2 Dividend Aristocrats For 20% Returns In 2022 (SWK &VFC)

Summary

2021 was one of the best years in market history, and after 12 years of 19% annual returns, stocks are 32% historically overvalued.
But it's always and forever a market of stocks and not a stock market. Today, you can still find wonderful blue-chips for any investment need, goal, or time horizon.
Today, VFC, SWK, and one high-yield blue-chip represent three great dividend aristocrats that analysts expect to soar 20% to 30% in 2022 alone.
Together, they yield 2.9%, more than Vanguard's high-yield ETF, and are expected to deliver 12.2% long-term returns, 1% more than the aristocrats, and 0.5% more than the Nasdaq.
That means potentially triple the long-term inflation-adjusted returns of the S&P 500, and all from three of the world's highest quality and most dependable dividend growth blue-chips. This is a recipe for a potentially rich 2022 and beyond, and a great way of making your own luck on Wall Street in the new year.
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economic recovery in 2022 after the fall due to the covid19 coronavirus pandemic. Businessman pointing 2022 graph corporate future growth plan — Pavel Muravev/iStock via Getty Images

It's been a crazy few years for stocks. In 2018 we saw two corrections including a 20% correction at the end of the year that resulted in the only negative year for the market in the past 12 years.

A 4.5% dip.

And then in 2019 stocks soared 31%, another 18% in 2020 (the pandemic crash year), and now stocks are up almost 30% in 2021.

Average annual returns SP 500 (Source: Michael Batnick)

In fact, while the 19% annual returns of the last 12 years are remarkable, stocks have actually delivered 25% returns over the last three years.

This has created a sense of euphoria among many investors, who have very unrealistic return expectations.

(Source: Michael Batnick)

For the next decade, investors expect almost 18% returns, literally on par Buffett, to continue.

Goldman, Moody's, and Vanguard have much more conservative forecasts, to put it mildly.

Vanguard Nominal (Non-Inflation Adjusted) Return Forecast Most analysts, according to FactSet, expect slightly better returns over the next five years.

Year	Upside Potential By End of That Year	Consensus CAGR Return Potential By End of That Year	Probability-Weighted Return (Annualized)	Inflation And Risk-Adjusted Expected Returns
2026	20.04%	3.72%	2.79%	0.09%

(Source: DK S&P 500 Valuation And Total Return Tool)

But I don't know about you, but the prospect of 3% to 4% returns in stocks, after a decade of almost 20% returns, is rather depressing.

But fear not friends, because it's always and forever a market of stocks, not a stock market.

Even with the S&P 500 now 32% historically overvalued according to JPMorgan, there are still world-class companies you can safely buy with the market at record highs.

This includes the bluest of blue-chips, the dividend aristocrats, many of which are still coiled springs set to soar in 2022 and beyond.

So, let me show you why Stanley Black & Decker (SWK), V.F. Corp (VFC), and a 4.1% yielding aristocrat can potentially enjoy very safe dividends today, and up to 30% total returns in 2022.

for the highest yielding aristocrat with the most potential upside in 2022, read the full version of this article through a two week free trial with Dividend Kings

V.F. Corp.: A Fast-Growing Dividend King That Could Soar 20% In 2022

Full Deep Dive (Including Complete Risk Profile)

3 High-Yield Dividend Aristocrats To Buy During The September Sell-Off

Reasons To Potentially Buy VFC

very safe 2.8% yield (81% safety score)
84% low-risk 13/13 ultra SWAN quality dividend king
50-year dividend growth steak
8% historically undervalued (potentially good buy)
fair value: $78.97
20.2X earnings vs 19 to 22.5 historical
A- stable credit rating = 2.5% 30-year bankruptcy risk
risk management consensus 90th industry percentile = exceptional
11% to 48% CAGR margin-of-error growth consensus range
34.1% CAGR median growth consensus
management guidance 12% to 14% CAGR
5-year consensus total return potential: 13% to 29% CAGR
12-month total return consensus: 20%

Investment Strategy	Yield	LT Consensus Growth	LT Consensus Total Return Potential	Long-Term Risk-Adjusted Expected Return	Long-Term Inflation And Risk-Adjusted Expected Returns
V.F. Corp (FactSet Consensus)	2.80%	34.10%	36.9%	71.0%	107.9%
V.F. Corp (Management Guidance)	2.8%	13%	15.8%	11.1%	8.7%
Value	2.1%	12.1%	14.2%	10.0%	7.6%
High-Yield	2.7%	11.0%	13.7%	9.6%	7.2%
High-Yield + Growth	1.7%	11.0%	12.7%	8.9%	6.5%
Safe Midstream	6.1%	6.2%	12.3%	8.6%	6.2%
Safe Midstream + Growth	3.3%	8.5%	11.8%	8.3%	5.9%
Nasdaq (Growth)	0.7%	11.0%	11.7%	8.2%	5.8%
Dividend Aristocrats	2.3%	8.9%	11.2%	7.8%	5.5%
REITs + Growth	1.8%	8.9%	10.6%	7.4%	5.0%
REITs	3.0%	7.0%	9.9%	6.9%	4.6%
S&P 500	1.4%	8.5%	9.9%	6.9%	4.5%
60/40 Retirement Portfolio	1.9%	5.1%	7.0%	4.9%	2.5%
10-Year US Treasury	1.47%	0.0%	1.5%	1.0%	-1.4%

(Sources: Morningstar, FactSet, YCharts)

V.F. Corp is one of my favorite dividend kings due to its rapid growth and Ultra SWAN quality, including risk management that's in the top 10% of its industry according to rating agencies.

How realistic are analysts' 20% return forecasts for 2022?

VFC 2022 Consensus Fair Value Return Potential

(Source: FAST Graphs, FactSet Research)

Almost entirely justified, with a return to fair value representing a 17% total return in 2022.

VFC 2026 Consensus Fair Value Return Potential

(Source: FAST Graphs, FactSet Research)

if VFC grows as expected and returns to historical mid-range fair value
then 89% total returns or 13% CAGR
compared to 20% for the S&P 500
potentially almost 5X the market's consensus returns and a very safe 2.8% yield that's more than Vanguard's high-yield ETF

VFC Investment Decision Score

(Source: DK Automated Investment Decision Tool)

Almost double the market's yield and three times the 5-year risk-adjusted expected return? And all in a low-risk Ultra SWAN quality dividend king package that's growing at 13% per year?

That's as close to a perfect dividend growth investment opportunity as you can find in today's 32% overvalued market.

Stanley Black & Decker: Analysts Are A Tad Overly Enthusiastic About This Fast-Growing Ultra SWAN Dividend King But Not By Much

Full Deep Dive (Including Complete Risk Profile)

Daily Blue-Chip Deal Video: Stanley Black & Decker Is A Fast-Growing Ultra SWAN Dividend King At A Reasonable Price

Reasons To Potentially Buy SWK

very safe 1.7% yield (93% safety score)
89% low-risk 13/13 ultra SWAN quality dividend king
54-year dividend growth steak
1% historically undervalued (potentially reasonable buy)
fair value: $188.53
15.7X earnings vs 16.5 to 18 historical
A stable credit rating = 0.66% 30-year bankruptcy risk
risk management consensus 79th industry percentile = good
8% to 16% CAGR margin-of-error growth consensus range
11.8% CAGR median growth consensus
5-year consensus total return potential: 11% to 17% CAGR
12-month total return consensus: 22%

Investment Strategy	Yield	LT Consensus Growth	LT Consensus Total Return Potential	Long-Term Risk-Adjusted Expected Return	Long-Term Inflation And Risk-Adjusted Expected Returns
Value	2.1%	12.1%	14.2%	10.0%	7.6%
High-Yield	2.7%	11.0%	13.7%	9.6%	7.2%
Stanley Black & Decker	1.7%	11.8%	13.5%	9.5%	7.1%
High-Yield + Growth	1.7%	11.0%	12.7%	8.9%	6.5%
Safe Midstream	6.1%	6.2%	12.3%	8.6%	6.2%
Safe Midstream + Growth	3.3%	8.5%	11.8%	8.3%	5.9%
Nasdaq (Growth)	0.7%	11.0%	11.7%	8.2%	5.8%
Dividend Aristocrats	2.3%	8.9%	11.2%	7.8%	5.5%
REITs + Growth	1.8%	8.9%	10.6%	7.4%	5.0%
REITs	3.0%	7.0%	9.9%	6.9%	4.6%
S&P 500	1.4%	8.5%	9.9%	6.9%	4.5%
60/40 Retirement Portfolio	1.9%	5.1%	7.0%	4.9%	2.5%
10-Year US Treasury	1.47%	0.0%	1.5%	1.0%	-1.4%

(Sources: Morningstar, FactSet, YCharts)

How does the idea of earning more than 3X the Nasdaq's yield from a dividend king that is expected to potentially outperform the Nasdaq overtime strike you?

And in 2022 alone, analysts expect SWK to deliver 22% total returns that will more than double what analysts expect from the S&P 500.

12-Month Forward S&P Bottom-Up Consensus	5225	Forward PE Forecast (12 Months From Now)	Forward Overvaluation Forecast (12 Months From Now)
12-Month Consensus Market Return Potential	9.1%	21.12	25.7%
12-Month Historical Margin-of-Error Consensus Market Return Potential	7.5%	Historical Margin Of Error	1.60%

(Source: DK S&P 500 Valuation And Total Return Tool, FactSet)

SWK 2022 Consensus Fair Value Return Potential

(Source: FAST Graphs, FactSet Research)

SWK's 22% consensus return forecast isn't justified by its reasonable valuation, though a very strong 13% return is what investors can expect if it grows as expected and ends next year at fair value.

SWK 2026 Consensus Fair Value Return Potential

(Source: FAST Graphs, FactSet Research)

if SWK grows as expected and returns to historical mid-range fair value
then 84% total returns or 13% CAGR
compared to 20% for the S&P 500
potentially almost 5X the market's consensus returns and a very safe 1.7% yield that's almost 4X more than the Nasdaq... which analysts expect SWK to beat over time

SWK Investment Decision Score

(Source: DK Automated Investment Decision Tool)

Higher yield than the market? Check. Almost 4X the risk-adjusted expected returns? Yup.

SWK might require a bit of overvaluation in 2022 to achieve the 22% gains analysts expect but at fair value, this Buffett-style "wonderful company at a fair price" remains one of the most reasonable and prudent dividend kings you can safely buy with the market near record highs.

All Three Aristocrats Together

For anyone comfortable with their risk profiles, these three aristocrats represent a potentially excellent combination of safety, quality, and dependability.

One that

yields 2.9%
is 10% undervalued
is expected to deliver 17% of your investment back in dividends in the next five years
and has almost 4X the 5-year risk-adjusted expected returns of the S&P 500

(Source: DK Automated Investment Decision Tool)

Investment Strategy	Yield	LT Consensus Growth	LT Consensus Total Return Potential	Long-Term Risk-Adjusted Expected Return	Long-Term Inflation And Risk-Adjusted Expected Returns
Safe Midstream	6.1%	6.2%	12.3%	8.6%	6.2%
Safe Midstream + Growth	3.3%	8.5%	11.8%	8.3%	5.9%
REITs	3.0%	7.0%	9.9%	6.9%	4.6%
3 Aristocrats That Could Soar 20% to 30% In 2022	2.9%	9.3%	12.2%	8.5%	6.2%
High-Yield	2.7%	11.0%	13.7%	9.6%	7.2%
Dividend Aristocrats	2.3%	8.9%	11.2%	7.8%	5.5%
Value	2.1%	12.1%	14.2%	10.0%	7.6%
60/40 Retirement Portfolio	1.9%	5.1%	7.0%	4.9%	2.5%
REITs + Growth	1.8%	8.9%	10.6%	7.4%	5.0%
High-Yield + Growth	1.7%	11.0%	12.7%	8.9%	6.5%
10-Year US Treasury	1.47%	0.0%	1.5%	1.0%	-1.4%
S&P 500	1.4%	8.5%	9.9%	6.9%	4.5%
Nasdaq (Growth)	0.7%	11.0%	11.7%	8.2%	5.8%

(Sources: Morningstar, FactSet, YCharts)

Together these aristocrats not only have the potential for a 24% gain in 2022, but analysts expect them to deliver 1% higher long-term returns than the aristocrats as a whole.

What can 1% extra returns get you over time?

3 Aristocrats Vs S&P 500 Vs Aristocrats Inflation-Adjusted Long-Term Return Forecast: $1,000 Investment

the bond market is pricing in 2.4% inflation for the next 30 years
2.7% for the next 5 years

Time Frame (Years)	7.5% CAGR Inflation-Adjusted S&P Consensus	8.8% Inflation-Adjusted Aristocrat Consensus	9.8% 3 Aristocrats That Could Soar Up To 30% In 2022	Difference Between 3 Aristocrats And S&P
5	$1,435.63	$1,524.56	$1,595.92	$160.29
10	$2,061.03	$2,324.28	$2,546.97	$485.94
15	$2,958.88	$3,543.51	$4,064.76	$1,105.88
20	$4,247.85	$5,402.29	$6,487.04	$2,239.19
25	$6,098.34	$8,236.11	$10,352.82	$4,254.48
30	$8,754.96	$12,556.45	$16,522.29	$7,767.33
35	$12,568.87	$19,143.06	$26,368.29	$13,799.42
40	$18,044.24	$29,184.74	$42,081.73	$24,037.49
45	$25,904.84	$44,493.88	$67,159.17	$41,254.33
50	$37,189.75	$67,833.58	$107,180.80	$69,991.06

(Source: DK Research Terminal, FactSet)

If you are patient enough, you, your children, grandchildren, or estate, could enjoy an extra $70,000 per $1,000 investment, in inflation-adjusted wealth.

Time Frame (Years)	Ratio Aristocrats/S&P	Ratio Aristocrats 3 Aristocrats/ S&P 500
5	1.06	1.11
10	1.13	1.24
15	1.20	1.37
20	1.27	1.53
25	1.35	1.70
30	1.43	1.89
35	1.52	2.10
40	1.62	2.33
45	1.72	2.59
50	1.82	2.88

(Source: DK Research Terminal, FactSet)

Or to put it another way, these three aristocrats could double the market's returns over the next 30 years and almost triple them over the next 50.

Bottom Line: These Three Aristocrats Could Soar 20% To 30% In 2022

2020 and 2021 were dramatic years, to say the least, and 2022 is sure to have its fair share of market volatility and surprises.

Inflation, Fed tightening, the ongoing pandemic, the best job market in over 50 years, all will do battle for the hearts and minds of investors in the new year.

But no matter what happens in 2022 with the economy, interest rates, the pandemic, or the stock market, one thing will remain constant.

Year	Aristocrats Returns	Aristocrats Cumulative Returns	S&P 500 Total Returns	S&P Cumulative Returns
1990	5.70%	105.70%	-3.2%	96.8%
1991	38.50%	146.4%	30.4%	126.2%
1992	10.10%	161.2%	7.6%	135.8%
1993	4.30%	168.1%	10.1%	149.5%
1994	0.90%	169.6%	1.3%	151.5%
1995	34.60%	228.3%	37.6%	208.4%
1996	20.90%	276.0%	22.9%	256.2%
1997	34.50%	371.3%	33.3%	341.5%
1998	16.80%	433.6%	28.6%	439.1%
1999	-5.40%	410.2%	21.0%	531.4%
2000	10.10%	451.7%	-9.1%	483.0%
2001	10.80%	500.4%	-11.9%	425.5%
2002	-9.90%	450.9%	-22.1%	331.5%
2003	25.40%	565.4%	28.7%	426.6%
2004	15.50%	653.1%	10.9%	473.1%
2005	3.70%	677.2%	4.9%	496.3%
2006	17.30%	794.4%	15.8%	574.7%
2007	-2.10%	777.7%	5.6%	606.9%
2008	-21.90%	607.4%	-37.0%	382.4%
2009	26.60%	768.9%	26.4%	483.3%
2010	19.40%	918.1%	15.1%	556.3%
2011	8.30%	994.3%	2.1%	568.0%
2012	16.90%	1162.4%	16.0%	658.8%
2013	32.30%	1537.8%	32.4%	872.3%
2014	15.80%	1780.8%	13.7%	991.8%
2015	0.90%	1796.8%	1.4%	1005.7%
2016	11.80%	2008.8%	12.0%	1126.4%
2017	21.70%	2444.7%	21.8%	1371.9%
2018	-2.70%	2378.7%	-4.4%	1311.5%
2019	28%	3044.8%	31.5%	1724.7%
2020	8.70%	3309.7%	18.4%	2042.0%
2021 YTD	24.83%	4131.4%	29.2%	2638.9%
Aristocrats Median Return Since 1990	Average Return Since 1990	Annualized Returns Since 1990	S&P 500 Annual Returns Since 1990	Annual Outperformance
13.65%	13.2%	12.42%	10.90%	1.52%

(Sources: Ploutos, FactSet, DK Research Terminal)

Dividend aristocrats, the bluest of blue-chips, will always remain a great way to exponentially grow your income and wealth over time.

Today V.F. Corp and Stanley Black & Decker represent two out of three reasonably to attractively valued aristocrats that offer 2.9% very safe yield today, the potential for 12.2% Nasdaq beating returns tomorrow, and up to 24% upside in 2022 alone.

If you're tired of obsessing over the market's short-term gyrations, and losing sleep worrying about Wall Street's everlasting Wall of Worry, then try entrusting your hard-earned savings to the worlds' highest quality blue-chips.

Luck is what happens when preparation meets opportunity. " - Roman philosopher Seneca the younger

When you buy reasonably to attractively valued aristocrats, retiring rich and staying rich in retirement isn't a matter of luck, just patience.

From everyone at iREIT and Dividend Kings, I want to wish you and yours a safe, healthy, relaxing, and profitable new year.

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This article was written by

Dividend Sensei

110.12K Followers

Dividend Sensei (Adam Galas) is an Army veteran and stock analyst with 20+ years of market experience.

He is a founding author of the investing group The Dividend Kings which focuses on helping investors safeguard and grow their money in all market conditions through the highest-quality dividend investments. Dividend Sensei and the team of analysts (Brad Thomas, Justin Law, Nicholas Ward, Chuck Carnevale, and Sebastian Wolf) help members invest more intelligently in dividend stocks. Features include: 13 model portfolios, buy ideas, company research reports, and a thriving chat community for readers looking to learn how to invest more intelligently in dividend stocks. Learn more.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of VFC, SWK either through stock ownership, options, or other derivatives. 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.

Dividend Kings owns VFC, and SWK in our portfolios.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.