The S&P Dividend Aristocrats ETF (NOBL) may be trailing the rest of the market in the past two years, but the above-average yield (2.1%), track record of long-time dividend growers, and value focus make for a rather intriguing fund to diversify into, especially if you’re ready to play more defense as you look beyond the tech sector for opportunities.
For the most part, the NOBL is a robust, low-cost (0.35% expense ratio) ETF that’s built to make it through turbulent times. It’s light on tech (3% weighting) and heavy on consumer staples (21.4% weighting), and is well diversified across more than 60 blue-chip firms that will probably keep hiking their dividend payouts even if a recession and market plunge were to arrive in the near-term future. While you can’t go wrong by buying the NOBL for long-term dividend appreciation, I do find that some names stand out above others. For stock pickers, I’m a fan of the following three NOBL components for the next 18 months and beyond.
Valuations are climbing, tech is getting frothy again, and the following dividend growers, I think, don’t have as much love as they deserve going into September.
Walmart
Walmart (NYSE:WMT) is one of the bluest blue chips in all of retail. The stock has digitally transformed itself in recent years and appears poised to keep taking more market share in an inflation-challenged environment. The retail behemoth boasts a commanding $823 billion market cap and seems well-equipped to join the $1 trillion market cap club in short order as the firm makes the most of the AI opportunities ahead.
What makes Walmart most intriguing is that it’s a defensive growth company when you consider the robotics automation potential and management’s tech-savvy, which seems potent enough to hit back at its e-commerce rivals. While the 0.91% yield is on the low end of the range, it is growthy, especially as the company taps into AI to fuel future growth. With more than 50 years of consecutive dividend increases and the potential for the hikes to go beyond 5% as the AI strategy pays off in good times and bad, I’d look to bet a net buyer, even at 44.1 times trailing price-to-earnings (P/E).
McDonald’s
McDonald’s (NYSE:MCD) stock is another steady dividend grower that has what it takes to thrive in the next big bear market moment. The stock sports a 2.3% yield and is poised to keep growing its payout for decades to come, regardless of what tariffs do to the economy. While McDonald’s has battled through its own share of inflationary and competitive headwinds in recent years, I do think it’s finally about to make up for lost time as it gets value right.
Indeed, fast food is a tough place to be if the value isn’t there. With $2.99 Snack Wraps and menu innovation on the menu going into the back half, I’m a fan of the stock and its long-term dividend growth potential. With a strong second quarter of results and a dedicated management team poised to keep rewarding shareholders with dividend raises, I think now’s as good a time as any to stash a few shares away.
Cintas
Cintas (NASDAQ:CTAS) is perhaps one of the growthiest dividend growers in the NOBL ETF. The company offers products and services to help workforces “stay clean, safe and professional.” Indeed, whether we’re talking about safety gear, disinfectant and soap for facilities, first aid products, or just about anything else, Cintas was built to be more of an “all-weather” type of play. The stock has a 0.8% yield, but it’s one that has immense growth potential, even in the face of a recession.
The stock is up 189% in five years and appears to be ready to make higher highs again after falling off a cliff last December. As a prime market-share gainer, according to Wells Fargo Securities, in a defensive field, CTAS really stands out as one of those names to buy and hold for decades for gains and dividend appreciation. The only thing is that CTAS is not a cheap stock at 51 times trailing P/E.
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