin Williams manufactures, distributes, and markets paints, coatings and related products to professional, industrial, commercial, and retail customers throughout various countries, with a primary concentration in the North and South America continents. The company was founded in 1866 and is headquartered in Cleveland, Ohio.

Sherwin Williams has solid looking financials and very strong double digit increases in both revenue and earnings growth.

Gross Profit Margin (Quarterly) 45.75%
Profit Margin (Quarterly) 4.73%
Return on Assets 11.72%
Return on Equity 42.91%
PE Ratio 26.54x
Revenue $10.19B
Quarterly Revenue Growth (YOY) 10.59%
EPS Quarterly Growth (YOY) 74.61%
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Looking at the chart below, you can see how well Sherwin Williams has performed against the S&P 500 over the past five years.

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^SPX data by YCharts

Dover

Dover Corporation is a diversified global industrial manufacturer that operates in the following segments: Energy, Communication Technologies, Engineered Systems and Printing & Identification. The company was founded in 1947 and is headquartered in Downers Grove, Illinois.

Just like PPG Industries, VF Corporation, and Sherwin Williams, Dover Corporation has a fairly rock solid financial position.

Gross Profit Margin (Quarterly) 37.60%
Profit Margin (Quarterly) 8.78%
Return on Assets 9.55%
Return on Equity 19.81%
PE Ratio 14.34x
Revenue $8.73B
Quarterly Revenue Growth (YOY) 9.70%
EPS Quarterly Growth (YOY) 26.89%
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Looking at the chart below, you can see that Dover has virtually outperformed the S&P 500 every step of the way over the past five years.

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^SPX data by YCharts

Pentair

Pentair, Inc. is a diversified industrial company that operates the following groups. Pentair's water technologies group provides products and systems used to move, treat, store and aid in the use of water. Pentair's technical products group designs and manufactures enclosures that house and protect sensitive electronics and electrical components. The company was founded in 1966 and is headquartered in Golden Valley, Minnesota.

There's a reason that these five companies have performed so well over the past five years. They all have solid financials and Pentair follows suit. While it had a downturn in earnings, the company is back on track as you can tell by the chart displayed below this table.

Gross Profit Margin (Quarterly) 33.60%
Profit Margin (Quarterly) 8.25%
Return on Assets 4.57%
Return on Equity 8.78%
PE Ratio 30.23x
Revenue $7.48B
Quarterly Revenue Growth (YOY) 9.47%
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PNR EPS Basic (TTM) data by YCharts

Looking at the chart below, you can see how Pentair compares to the S&P 500 over the past five years.

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^SPX data by YCharts

Conclusion

While I think each of the dividend aristocrats are worth looking at as possible long term buys, if you don't want to research all 54 companies, I think these five are a great place to start. While there is no guarantee these stocks will match their impressive performance over the next five years, they all do have solid fundamentals, increasing revenues, nice returns on assets and equity, and of course, a long history of consistent and increasing dividend payouts.

For investors focused on dividend growth, you can see from the chart below that PPG Industries is the one company out of the five that has had the least impressive dividend growth over the past five years.

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PPG Dividends Paid (TTM) data by YCharts

While PPG's dividend growth has been lower than the other four companies, it has been consistent. And I believe that PPG's low PE ratio makes it an attractive stock at the moment along with Dover. I think all five stocks are worth considering as long term investments, but I feel as though value investors might want to wait for a dip before adding VF Corporation, Sherwin Williams, or Pentair as they seem to be slightly overvalued at the moment (based on historical PE ratios). 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.