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5 Dividend Aristocrats To Buy And 5 Dividend Aristocrats To Avoid

Jun. 24, 2022 8:30 AM ETABBV, BF.A, BF.B, CLX, CVX, ESS, JNJ, MCD, MO, NOBL, TGT, WMT84 Comments


  • Dividend Aristocrats tend to outperform during market downturns and crashes. An allocation towards these names can thus make sense from a risk perspective.
  • Not all Dividend Aristocrats are created equal, however. Some are expensive today, while others are a way better value right now.
  • We share some overvalued, at-risk picks and some inexpensive choices in this article.
  • Looking for a helping hand in the market? Members of Cash Flow Kingdom get exclusive ideas and guidance to navigate any climate. Learn More »

Dollar-Währungswachstumskonzept mit Aufwärtspfeilen auf Charts und Münzen Hintergrund

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Article Thesis

In times of market turmoil, Dividend Aristocrats, with their reliable income and proven resilience, can be good investments. However, not all of these companies are necessarily a buy at the same time. Instead, some of them usually tend to be

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This article was written by

Jonathan Weber profile picture

Jonathan Weber holds an engineering degree and has been active in the stock market and as a freelance analyst for many years. He has been sharing his research on Seeking Alpha since 2014. Jonathan’s primary focus is on value and income stocks but he covers growth occasionally.

He is a contributing author for the investing group Learn more.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of JNJ, MO, ABBV, MSFT, GOOG 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.

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.

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Comments (84)

Jonathan Weber profile picture
Dear readers, if you have any questions please feel free to reach out via the message function or by adding a comment. If you want to see more of this type of content, we’d be happy if you hit the „Follow“ button!
jakefountain profile picture
@Jonathan Weber What happened to 2020 and 2021 in your table? Did not outperform then lol.
jakeelwood5 profile picture
@Jonathan Weber How would you compare XOM to CVX. I think XOM has more room to advance from here, especially since small investors can buy more shares of XOM than CVX.
Jonathan Weber profile picture
@jakeelwood5 I think both are well positioned in the current environment and will reward shareholder handsomely
Eagle Investing profile picture
Thanks for sharing - a lot of good names to look into more!
Jonathan Weber profile picture
@eagleinvesting glad you liked it! All the best
Five Aristocrats to buy: ORI, AFL, BEN, ADM, CAT. See profile for other great picks.
Jonathan Weber profile picture
@Aristocrat & Dividend King Investor thanks for sharing. BEN and AFL look pretty inexpensive
1.21 Jigawatts profile picture
Thanks for the article, good stuff. I would have added SWK as another screaming buy right now. Dividend King to boot.
Jonathan Weber profile picture
@1.21 Jigawatts glad you liked it! SwK looks very good as well, I agree. All the best
Sade Murphy profile picture
hevron (CVX) is one of the global supermajors in the oil and gas industry. It owns vast upstream/production and downstream/refining & marketing assets. With significant exposure to liquified natural gas production and sales, the company benefits a lot from ultra-high natural gas prices in many markets around the world, such as Europe or parts of Asia.

Shares are up so far this year but have recently pulled back meaningfully from the highs around $180. Earnings will explode upwards this year, as high natural gas prices, high oil prices, and hefty refining margins make for a perfect combination to drive up profits at Chevron and its peers. From a valuation perspective, Chevron seems far from expensive
Marrk profile picture
Thank you for this article. I enjoyed reading it.

Jonathan Weber profile picture
@Marrk glad you liked it! All the best
I like JNJ but the break up has me unsure. Seems a lot of companies are stopping their empire building/conglomerates. GE, K and JNJ.
1.21 Jigawatts profile picture
@Desmater Ideally, the breakup means they spin off their slow growth, litigation-riddled consumer division. I would much rather have a leaner JNJ without that weighing it down anyway.
Jonathan Weber profile picture
@Desmater when done right they can help unlock (potentially hidden) value
Jonathan Weber profile picture
@1.21 Jigawatts I agree, this move could help JNJ. All the best
alchemist11 profile picture
I think MO needs to be avoided until the fallout settles, then we'll see.
Jonathan Weber profile picture
@alchemist11 prices could be higher then though. All the best
jakeelwood5 profile picture
I like ABBV a lot, but am constrained by its high price.
Jonathan Weber profile picture
@jakeelwood5 Share price should be seen relative to earnings per share etc, where it does not look especially expensive
jakeelwood5 profile picture
@Jonathan Weber Yes, but where normally I take positions on a thousand shares or so, with ABBV that would put me at too much risk, so can only take positions in a couple hundred. I understand about earnings, particularly the PE and dividend are important to me.
I am especially wary in times like these, where we could have a significant across the board downturn. Government actions have lost me a lot of money over the past 40 years.
I'm sorry to say, "All stocks fail in a Bear Market".
Jonathan Weber profile picture
@HereToWin Not all fall to the same degree though
1.21 Jigawatts profile picture
@HereToWin Investing when things are on sale is how fortunes are made. Nobody ever got rich by buying things at peak prices.
aterosin profile picture
@HereToWin maybe so, but my dividends keep piling up
DividendNow profile picture
Another 2 that could of been added to your list are: MDT and APD. Loaded up on MDT this past week
Jonathan Weber profile picture
@JS Invest two quality companies for sure! All the best
Migdriver75 profile picture

Same, same - a few weeks ago.
Wow. Out of the five listed I only have MO. Thankfully the stocks in my portfolio did well today. Totally in the green. One stock jumped over $114.00 a share.
Total return today 3.37%, and biggest money day in more than a year. 💲
Jonathan Weber profile picture
@Aristocrat & Dividend King Investor nice, but I don’t really focus on day to day moves. All the best
@Jonathan Weber "nice, but I don’t really focus on day to day moves. All the best."
Thanks for your comment. Neither do I, but I do notice them. End of year total return and beyond is what I focus on as well as the health of each company in my portfolio. All the best Jonathan.
Jonathan Weber profile picture
@Aristocrat & Dividend King Investor that’s my mindset as well. Happy investing!
Ventureshadow profile picture
Walmart has a Target on its back.
Jonathan Weber profile picture
@Ventureshadow do you think target is the better pick among these two?
Ventureshadow profile picture
@Jonathan Weber You are so collegial to ask. Walmart is by far my preference for shopping, with much wider selection and lower prices. As a shopper at Walmart I feel my money is worth something, but not at Target. Yet I have shopped at Target since the late 1960s, when they were a subsidiary of Dayton-Hudson Corp and indeed gave true bargains throughout the store. That definitely changed, and I see it reflected in company financials.

From my semi-skilled perspective Target appears to have higher margins than Walmart, but I feel this as a shopper. When consumer budgets become strained I expect they will shift purchasing from Target to Walmart. So I prefer Walmart as a shopper, and I occasionally sell puts on Walmart but I don't and will not trade Target stock. However, neither are attractive right now, as you say.

My comment about Walmart having a Target on its back is wordplay humor.
Shop at Target because it is a better environment....cleaner, better shopping experience and prices are comparable. Price isn't everything.
One company that I’d add for consideration is SBUX. The stock is down from a high of $127. They pay a reasonable dividend, and in a recession environment they offer cash-strapped consumers the illusion of “going out” without dropping a lot of money. Their product costs virtually nothing to make and the profit margin is enormous. I’ll be looking for an entry point around $65.
Jonathan Weber profile picture
@belial666 not a bad company but they aren’t a dividend aristocrat which is why I didn’t consider them here. All the best
CompoundValue profile picture
I like AOS TROW & SPGI more. Offer more value in my opinion and greater return potential imho.
Jonathan Weber profile picture
@Compound Valorem three good companies as well, I agree. All the best
1.21 Jigawatts profile picture
@Compound Valorem Think TROW is a fantastic long-term play right now. Massive div growth here, and they aren't going anywhere.
CompoundValue profile picture
@1.21 Jigawatts couldn't agree morel. With a FCF Yield of 10%, 4%+ dividend, and the cleanest balance sheet of all the aristocrats -- TROW is hands down the best valued Aristocrat today.
josephaoppenheim profile picture
The only one I own is MO. I prefer XOM over CVX, thus own XOM.

As for JNJ, I wish I hadn’t sold it many years ago, despite getting a nice profit. But I own PFE instead of JNJ. Although not a Dividend Aristocrat, 12 consecutive annual raises, it has paid dividends for 330+ consecutive quarters, has a PE=8, a similar fortress balance sheet as JNJ and currently a higher yield.
Jonathan Weber profile picture
@josephaoppenheim XOM and chevron are relatively similar I’d say
josephaoppenheim profile picture
@Jonathan Weber But CVX is more popular than XOM with the heard. I favor the contrarian approach.
Jonathan Weber profile picture
@josephaoppenheim I think XOM has gotten way more popular in recent months
Hello Jon,

I hold your opinion in high regard but to be honest not sure about JNJ recommendation. I recognize all the "Brand" points and that the stock is up 6% in a very tough market, but......
Overall, they missed both GAAP EPS and Revenue estimates in Q1 and missed revenue in the two prior quarters. At the high end of the 52 week range, close to all time high.
- Consumer Div revenue could be flat to down post the major COVID crisis,
- Diagnostic Div revenue has been essentially flat since 2011.

- Pharma's Div pipeline doesn't compare with ABBV's or even BMY's. There's also their continued opioid exposure.

I'm not an expert so I could be completely off here but I'm not impressed and do think there are better Div Arist's that could be considered.
Jonathan Weber profile picture
@LongviewInvestor JNJ isn’t a high growth company, that’s true. The company is mainly a nice pick thanks to the very low risks
Don't forget about IBM. It's a sleeper. The div has more than doubled over the past 10 years and it yields almost 5%.
Jonathan Weber profile picture
@truckster thanks for the suggestion. They seem to be somewhat troubled when it comes to growing the business though
jakefountain profile picture
@truckster IBM really lol. Total return last 10 years a whopping 11%.
@truckster IBM: more moribund than sleeping I think
I like ABBV, JNJ, and CVX.
Jonathan Weber profile picture
@Money 29 thanks for sharing! All the best
Nice ideas, I agree with most of your picks. I disagree with mcds, I think it's a buy. Main reasons with high gas and cost people still need to travel and I believe this will increase mcds sales traffic, great locations, number of stores, and low cost option that everyone knows. Mcds has proven to do well in both inflation and recession markets. And Essex is honestly just to expensive if I was going for a reit type stock I'd buy O. It's just better. But all the others good ideas.
Jonathan Weber profile picture
@Joshua. D thanks for your perspective. MCD is a low cost travel choice, but bringing one‘s food is even cheaper. More consumers may opt for that with high inflation
Hello Jonathon, good article, thanks. The one thing I would suggest is reminding investors that ESS, although a solid company with good long term potential, is a REIT and as such a significant portion of their dividend is not qualified which, as you know , means paying ordinary income tax rate on a significant portion of the dividend. This can impacts higher income tax payers significantly unless the investment is held in a tax deferred account.
Jonathan Weber profile picture
@Thoughtful Investor40 glad you liked the report! Tax considerations can be very different for different investors so I didn’t go into that. All the best
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