On Wall Street, many income-focused investors prioritize long-term stability and reliability over short-term volatility. Enter the Dividend Aristocrat stocks.
These companies boast a remarkable track record of increasing their dividends for at least 25 consecutive years. Weathering market storms and economic downturns, they consistently reward shareholders with a dependable stream of income.
But dividend aristocrat stocks offer more than just consistent payouts. They often represent well-established companies with strong fundamentals, healthy balance sheets and a clear path for future growth. Including these reliable dividend payers in your portfolio can provide a valuable source of passive income, while potentially offering long-term capital appreciation.
Let’s explore three dividend aristocrat stocks that stand out for their robust business models and solid fundamentals.
Johnson & Johnson (JNJ)
Topping our list of dividend aristocrat stocks to buy is the global healthcare behemoth Johnson & Johnson (NYSE:JNJ). The company currently operates across two segments: Janssen, its pharmaceutical segment, and Johnson & Johnson MedTech, its medical technology segment. But management has recently announced that the former segment will now be rebranded as Johnson & Johnson Innovative Medicine.
The healthcare titan announced strong financial results for the first quarter in April. Total sales rose 2.3% year-to-date (YTD) to $21.4 billion, while adjusted net earnings climbed 3.8% to $6.58 billion. Adjusted earnings per share (EPS) surged 12.4% to $2.71 per share. Management also raised the midpoint of full-year 2024 adjusted operational sales guidance from 5.5% to 5.8%.
Recently, Johnson & Johnson MedTech announced it is working with Nvidia (NASDAQ:NVDA) to enable AI-based model development. As a result, the company is hoping to achieve real-time AI deployment through JNJ MedTech’s digital surgery ecosystem. Research suggests between 2023 and 2032, the AI-based healthcare segment should grow at a compound annual growth rate (CAGR) of over 29%.
Despite losing around 4% YTD, JNJ shares seem reasonably priced at 14.2x forward earnings. In addition, the stock offers a compelling 3.28% dividend yield. Analysts have a 12-month price target of $170 for JNJ, suggesting potential upside of close to 14% from current levels.
Air Products and Chemicals (APD)
Industrial gas manufacturer Air Products and Chemicals (NYSE:APD) is another top pick as a dividend aristocrat stock. APD develops and operates some of the world’s largest industrial gas projects. Their core business focuses on supplying atmospheric industrial gases to various industries. Those includ oxygen, nitrogen, argon, hydrogen and carbon dioxide,
In late April, Air Products and Chemicals delivered mixed second quarter 2024 earnings. Revenue totaled $2.93 billion, down 8% from the previous year and falling short of estimates of $3.047 billion. On the other hand, adjusted net income rose to $694 million, a 7.6% increase compared to the prior-year quarter. Adjusted EPS came in at $2.85, up 4% from the previous year, and surpassing estimates of $2.69.
Recently, Air Products received funding to build two large-scale hydrogen refueling stations (HRS)in the region of North-Rhine Westphalia in Germany. These stations will have the capability of fueling a range of vehicles including medium and heavy-duty classes. Germany has been installing HRSs as it decarbonizes its vast transportation network. The trend is likely to continue in the country as well as the rest of the European Union (EU).
Meanwhile, the APD board increased the quarterly dividend to $1.77 per share in January. At present, the stock offers a dividend yield of 2.96%. Since the start of the year, APD has tumbled more than 10%, making the stock even more attractive for income-focused investors. Currently, the shares trade at 19.3x forward earnings. Wall Street still remains bullish, with a median 12-month price target of $263, implying a potential 8% upside.
Kimberly-Clark (KMB)
The final dividend aristocrat pick is personal care consumer giant Kimberly-Clark (NYSE:KMB). Some of its brands readers will recognize include Huggies, Pull-Ups, Poise, Kleenex, Scott and Cottonelle.
Recently, Kimberly-Clark announced first quarter earning results. Sales dipped 1% YOY to $5.1 billion, impacted mainly by foreign currency translation and divestitures in Brazil in June 2023. But adjusted net income jumped by 14% YOY to $658 million fueled by gross profit gains. Meanwhile, diluted EPS also increased 14% to $1.91 despite a negative impact from the company’s transformation initiative.
In mid-March, the company outlined the next phase of its strategic plan. Management is looking to revamp the operating model and key commercial initiatives with the aim of accelerating brand and business growth. As a result, investors will need to evaluate the steps being taken by Kimberly-Clark’s management.
Meanwhile, the board raised its quarterly payout to $1.22 per share in January. The shares currently have a dividend yield of 3.58%. Despite the volatility on Wall Street, KMB stock has gained a solid 13% YTD and now trades at 19.2x forward earnings. As the Street placed a median 12-month price target of $136, interested readers may consider waiting for a pullback before buying KMB shares.
On the date of publication, Tezcan Gecgil held both long and short positions in NVDA stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
