5 Dividend Aristocrats Where Analysts See Capital Gains

To become a “dividend aristocrat,” a dividend-paying company must accomplish an incredible feat: consistently increasing shareholder dividends every year for at least 20 consecutive years. Companies with this kind of track record tend to get a lot of investor attention – and additionally, “trailer” funds that track the Dividend Aristocrats Index to have to own them. With all this demand for equities, dividend growth stocks can sometimes become “fully priced” where there isn’t much upside for analysts’ goals.

But at ETF Channel, we looked at the underlying holdings of the SPDR S&P Dividend ETF (which tracks the S&P High Yield Dividend Aristocrats Index) and found these five dividend growth stocks that still have a pretty substantial upside over at the analysts’ average target price. 12 months off. Which means that, if analysts are right, these are five dividend growth stocks that could produce capital gains on top of their growing dividend payouts.

In the first table below, we present the five actions. The stock’s recent price, 12-month average analyst target price, and percentage upside to hit the analysts’ target are shown.

Store Recent Price Avg. 12-MB Analyst. Target % increase over target
Archer Daniels Midland Co. (Symbol: ADM) $84.14 $95.78 13.83%
OZK Bank (Symbol: OZK) $42.41 $47.75 12.59%
Nordson Corp. (Symbol: NDSN) $238.50 $261.33 9.57%
Albemarle Corp. (Symbol: ALB) $265.70 $284.12 6.93%
PepsiCo Inc (Symbol: PEP) $175.04 $187.00 6.83%

Analysts’ 12-month average targets are only targets for share price however, and each of these stocks is expected to pay dividends during this holding period – so the full return if these stocks meet their analyst targets, it is actually the rise in the share price seen by analysts more the dividend yield that shareholders can expect. To estimate this total return potential, we added the current yield to the upside of the analyst’s target price, to arrive at the 12-month total return potential:

Store Dividend yield % upside from analyst’s target Implicit Total Return potential
Archer Daniels Midland Co. (Symbol: ADM) 1.90% 13.83% 15.73%
OZK Bank (Symbol: OZK) 3.02% 12.59% 15.61%
Nordson Corp. (Symbol: NDSN) 0.86% 9.57% 10.43%
Albemarle Corp. (Symbol: ALB) 0.59% 6.93% 7.52%
PepsiCo Inc (Symbol: PEP) 2.63% 6.83% 9.46%

Another consideration with dividend growth stocks is how much the dividend increases. We researched the last twelve months of dividends that shareholders of each of the above five companies received, then we also researched the same number for the prior dragging twelve months. This gives us a rough yardstick to see how much the dividend has increased, from one twelve month period to the next.

Store Previous TTM dividend TTM dividend % Growth
Archer Daniels Midland Co. (Symbol: ADM) $1.46 $1.54 5.48%
OZK Bank (Symbol: OZK) $1.118 $1.22 9.12%
Nordson Corp. (Symbol: NDSN) $1.56 $2.04 30.77%
Albemarle Corp. (Symbol: ALB) $1.55 $1.57 1.29%
PepsiCo Inc (Symbol: PEP) $4.144 $4.375 5.57%

These five stocks are part of our comprehensive list of dividend aristocrats. The analyst average target price data on which this article was based is provided courtesy of Zacks Investment Research via Quandl.com.
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Dividend Growth Stocks: 25 Aristocrats »

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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