Investing

Top Dividend Aristocrat Stocks to Buy Are Growing Revenues 10% per Year

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If there is any group of stocks that investors can feel comfortable buying even now, it is the Dividend Aristocrats. These stocks are S&P 500 constituents that have increased their dividend payouts for 25 consecutive years. The companies that make up the Dividend Aristocrats span 10 different business sectors, with both growth and value holdings.

Jefferies recently noted in a research piece that three of the companies in this prestigious group also share one incredible trait in common. All three have grown revenues at a compounded annual growth rate (CAGR) of 10% or more over the past decade. With a pricey market, it’s critical to buy stocks that are growing revenues to help justify higher multiples. These three fit the bill, and another comes close.

Ecolab

This company continues to be widely followed on Wall Street. Ecolab Inc. (NYSE: ECL) is the global leader in water, cleaning and energy products and services. Ecolab provides chemicals and onsite service for customers in the food, health care, energy, hospitality and industrial markets. In 2016, Ecolab’s 48,000 employees generated over $13 billion in sales across over 1 million customer locations.

Top analysts like the strong and stable earnings per share and the potential for the current dividend to continue to grow. Another big positive for investors is that the company is far less commodity sensitive than other material plays.

Ecolab reported outstanding fourth-quarter and full-year 2016 earnings that show very successful execution against management’s near-term and long-term growth strategies. While that pushed the stock to all-time highs, financial guidance for this one should push the bar even higher.

Shareholders receive a 1.2% dividend. The Wall Street consensus price objective is $124.83. The shares closed near that level Wednesday at $124.50.

T. Rowe Price

Many analysts feel shares of this top financial services company have very good upside potential. T. Rowe Price Group Inc. (NASDAQ: TROW) provides its services to individuals, institutional investors, retirement plans, financial intermediaries and institutions. Through its subsidiaries, it launches and manages equity and fixed income mutual funds. The company also launches balanced mutual funds and private equity funds. It invests in the public equity and fixed income markets across the globe. It also invests in alternative markets, including currency markets, and it employs fundamental and quantitative analysis with a bottom-up approach.

The company enjoyed at least temporarily, a huge windfall recently as it has a big position in the recent hot initial public offering from Snap. While the shares have backed up big over the past couple of days, the company owns 1.6 million shares of Snap as of December 31, including 645,007 in its Institutional Large-Cap Growth Fund.

Investors receive a 3.22% dividend. The consensus price objective for the shares is $72.27. The stock closed most recently at $71.30.

W.W. Grainger

This company has had a tremendous run since the election as part of the Trump rally. W.W. Grainger Inc. (NYSE: GWW) distributes maintenance, repair and operating supplies, as well as other related products and services, that are used by businesses and institutions in the United States, Canada, Europe, Asia and Latin America.

The company offers material handling equipment, safety and security supplies, lighting and electrical products, power and hand tools, pumps and plumbing supplies, cleaning and maintenance supplies, building and home inspection supplies, vehicle and fleet components, and various other products. It also offers inventory management solutions and distributes tools, fasteners and safety and industrial supplies.

Shareholders are paid a 1.95% dividend. The consensus price target is $242.71, and shares closed way above that level at $250.15.

ADM

While this company didn’t quite hit the 10% CAGR level, it came close and is still a terrific buy. It also is a Dividend Aristocrat. Archer Daniels Midland Co. (NYSE: ADM) is a large agricultural services company with almost $90 billion in sales. It is in the business of converting agricultural harvest such as corn, wheat, soybeans and other products into basic ingredients for both consumer and industrial product manufacturers. Its main business lines are focused on oilseed processing, corn processing and agricultural services.

While some on Wall Street see the stock as fully valued at current levels, increased growth and earnings could certainly push shares higher. For the ninth year in a row, the company was named one of Fortune magazine’s most admired companies in its industry.

Shareholders are paid a 2.91% dividend. The consensus price target is $45.08. Shares closed close to that level Wednesday at $43.99.

The Dividend Aristocrat stocks give investors the kind of long-term safety many are looking for now. While there are many positives as a result of the new administration, stocks are expensive and new initiatives don’t happen overnight.

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Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.

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