The Superstar Dividend Aristocrats
Only 5 stocks with back to back double digit hikes
The Dividend Aristocrats are lagging this year with an average return of just 7.3% as of July 26, 2024. We highlight the three Aristocrats that stand out based on dividend growth with bigger increases every year in the last three years.
Based on Friday’s closing prices we have now seen 36 Dividend Aristocrats announcing a dividend hike so far YTD with the average increase being 5.9%. Thanks to Cintas, doing a 15.6% hike last week, the average would have been a lot worse with now six Aristocrats increasing the dividend by at least 10% in 2024.
Most Aristocrats so far are dissapointing with mini increase like the 1.2% hike by Stanley Black & Decker just last week. A total of 11 Aristocrats announced a dividend hike of 2.5% or less in 2024 bringing down the average increase significantly.
With our Focus Stocks we look at the best dividend growers worldwide with consistant, preferrably double digit, annual increases, combined with other strong metrics and of course a strong dividend track record to start with. Most of these super dividend stocks are actually NOT Dividend Aristocrats. Please note that this is not about the biggest dividend hikes but about the most consistent increases over time without big variations throughout the years.
THREE (AND MAYBE 5) OF THE BEST ARISTOCRATS
However, some Dividend Aristocrats tick all the boxes based on important metrics apart from a strong track record and above average dividend growth. We highligt three Aristocrats that are unique with Fastenal (FAST), Cintas (CTAS) & Nextera Energy (NEE) as the only three Aristocrats with a double digit dividend hike in each of the last three years, including 2024.
Two more stocks, Brown & Brown (BRO) and Automatic Data Processing (ADP) can join these three superstars only if they announce another double digit increase later this year.
In today's stock market, finding companies with a durable competitive advantage, or "moat," is key for long-term investing. Here, we'll explore five companies—Fastenal, Cintas, Nextera Energy, Brown & Brown, and ADP—that not only have strong business models but also boast significant moats.
It is no surprise that Brown & Brown currently is the best performing Dividend Aristocrat in 2024 with a 39.9% Total Return which also explains the rather small dividend yield for the insurer. Cintas (#3 Aristocrat YTD with +26.9%) and NextEra Energy (#6 with +24.2%) are also outperforming this year, combined with a double digit dividend growth.
1. Fastenal (FAST)
Business Overview: Fastenal is a leading distributor of industrial and construction supplies, specializing in fasteners, tools, and safety products.
MOAT: Fastenal's moat is rooted in its extensive distribution network and superior customer service. With thousands of locations, Fastenal ensures rapid product availability and delivery. Their integrated supply chain solutions and vending machines embedded within customer facilities create a sticky customer base, making it challenging for competitors to match their service level and convenience.
Dividend Stats
Fastenal has a 2.22% dividend yield at a stock price of $70.37. The company has raised its dividend for 25 consecutive years with double digit increases in each of the last 7 years, including a 11.4% hike in 2024.
2024 hike: +11.4%
2023 hike: +12.9%
2022 hike: +10.7%
2. Cintas (CTAS)
Business Overview: Cintas provides specialized services to businesses, including uniform rental, facility services, and first aid supplies.
MOAT: Cintas' competitive advantage lies in its scale and breadth of services. The extensive route-based logistics network and high customer retention rates create barriers for new entrants. Additionally, the recurring revenue model from long-term contracts ensures stable cash flow and customer loyalty. Their comprehensive service offerings reduce the need for clients to source from multiple vendors, fostering deep customer relationships.
Dividend Stats
Cintas has a 0.8% dividend yield at a stock price of $761.39. The company has raised its dividend for 41 consecutive years with double digit increases in each of the last 4 years, including a 15.6% hike in 2024 just announced. Over time Cintas actually is our #1 ranked Aristocrat based on average dividend growth over the last 5, 10 and 20 years. Since 2011 the dividend was hiked by 20.1% average every single year with a 9.8% hike in 2020 as the smallest increase on record.
2024 hike: +15.6%
2023 hike: +17.4%
2022 hike: +21.1%
3. Nextera Energy (NEE)
Business Overview: Nextera Energy is a leading clean energy company, involved in renewable energy projects and operating the largest rate-regulated utility in the U.S., Florida Power & Light.
MOAT: Nextera Energy's moat is driven by its massive investments in renewable energy infrastructure and technology. Their early and significant commitment to wind and solar energy projects has positioned them as a leader in the sector. The high capital requirements and regulatory complexities create formidable barriers to entry. Additionally, their scale allows them to achieve lower costs and operational efficiencies, which are hard for competitors to replicate.
Dividend Stats
NextEra Energy is one of the most consistant Aristocrats with spot on 10% hikes every year in the last four years. The dividend yield for NEE is 2.8% at a stock price of $74.26. The dividend has been raised for 30 consecutive years.
2024 hike: +10.2%
2023 hike: +10.0%
2022 hike: +10.4%
4. Brown & Brown (BRO)
Business Overview: Brown & Brown is an insurance brokerage firm offering a range of insurance products and services to both retail and wholesale customers.
MOAT: Brown & Brown's moat is founded on its decentralized model, allowing for local expertise and strong customer relationships. The company's acquisition strategy, focused on integrating small, locally managed firms, has resulted in a broad and diverse portfolio. Their strong reputation and established relationships with insurance carriers provide a competitive edge that is difficult for new entrants to overcome.
Dividend Stats
Brown & Brown has a dividend yield of 0.5% at a stock price of $99.17. The dividend has been raised for 30 consecutive years with double digit hikes in the last three years. This October we expect another dividend hike by BRO that will probably be another double digit one (a 2 cent hike from $0.13 to $0.15 quarterly is likely).
2024 hike: TBA
2023 hike: +13.0%
2022 hike: +12.2%
2021 hike: +10.8%
5. Automatic Data Processing (ADP)
Business Overview: ADP is a global provider of human capital management (HCM) solutions, including payroll, talent management, and benefits administration.
MOAT: ADP's moat is built on its robust technology infrastructure and vast client base. Their comprehensive suite of services and integrated solutions create a one-stop-shop for businesses of all sizes. The high switching costs associated with changing payroll and HCM providers ensure strong customer retention. ADP's continual investment in technology and compliance expertise further enhances its competitive position, making it a trusted partner for managing complex workforce needs.
Dividend Stats
ADP has a 2.2% dividend yield at a stock price of $252.67. The company has raised its dividend for 49 consecutive years with double digit increases in each of the last 3 years, including a 12.0% hike in 2023. This November we expect that ADP will announce its 50th consecutive year of dividend increases. However of all five stocks in this article ADP is the most likely ‘victim’ to get dropped from our superstar list since we are not that sure that they will do another double digit hike in 2024. Time will tell…..
2024 hike: TBA
2023 hike: +12.0%
2022 hike: +20.2%
2021 hike: +11.8%
These five Dividend Aristocrats currently are the only ones with 3 consecutive years of double digit dividend hikes. Some of them are also part of our new Dividend Heroes selection, including (you could have guessed this one) Cintas Corporation. More on this soon, including the full list of the current top 25 U.S. dividend growers (‘Heroes’) for 2024. This selection has returned 21.4% YTD so far as of July 26, 2024.
Disclaimer: The information provided here is for informational purposes only and should not be considered financial advice. Investors should conduct their own research or consult with a financial advisor before making any investment decisions.