Dividend investing isn’t as glamorous as, say, day trading or growth stock investing. I’ve seen enough people describe income-centric strategies as the investment equivalent of watching white paint dry. And despite being a conservative dividend investor, I find the comparison utterly funny and eerily accurate. But one of the advantages of dividend investing – especially if you invest in ultra-safe companies like the ones in the Dividend Aristocrats list – is the security and consistency it brings.
Sure, they don’t have double-digit yields. Sometimes, they don’t even have single-digit yields. But what they do offer is reliability and the promise of potential price and dividend growth over longer investing horizons, making them perfect for retirement portfolios.
And, if you’re looking to enhance your chances of returns, you can limit your selection to stocks that have both favorable fundamentals and technicals. But since we’re all busy and nobody really has the time to delve into fundamental metrics and technical indicators of thousands of stocks, I can show you how to identify ripe opportunities using just a handful of indicators, courtesy of Barchart’s Stock Screener and proprietary analysis tools. Here’s how it works.
With Barchart’s Stock Screener, I used the following filters:
Overall Buy/Sell/Hold Signal: Buy. This filter is based on Barchart Opinion, the website’s proprietary analysis tool that combines 13 popular technical indicators to provide stock ratings. A “Buy” recommendation means that most of the indicators suggest a bullish trend.
Overall Opinion %: More than 70%. Through this filter, I am limiting the results to Dividend Aristocrats with a weighted score of over 70%, so that I get a list of companies that offer the best chance for a favorable upside price movement.
Current Analysts Rating: 4.5 to 5 (Strong Buy). Next, I’ve limited the results to stocks that have high analyst scores. Wall Street analyst ratings reflect the company’s business and prospects, so the focus is on fundamental metrics. Though some analysts may have different analysis processes than others, a consensus Strong Buy means Wall Street is quite optimistic about the stock.
Watchlists: Dividend Aristocrats only.
After running the scan, I got exactly three companies, which I arranged from highest to lowest opinion percentage score:
With that out of the way, let’s get started with the top one:
First on the list is S&P Global, one of the most prominent financial services companies worldwide. The company offers market analytics, credit ratings, mobility insights, and the establishment and management of indices, some of which serve as barometers for entire markets and industries. Even newbie investors would recognize the S&P 500, and even the basis for this article – the Dividend Aristocrats list – comes from S&P Global.
The company currently pays $3.84 annually, translating to a yield of approximately 0.7%, which is relatively low by most standards. S&P Global has maintained low yields for almost all of its dividend-paying history.
But that’s not why dividend investors and analysts love the stock. In the last 20 years, SPGI has returned over 1,000% to investors on price appreciation alone. Right now, Wall Street gives the stock a 4.71 average score, while Barchart Opinion echoes the assessment with a 100% Strong Buy recommendation.
Nucor Corporation is a producer of steel and steel products. The company is the largest steel manufacturer in North America and operates over 300 mills and recycling facilities that service data centers, automotive companies, energy outfits, and, of course, the construction industry.
Nucor currently pays $2.20 per share per year, which translates to a roughly 1.5% yield. Analysts rate NUE a borderline Strong Buy with a 4.5 average score, while Barchart Opinion rates it an 88% Strong Buy.
Last but not least is Walmart, the retail behemoth that operates over 10,750 brick-and-mortar stores to service over 255 million customers weekly. The company also operates a growing e-commerce platform and has a presence in over 19 countries.
Like S&P Global, Walmart has a relatively low yield: around 0.96% based off its 94-cent annual payout. But, like the other companies on this list, WMT has proven itself as a winner for long-term investors, returning over 550% in the last 20 years.
Analysts rate WMT stock a 4.78 average score – the highest on this list, while it maintains an 80% Strong Buy rating from Barchart Opinion.
These three Dividend Aristocrats, while offering low yields, provide investors the opportunity for above-average growth over the long term, based on analyst expectations and technical analysis. However, no stock list will ever be the end-all, be-all of dividend investing. Market dynamics – and, indeed, personal priorities – can be fluid, so make sure you do your research and ensure that you’re investing in companies that fit your investment thesis.
On the date of publication, Rick Orford did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
