Investing

7 'Strong Buy' Dividend Aristocrats That Blew Away Q3 Earnings Expectations

Roman Tiraspolsky / iStock Editorial via Getty Images

Investors that were long technology got a very rude awakening last week as a host of top companies in the sector reported poor third-quarter results. Most added insult to injury by offering up lousy forward guidance for the fourth quarter as well, and some even announced big layoffs. Facebook parent Meta reportedly will cut 15% of its workforce. Overall, a stunning 44,000 tech workers across the industry have already lost their jobs this year, and more cuts are likely on the way.
[in-text-ad]
While the best plan now may be to stay in cash, if passive income is required from investments, savvy growth and income investors look for solid companies paying big and dependable dividends. Many are drawn to the Dividend Aristocrats. The 66 companies that made the cut for the 2022 S&P 500 Dividend Aristocrats list have increased dividends (not just remained the same) for 25 years straight. But the requirements go even further, as the following attributes also are mandatory for membership on the list:

  • They must be a member of the S&P 500.
  • Companies must be worth at least $3 billion at the time of each quarterly rebalancing.
  • Average daily volume of at least $5 million in transactions is required for every trailing three-month period at every quarterly rebalancing date.


With the potential for big downside still looming, and interest rates definitely headed higher, we thought it would be a good idea to look for companies on the Dividend Aristocrats that posted solid third-quarter results that exceed Wall Street expectations. Seven stocks hit our screens, all of which are Buy rated at top Wall Street firms. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Abbott Laboratories

This is a top pharmaceutical and med-tech stock with very solid growth potential. Abbott Laboratories (NYSE: ABT) manufactures and sells health care products worldwide.

Its Established Pharmaceutical Products segment offers branded generic pharmaceuticals to treat pancreatic exocrine insufficiency; irritable bowel syndrome or biliary spasm; intrahepatic cholestasis or depressive symptoms; gynecological disorders; hormone replacement therapy; dyslipidemia; hypertension; hypothyroidism; Ménière’s disease and vestibular vertigo; pain, fever and inflammation; migraines; anti-infective clarithromycin; cardiovascular and metabolic products; and influenza vaccines, as well as to regulate physiological rhythm of the colon.


The LabsDiagnostic Products segment provides immunoassay and clinical chemistry systems; assays used to screen and/or diagnose cancer, cardiac, drugs of abuse, fertility, infectious diseases and therapeutic drug monitoring; hematology systems and reagents; diagnostic systems and cartridges; instruments to automate the extraction, purification and preparation of DNA and RNA from patient samples, and detects and measures infectious agents; genomic-based tests; informatics and automation solutions; and a suite of informatics tools and professional services.
The pharmaceutical giant earned $1.15 per share, minus some items, on $10.41 billion in sales. Earnings toppled close to 18% year over year but topped a FactSet consensus forecast for $0.94 a share. Sales dropped nearly 5% on a strict, as-reported basis, but were above the $9.65 billion estimate.

Abbott Laboratories stock investors receive a 1.89% dividend. The Royal Bank of Canada’s $126 price target compares with a $117.32 consensus target and the most recent close at $99.77 a share.
[in-text-ad]

Caterpillar

This large-cap leader led the Dow Jones industrial average higher after posting stellar results. Caterpillar Inc. (NYSE: CAT) is the world’s largest manufacturer and marketer of construction equipment, and it is also a leading manufacturer of diesel engines and turbines for transport and industrial applications.

Caterpillar is the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. The company principally operates through its three primary segments (Construction Industries, Resource Industries and Energy & Transportation) and also provides financing and related services through its Financial Products segment.

Third-quarter 2022 profit per share was $3.87, up from $2.60 in the same period of last year. Adjusted profit per share in the third quarter of 2022 was $3.95, compared with the year-ago figure of $2.66 per share. The results were way above estimates for the top and bottom lines.

Shareholders receive a 2.19% dividend. Baird has a $242 target price on Caterpillar stock. The shares popped more than 11% in the past week and closed on Friday at $219.34.

Chevron

This integrated giant remains a safer way for investors looking to get positioned in the energy sector. Chevron Corp. (NYSE: CVX) engages in integrated energy and chemicals operations worldwide.

The Upstream segment is involved in the exploration, development, production and transportation of crude oil and natural gas; processing, liquefaction, transportation and regasification associated with liquefied natural gas (LNG); transportation of crude oil through pipelines; and transportation, storage and marketing of natural gas, as well as operating a gas-to-liquids plant.

The Downstream segment engages in refining crude oil into petroleum products; marketing crude oil, refined products and lubricants; manufacturing and marketing of renewable fuels; transporting crude oil and refined products by pipeline, marine vessel, motor equipment and rail car; and manufacturing and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives. It is also involved in cash management and debt financing activities, insurance operations, real estate activities and technology businesses.
Last Friday, the energy giant reported its second-highest-ever quarterly profit, roaring past Wall Street estimates, driven by massive global demand for its oil and gas and rising production from its U.S. oilfields.

The company sports a 3.25% dividend. The Credit Suisse target price is $202, well above the $181.41 consensus target. Chevron stock closed on Friday at $179.98.
[in-text-ad]

Coca-Cola

This remains a top Buffet holding, as he owns a massive 400 million shares. Coca-Cola Co. (NYSE: KO) is the world’s largest beverage company, refreshing consumers with more than 500 sparkling and still brands. It has an incredibly strong worldwide brand, with 40% overseas sales.

The company’s portfolio features 20 billion-dollar brands including Diet Coke, Fanta, Sprite, Coca-Cola Zero, vitaminwater, Powerade, Minute Maid, Simply, Georgia and Del Valle. Globally, it is the number one provider of sparkling beverages, ready-to-drink coffees and juices and juice drinks.

Through the world’s largest beverage distribution system, consumers in more than 200 countries enjoy Coca-Cola beverages at a rate of more than 1.9 billion servings a day. Also remember that the company also owns 16.7% of Monster Beverage, which continues to deliver big numbers.

Coca-Cola’s earnings topped Wall Street analysts’ estimates last week at $0.69 per share against projections of $0.64. Revenue was slightly ahead of expectations as well, at $11.05 billion against $10.52 billion.

Investors receive a 2.90% dividend. Truist Financial’s $75 target price is a Wall Street high. The consensus target for Coca-Cola stock is $66.94, and Friday’s close was at $60.76.

Exxon Mobil

This mega-cap energy leader trades at a reasonable valuation and offers investors an excellent entry point. Exxon Mobil Corp. (NYSE: XOM) is the world’s largest international integrated oil and gas company. It explores for and produces crude oil and natural gas in the United States, Canada, South America, Europe, Africa and elsewhere.

Exxon also manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and specialty products, and it transports and sells crude oil, natural gas and petroleum products.

Top Wall Street analysts expect Exxon to remain a key beneficiary in this higher oil price environment, and most remain strongly positive about the company’s sharp positive inflection in capital allocation strategy, upstream portfolio, and leverage to a further demand recovery, with Exxon Mobil offering greater downstream/chemicals exposure relative to peers.

The energy behemoth reported a per-share profit of $4.68, smashing Wall Street’s $3.89 consensus view, on a huge jump in natural gas earnings, continued high benchmark oil prices and strong fuel sales.

Exxon Mobil stock comes with a 3.29% dividend, which will continue to be defended. The $133 Jefferies price target compares with a consensus target of $109.88, which is lower than Friday’s close at $110.70.

General Dynamics

Like other major defense contractors, General Dynamics Corp. (NYSE: GD) has had a very solid year. It is engaged in business aviation, land and expeditionary combat vehicles and systems, armaments, munitions, shipbuilding and marine systems, and information systems and technologies.
[in-text-ad]
Major products include Virginia-class nuclear-powered submarine and Ohio class replacement, Arleigh Burke-class Aegis, Abrams M1A2 tank, Stryker 8-wheeled assault vehicle, medium-caliber munitions and gun systems, tactical and strategic mission systems.

The defense giant posted third-quarter 2022 net earnings of $902 million on revenue of $10 billion. Diluted earnings per share were $3.26, a 6.2% increase from the year-ago quarter. Both numbers topped Wall Street expectations.

The dividend yield here is 2.01%. General Dynamics stock has a $325 price target at BofA Securities. The consensus estimate is just $266.61, and shares closed at $250.72 on Friday.

McDonald’s

The legacy fast-food heavyweight is a solid pick when the economy goes south, and it is among the safest large-cap restaurant plays. McDonald’s Corp. (NYSE: MCD) operates and franchises McDonald’s restaurants in the United States and internationally.

The company’s restaurants offer hamburgers and cheeseburgers, chicken sandwiches and nuggets, wraps, fries, salads, oatmeal, shakes, desserts, sundaes, soft serve cones, bakery items, soft drinks, coffee, and other beverages, as well as a breakfast menu, including biscuit and bagel sandwiches, breakfast burritos, hotcakes and other sandwiches. As of December 31, 2021, the company operated 40,031 restaurants.

The company posted very solid results last week, with $5.87 billion in revenue exceeding estimates of $5.7 billion, and earnings-per-share of $2.68 topped the $2.57 street estimates as well. The company cited solid marketing efforts and higher menu prices as positive factors in the outstanding results.

Shareholders receive a 2.21% dividend. BMO Capital Markets has set a Wall Street high $300 target price. The consensus target is $283.00. The final McDonald’s stock trade on Friday was reported at $274.52.


All seven stocks have reasonable upside to the Wall Street targets, and they all pay very dependable dividends given their Dividend Aristocrat status. With even moderate appreciation in their share prices, investors should be looking at double-digit percentage total return potential. In a market that is very volatile and could be headed lower, the safety net of solid earnings and forward guidance helps to backstop these blue-chip giants.

Sponsored: Want to Retire Early? Here’s a Great First Step

Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?

Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.

Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.