10 Sleep Well At Night Dividend Aristocrat Bargains

May 18, 2022 12:35 PM ETCL, ECL, ENB, MMM, MO, NVS, NWN, RHHBY, RNR, UGI, ENB:CA37 Comments22 Likes


  • The speed with which stocks have plunged has many investors shell-shocked. The 60/40 retirement portfolio has fallen nearly as much as stocks.
  • Low volatility dividend aristocrats are a great choice for those looking to build the ultimate sleep well at night retirement portfolio.
  • Today CL, NVS, NWN, RHHBY, RNR, UGI, MO, ENB, MMM, and ECL are the lowest volatility aristocrats you can safely buy at reasonable to attractive valuations.
  • They yield a very safe 3.6%, are 15% undervalued, growing at 7.2%, and analysts expect long-term returns of 10.8%, similar to the 11.1% they delivered since 2003.
  • These aristocrats fell half as much as the S&P 500 during the Great Recession and averaged 11% annual volatility over the last 20 years, 33% less than the S&P 500 while outperforming the broader market. They can help you sleep well at night in all economic conditions while potentially retiring in safety and splendor.
  • Looking for a portfolio of ideas like this one? Members of The Dividend Kings get exclusive access to our model portfolio. Learn More »

Mother putting daughter to sleep at home

FG Trade/E+ via Getty Images

This has been a hard year for many investors for three main reasons.

tweet from charlie bilello

Charlie Bilello

It's the 2nd worst start to the year in history. While the magnitude of the decline is completely normal by historical standards the rate of decline has shocked many.

Next, we have the worst bond bear market in history.

Tweet from Charlie Bilello

Charlie Bilello

It's not just the worst year for bonds but the worst by far. The largest decline in a single year before 2022 was -2.9% in 1994.

This means that the conservative 60/40 stock/bond retirement portfolio hasn't just failed in 2022, it's failed rather impressively.

S&P 500, Nasdaq, Vanguard balanced index inv, proshares S&P 500 dividend aristocrats total return price % off high total return price % off high


In 2022 so far the 60/40 is down 14%, twice as much as the dividend aristocrats who have benefited from a flight to safety.

And finally, we have so much uncertainty surrounding the perfect storm of negative risk factors that are likely to persist all year or even into 2023.

  • war uncertainty
  • inflation uncertainty
  • Fed policy uncertainty
  • growth worries/recession risk

Many investors want to know have we bottomed?

The simple answer is that no one knows.

Time Frame

Historically Average Bear Market Bottom

Non-Recessionary Bear Markets Since 1965 -21%
Non-Recessionary Bear Markets Since 1928 -26%
Bear Markets Since WWII -30%
Recessionary Bear Markets Since 1965 -36%
All 140 Bear Markets Since 1972 -37%
Average Recessionary Bear Market Since 1928 -40%

(Sources: Ben Carlson, Bank of America, Oxford Economics)

If we avoid recession then we might have bottomed already or be very close to bottom.

  • not that this necessarily means a rapid recovery, we could trade flat after bottoming for 6 to 12 months

If we get a mild recession, then Goldman and Citigroup think the market bottoms at -24% to -25% per their most recent models.

And if we get a severe recession, in a worst-case scenario that Deutsche Bank considers its base case, then we could have a long way to fall still.

  • Deutsche Bank thinks inflation will remain high through 2023
  • forcing the Fed to hike to 5% or even 6%
  • triggering a severe recession in late 2023
  • that ends in mid-2024

Morgan Stanley, which began warning of a bear market in late 2021, has just updated its latest base case forecast.

  • -28% on the S&P
  • with the S&P 500 at 3,900 by late spring 2023

Moody's, while not providing a market forecast, thinks a mild recession is the base-case scenario sometime in late 2023 or early 2024.

And for those who enjoy doom and gloom, you'll love Societe General's latest base-case, which calls for a 40% crash...by mid-July 2022.

  • they model the Fed hiking just 1 more time, and then reversing course and slashing rates in July
  • not because of recession (no recession until 2023) but because the market is down so much

The good news is that SocGen's forecast is absurd, at least the specifics.

  • economists expect inflation to fall by just 0.2% per month through the end of the year
  • 7.9% in July and 6.9% by the end of the year
  • Fed is almost certainly not going to pivot and start cutting rates and buying more bonds just because the stock market is down

The good and bad news about the Fed put is that the Fed will likely step in if stocks fall...hard enough to disrupt credit markets.

  • Jerome Powell has said that the Fed has always cared about credit markets...but not the stock market
  • it's just that when stocks fall hard the credit markets are also affected
  • thus the "Fed Put on stocks" has actually been the "Fed put on credit markets"

Morgan Stanley thinks that for the stock market to destabilize credit markets would take an approximately 40% to 45% decline.

  • and it would have to be a rapid decline
  • if it happens over 12+ months then credit markets would likely remain liquid and the Fed would be free to ignore the stock market crash

So what does all this mean? Should we live in fear of the most bearish forecasts from economists?

Should we be petrified at Robert T. Kiyosaki's never-ending forecasts of "the largest stock market crash in history"?

  • which would have to be 88+% in order to come true


Nick Maggiulli

Robert Kiyosaki is a permabear who has been recommending gold instead of stocks since 2011 and kept thousands of investors out of the market during one of the best decades for stocks in history.

Stocks Vs Gold Since April 2011 (Kiyosaki's First Crash Prediction)

portfolio returns

(Source: Portfolio Visualizer Premium)

Since Kiyosaki started scaring people gold is up 2.6% annually far underperforming stocks, the Nasdaq, and a 60/40 retirement portfolio.

portfolio growth

(Source: Portfolio Visualizer Premium)

In fact, including this bear market, and adjusting for inflation, since 2011:

  • 60/40 is up 91% (30X better than gold)
  • S&P is up almost 200% (almost 70X more than gold)
  • Nasdaq is up 367% (over 100X more than gold)
  • gold is up 2.7% (in total not annually)

In other words, following this man's scaremongering advice and you'd have made zero inflation-adjusted returns for the last 11 years.

  • 1/3 of a standard retirement

But let me show you how you can achieve amazing results from the world's best blue-chips, the dividend aristocrats.

  • a generous and very safe yield 2X that of the S&P 500
  • market-beating returns
  • 33% lower volatility than the market

So let me show you the 10 best low volatility aristocrats you can safely buy today, to help you sleep well at night in all economic and market conditions.

10 Sleep Well At Night Dividend Aristocrat Bargains

Dividend kings research terminal

Dividend Kings Zen Research Terminal

I've linked to articles exploring each company's safety, quality, investment thesis, risk profile, valuation, and total return potential.

These 10 low volatility aristocrats represent seven sectors and three countries on two continents.

  • 19.7% average annual volatility
  • vs 23% for aristocrats
  • 28% for standalone companies
  • volatility lower than most utilities

Safety And Quality You Can Trust In All Market And Economic Conditions

Dividend kings research terminal

Dividend Kings Zen Research Terminal

These are some of the highest quality dividend blue-chips on earth.

Metric Dividend Aristocrats

10 Low Volatility Aristocrats

Quality 87% 90%
Safety 89% 92%
Dependability 84% 87%
Long-Term Risk Management Industry Percentile 67% 70%
Average Credit Rating A- Stable BBB+ stable
Average 30-Year Bankruptcy Risk 3.01% 4.02%
Average Dividend Growth Streak (Years) 44.3 41.5
Average Return On Capital 100% 230%
Average ROC Industry Percentile 83% 91%
13-Year Median ROC 89% 123%

(Source: DK Zen Research Terminal)

They offer superior quality, risk-management, and returns on capital than the dividend aristocrats.

How safe are these dividends?

Rating Dividend Kings Safety Score (161 Point Safety Model) Approximate Dividend Cut Risk (Average Recession)

Approximate Dividend Cut Risk In Pandemic Level Recession

1 - unsafe 0% to 20% over 4% 16+%
2- below average 21% to 40% over 2% 8% to 16%
3 - average 41% to 60% 2% 4% to 8%
4 - safe 61% to 80% 1% 2% to 4%
5- very safe 81% to 100% 0.5% 1% to 2%
10 Low Volatility Aristocrats 92% 0.5% 1.4%
Risk Rating Low-Risk (70th industry percentile risk-management consensus) BBB+ Stable outlook credit rating 4.0% 30-year bankruptcy risk

15% OR LESS Max Risk Cap Recommendation (Each)

(Source: DK Research Terminal)

The average risk of a dividend cut in a historically average recession since WWII is about 1 in 200.

The average dividend cut risk in a severe Pandemic or Great Financial Crisis downturn is about 1 in 71.

S&P estimates the average risk of bankruptcy at 4%, a BBB+ stable credit rating.

And six risk rating agencies estimate these aristocrats' average long-term risk management is in the top 30% of their respective industries, better than the aristocrats' 67th percentile.

Wonderful Companies At Wonderful Prices

Dividend kings research terminal

Dividend Kings Zen Research Terminal

The S&P 500 is historically 1% overvalued while these aristocrats are 15% undervalued (potentially good buy).

Their average PE is 15.9 and analysts expect an average gain of 20% in just the next 12 months.

Their fundamentals justify a 23% total return in the next 12 months.

Long-Term Return Fundamentals That Can Help You Retire In Safety And Splendor

dividend kings zen research terminal

Dividend Kings Zen Research Terminal

Not only do these aristocrats offer one of the safest 3.6% yields on earth, but analysts expect 7.2% long-term growth to drive 10.8% CAGR long-term total returns.

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 Years To Double Your Inflation & Risk-Adjusted Wealth

10 Year Inflation And Risk-Adjusted Expected Return

Safe Midstream 5.6% 6.0% 11.6% 8.1% 5.6% 12.9 1.72
10 Low Volatility Aristocrats 3.6% 7.20% 10.8% 7.6% 5.0% 14.4 1.63
10-Year US Treasury 2.9% 0.0% 2.9% 2.9% 0.4% 205.7 1.04
High-Yield 2.8% 10.3% 13.1% 9.2% 6.6% 10.9 1.90
REITs 2.8% 6.5% 9.3% 6.5% 4.0% 18.2 1.47

(Source: Morningstar, FactSet, Ycharts)

This is one of the most attractive high-yield portfolios you can buy today, and most assuredly the lowest volatility other than 10-year treasuries.

What could 10.8% long-term returns mean for you?

Inflation-Adjusted Consensus Return Potential: $1,000 Initial Investment

Time Frame (Years) 7.7% CAGR Inflation-Adjusted S&P Consensus 8.7% Inflation-Adjusted Aristocrat Consensus 8.3% CAGR Inflation-Adjusted Low Volatility Aristocrat Consensus Difference Between Inflation Adjusted Low Volatility Aristocrat Consensus And S&P Consensus
5 $1,445.67 $1,514.08 $1,486.41 $40.74
10 $2,089.97 $2,292.44 $2,209.42 $119.45
15 $3,021.42 $3,470.93 $3,284.12 $262.70
20 $4,367.98 $5,255.26 $4,881.55 $513.57
25 $6,314.67 $7,956.89 $7,256.01 $941.33
30 $9,128.95 $12,047.36 $10,785.42 $1,656.47

(Source: DK Research Terminal, FactSet)

Analysts expect about 11X inflation-adjusted returns over the next 30 years, slightly more than the S&P 500.

Time Frame (Years) Ratio Aristocrats/S&P 500 Ratio Inflation-Adjusted Low Volatility Aristocrat Consensus And S&P Consensus
5 1.05 1.03
10 1.10 1.06
15 1.15 1.09
20 1.20 1.12
25 1.26 1.15
30 1.32 1.18

(Source: DK Research Terminal, FactSet)

The goal with these aristocrats isn't necessarily market smashing returns but rather returns with low volatility.

What evidence is there that these aristocrats can match the market over time much less slightly beat it with minimal volatility?

Historical Returns Since September 2003 (Annual Rebalancing)

The future doesn't repeat, but it often rhymes." - Mark Twain

Past performance is no guarantee of future results, but studies show that blue-chips with relatively stable fundamentals over time offer predictable returns based on yield, growth, and valuation mean reversion.

valuation is almost allx that matters for long-term stock returns

Bank of America

So let's take a look at how these aristocrat bargains have performed over the last 19 years when over 91% of total returns were the result of fundamentals, not luck.


(Source: Portfolio Visualizer Premium)

Analysts expect these low volatility aristocrats are expected to deliver 10.8% long-term returns and they delivered 11.1% over the last two decades.

That's slightly more than the aristocrats, more than gold, and more than a 60/40.

But they did it with just 11% annual volatility compared to 14% for stocks and 17% for gold, and a peak decline of just 26% during the Great Recession, less than a 60/40.

  • 37% better negative volatility-adjusted total returns than a 60/40
  • 53% better negative volatility-adjusted total returns than the S&P
  • 69% better native volatility-adjusted total returns than gold

portfolio growth (Inflation adjusted)

(Source: Portfolio Visualizer Premium)

Over 19 years:

  • 4.5X inflation-adjusted return
  • vs 3.7X return for S&P 500
  • 3.2X return for gold
  • 2.5X return for 60/40


(Source: Portfolio Visualizer Premium)

These low volatility aristocrats delivered very consistent 11% annual returns just as they are expected to in the future.

They consistently outperformed the S&P and Kiyosakwi's beloved gold, with lower volatility, especially during periods of peak market stress.

Drawdowns for historical market stress periods

(Source: Portfolio Visualizer Premium)

During the pandemic, these aristocrats fell 18%, slightly less than the market's 20% in March 2020.

During the Great Recession, they fell 26% vs the 60/40's 33%, gold's 25% and the market's -51%.

In fact, outside of the Pandemic and Great Recession, these low volatility aristocrats haven't suffered a single correction over the past 29 years.

And what about income growth?

Portfolio 2004 Income Per $1,000 Investment 2021 Income Per $1,000 Investment Annual Income Growth Starting Yield 2021 Yield On Cost
S&P 500 $22 $80 7.89% 2.2% 8.0%
10 Low Volatility Aristocrats $30 $262 13.60% 3.0% 26.2%

(Source: Portfolio Visualizer Premium)

Over the last two decades, the S&P delivered solid 8% annual income growth, and these aristocrats about 2X that.

In 2004 they yielded 3% (3.6% today) and today their yield on cost is 26.2% vs the S&P 500's 8%.

What about future income growth?

Analyst Consensus Income Growth Forecast Risk-Adjusted Expected Income Growth Risk And Tax-Adjusted Expected Income Growth

Risk, Inflation, And Tax Adjusted Income Growth Consensus

13.3% 9.3% 7.9% 5.4%

(Source: DK Research Terminal, FactSet)

Analysts expect a very similar 13% long-term income growth in the future.

Adjusting for the risk of these companies now growing as expected, inflation, and taxes, investors can reasonably expect 5.4% long-term income growth.

Now compare that to what they expect from the S&P 500.

Time Frame S&P Inflation-Adjusted Dividend Growth S&P Inflation-Adjusted Earnings Growth
1871-2021 1.6% 2.1%
1945-2021 2.4% 3.5%
1981-2021 (Modern Falling Rate Era) 2.8% 3.8%
2008-2021 (Modern Low Rate Era) 3.5% 6.2%
FactSet Future Consensus 2.0% 5.2%

(Sources: S&P, FactSet, Multipl.com)

What about a 60/40 retirement portfolio?

  • 0.5% consensus inflation, risk, and tax-adjusted income growth.

In other words, these 10 Low Volatility Aristocrats offer:

  • more than 2X the market's yield (and a much safer yield at that)
  • 2.5X the market's expected real income growth
  • 11X better long-term inflation-adjusted income growth than a 60/40 retirement portfolio

This is the power of low volatility dividend aristocrat bargain hunting in a bear market.

Bottom Line: These 10 Sleep Well At Night Dividend Aristocrat Bargains Can Help You Retire In Safety And Splendor

I know it can feel scary right now, with the media full of frightening forecasts about where this bear market might bottom.

Scaremongers like Robert Kiyosaki would have you believe that we're on the verge of the worst market crash in history, and when stocks fall 8% in a single month that sounds a lot more plausible.

But here's why you should ignore these doomsday predictions.

  • the economy is slowing but not crashing
  • the labor market is the strongest it's been in over 50 years
  • consumer spending is still growing robustly
  • corporate earnings are growing at 10%

The economy is NOT on fire, and so a 60%, 70%, or 88+% crash is so unlikely as not to be worth losing sleep over.

Rather than speculating about what MIGHT go wrong with the economy, why not safeguard your hard-earned savings into the world's best companies?

Low volatility aristocrats like CL, NVS, NWN, RHHBY, RNR, UGI, MO, ENB, MMM, and ECL have been around for decades, some over 100 years.

They've literally survived and thrived through the Great Depression, along with numerous recessions both great and small.

They've kept on paying dividends every quarter, even when the market was crashing up to 87%.

These are truly among the safest and most dependable dividend blue-chips on earth, and while I can't tell you what the market will do this year, here's what I can tell you.

  • 3.6% very safe yield
  • BBB+ stable average credit rating (4.0% average bankruptcy risk)
  • 42-year average dividend growth streak
  • 7.2% long-term consensus growth
  • 10.8% long-term return potential vs 11.1% returns since 2003
  • 11% average annual volatility = 33% less than the S&P 500
  • 26% peak decline during the Great Recession = half that of the market
  • 12% lower peak decline than a 60/40 retirement portfolio

If you want to sleep well at night then a high-yield, low-volatility aristocrat portfolio is a great choice.

Whether inflation comes down in one year, or five, whether interest rates peak at 3% or 6%, whether this bear market bottoms at -21% or -40%, these aristocrats are names you can rely on for generous, safe, and steadily growing income.

Not just to help you achieve your long-term financial goals, but also to let you sleep well at night no matter how crazy the market might get in 2022 or beyond.


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This article was written by

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Maximize your income with the world’s highest-quality dividend investments

Adam Galas is a co-founder of Wide Moat Research ("WMR"), a subscription-based publisher of financial information, serving over 5,000 investors around the world. WMR has a team of experienced multi-disciplined analysts covering all dividend categories, including REITs, MLPs, BDCs, and traditional C-Corps.

The WMR brands include: (1) The Intelligent REIT Investor (newsletter), (2) The Intelligent Dividend Investor (newsletter), (3) iREIT on Alpha (Seeking Alpha), and (4) The Dividend Kings (Seeking Alpha).

I'm a proud Army veteran and have seven years of experience as an analyst/investment writer for Dividend Kings, iREIT, The Intelligent Dividend Investor, The Motley Fool, Simply Safe Dividends, Seeking Alpha, and the Adam Mesh Trading Group. I'm proud to be one of the founders of The Dividend Kings, joining forces with Brad Thomas, Chuck Carnevale, and other leading income writers to offer the best premium service on Seeking Alpha's Market Place.

My goal is to help all people learn how to harness the awesome power of dividend growth investing to achieve their financial dreams and enrich their lives.

With 24 years of investing experience, I've learned what works and more importantly, what doesn't, when it comes to building long-term wealth and safe and dependable income streams in all economic and market conditions.


Disclosure: I/we have a beneficial long position in the shares of NVS, UGI, MO, ENB, MMM 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.

Additional disclosure: Dividend Kings owns NVS, UGI, MO, ENB, and MMM in our portfolios.

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