Investing
5 Highest-Yielding Dividend Aristocrats Can Explode Higher as Rates Cuts Begin
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24/7 Wall St. Insights
Dividend stocks are a favorite among investors for good reason. They provide a steady income stream of passive income and offer a promising avenue for total return. Total return, a comprehensive measure of investment performance, encompasses interest, capital gains, dividends, and distributions realized over time.
In March 2022, as inflation exploded, the Federal Reserve made its first interest rate increase since 2018, when the Fed lifted rates from 0% by 0.25% to 0.25–0.50%. Inflation then peaked at a stunning 9.1% in June 2022. In July 2023, the Fed made its final 0.25% increase, bringing rates to 5.25–5.50%. The federal funds rate has not been cut since then, but the market expects it, and Fed Chair Powell has all but announced the first interest rate cut, which will likely come in at 25 basis points this month.
We decided to screen the Dividend Aristocrats, looking for the highest-yielding companies that have the potential to be the beneficiaries of the rate-lowering cycle, which could extend into 2026. Investors seeking defensive companies with substantial dividends are naturally drawn to the Dividend Aristocrats, and for good reason.
The 68 companies that made the cut for the 2024 S&P 500 Dividend Aristocrats list have not just maintained but increased their dividends for 25 years straight. But the requirements for membership on this list go even further, with the following attributes also mandatory:
The Dividend Aristocrats provide investors with reliable streams of passive income. Passive income is characterized by its ability to generate revenue without requiring the earner’s continuous active effort, making it a desirable financial strategy for those seeking to diversify their income streams or achieve financial independence.
This company is a mutual fund powerhouse that pays a safe and secure 5.92% dividend. Franklin Resources Inc. (NYSE: BEN) is among the most prominent global money managers.
The firm markets mutual funds and institutional separate accounts under the Franklin, Templeton, and Mutual Series brands. At times, 50% of its sales are from outside the US, an advantage given the maturing US market.
Franklin Resources offers its products and services under the brands of:
The 2023-2024 bull market has proven to be a solid tailwind for the company. While withdrawals from baby boomers may be a concern, the path forward looks solid.
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 5.17% dividend. Realty Income Corp. (NYSE: O) is an S&P 500 company that provides stockholders with dependable monthly income.
The company is structured as a real estate investment trust (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.
This is another top mutual fund company with tremendous assets under management and pays a 4.45% dividend. T. Rowe Price Group Inc. (NASDAQ: TROW) is a publicly owned investment manager.
The firm provides services to:
It launches and manages equity and fixed-income mutual funds.
T. Rowe Price invests in public equity and fixed-income markets worldwide. It employs fundamental and quantitative analysis with a bottom-up approach.
The firm utilizes in-house and external research to make its investments. It employs socially responsible investing focusing on environmental, social, and governance issues.
It also invests in late-stage venture capital transactions and usually invests between $3 million and $5 million.
This top company makes sense now as its products are always needed, and it pays a robust 4.5% dividend. Amcor PLC (NYSE: AMCR) manufactures and sells packaging products in Europe, North America, Latin America, Africa, and the Asia Pacific regions.
The company operates through two segments:
The Flexibles segment provides flexible and film packaging products in food and beverage, medical and pharmaceutical, fresh produce, snack food, personal care, and other industries.
The Rigid Packaging segment offers rigid containers for a range of beverage and food products, including:
The company sells its products primarily through its direct sales force.
While commercial real estate has slowly come back, hard assets are always suitable investments, and this stock pays a solid 4% dividend. Federal Realty Investment Trust (NYSE: FRT) is a recognized leader in the ownership, operation, and redevelopment of high-quality retail-based properties in major coastal markets, from the District of Columbia to Boston and San Francisco to Los Angeles.
Federal Realty’s mission is to deliver long-term, sustainable growth through investing in densely populated, affluent communities where retail demand exceeds supply.
Its expertise includes creating urban, mixed-use neighborhoods like:
Federal Realty’s 105 properties include approximately 3,300 in 26 million square feet tenants and approximately 3,100 residential units. Federal Realty has increased its quarterly dividends to its shareholders for 56 consecutive years, the longest record in the REIT industry.
Six Blue-Chip Dividend Giants Every Passive Income Investor Should Own
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