Investing

3 Dividend Aristocrats to Buy Today

Lee Jackson

Published: June 10, 2024 7:20 am

24/7 Insights:

• Investors looking for dividend safety love the Dividend Aristocrats
• The Dividend Aristocrats are the perfect vehicle to deliver passive income
• Access 2 legendary, high-yield dividend stocks Wall Street loves

Investors love dividend stocks because they provide dependable income and a great opportunity for solid total return. Total return includes interest, capital gains, dividends, and distributions realized over time. In other words, the total return on an investment or portfolio consists of income and stock appreciation.

Those in search of defensive companies with substantial dividends are naturally drawn to the Dividend Aristocrats, and for good reason. The 67 companies that have earned a place on the 2024 S&P 500 Dividend Aristocrats list have not just maintained their dividends, but have consistently increased them for 25 consecutive years. However, the criteria for inclusion are even more stringent, and  the following requirements are mandatory for membership on the Dividend Aristocrats list:

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

We screened the current list, looking for stocks in the group that provide an outsized opportunity for total return and will deliver a dependable stream of passive income for investors. Three top stocks look like incredible opportunities, are rated Buy at top Wall Street firms, and can all be bought today.

Chevron

Source: Marina113 / iStock Editorial via Getty Images

This integrated giant is a safer way for investors looking to get positioned in the energy sector and pays a rich 4.18% dividend. Chevron Corporation (NYSE: CVX) engages in integrated energy and chemicals operations worldwide through its subsidiaries.

With the big backup in benchmark oil prices over the last 90 days, the shares have traded back to the middle of the 52-week trading range, and with the potential for an expansion of the fighting in the Middle East, it may be offering investors an incredible opportunity to buy this mega-cap Blue Chip energy giants

The company operates in two segments:

• Upstream
• Downstream

The Upstream segment is involved in the following:

• Exploration, development, production, and transportation of crude oil and natural gas;
• Processing, liquefaction, transportation, and regasification associated with liquefied natural gas
• Transportation of crude oil through pipelines
• 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 product
• Marketing crude oil, refined products, and lubricants
• Manufacturing and marketing renewable fuels
• Transporting crude oil and advanced products by pipeline, marine vessel, motor equipment, and rail car
• Manufacturing and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives

Chevron announced in the fall that it has entered into a definitive agreement with Hess Corporation (NYSE: HES) to acquire all of the outstanding shares of Hess in an all-stock transaction valued at $53 billion, or $171 per share based on Chevron’s closing price on October 20, 2023. Under the terms of the agreement, Hess shareholders will receive 1.0250 shares of Chevron for each Hess share. The transaction’s total enterprise value, including debt, is $60 billion.

Three lawsuits have been filed against Hess, charging inadequate disclosure over the sale, and Chevron has said arbitration over Hess’ Guyana assets could delay the closing timeline until October 2025. However, most Wall Street analysts feel the deal will ultimately be completed, and Chevron will emerge even more powerful in the energy sector.

Warren Buffett’s Berkshire Hathaway owns 6.7% of Chevron’s outstanding stock with 122,980,207 shares, and the energy giant makes up 5.1% of the portfolio. Each year the stock generates $776,734,888 in dividend income for Berkshire Hathaway. 

Kenvue

Source: jeepersmedia / Flickr

Spun off from Johnson & Johnson, Inc. (NYSE: JNJ) last year, this potential total return home run pays a solid 4.29% dividend. Kenvue Inc. (NYSE: KVUE) is a global consumer health company.

Investors looking to buy the stock have a golden opportunity after Johnson and Johnson recently sold their remaining 9.5% stake in the company. While they actually exchanged their holdings with Goldman Sachs and JPMorgan for the company’s debt according to reports, many investors seemed confused and tremendous selling pressure came in on the stock. This likely was also spurred on by short-sellers.

The company operates through three segments:

• Self Care
• Skin Health and Beauty
• Essential Health

The self-care segment offers cough, cold, and allergy pain care, digestive health, smoking cessation, and other products under:

• Tylenol,
• Nicorette
• Zyrtec brands.

The Skin Health and Beauty segment provides face and body care, hair care, sun care, and other products under:

• Neutrogena
• Aveeno
• OGX brand names.

The Essential Health segment offers oral and baby, women’s health, and wound care products under:

• Listerine
• Johnson’s
• Band-Aid
• Stayfree brands

Realty Income

Source: SeanPavonePhoto / iStock Editorial via Getty Images

This is an ideal stock for growth and income investors looking for a safer contrarian idea for the rest of 2024 that pays a whopping 5.68% dividend, the highest of all the Dividend Aristocrats. Realty Income Corporation (NYSE: O) is an S&P 500 company that provides stockholders with dependable monthly income.

This is also the perfect play for investors that anticipate interest rates finally starting to come down. While it could be near the end of the year or early in 2025 before the Federal Reserve cuts, shareholders can draw some solid passive income while they wait. 

The company is structured as a REIT, and its monthly dividends are supported by the cash flow from over 15,540 real estate properties owned under long-term lease agreements with commercial tenants.

The company has declared 644 consecutive common stock monthly dividends throughout its 55-year operating history and increased the dividend 123 times since Realty Income’s public listing in 1994. It is a top real estate member of the S&P 500 Dividend Aristocrats index.