Investing

3 Dividend Aristocrats Positively Surprising Investors

Derek Lewis

Published: August 15, 2023 11:45 pm

Last Updated: August 16, 2023 11:57 am

Income investors love to target Dividend Aristocrats, S&P 500 companies that have increased dividend payouts for at least 25 consecutive years.

And it’s easy to see why they’re so beloved, as their consistency and reliability are impossible to ignore.

Interestingly enough, several members of the club – PepsiCo PEP, AbbVie ABBV, and Emerson Electric EMR – have recently posted better-than-expected results, reflecting their successful operations.

For those interested in reaping a passive income stream, let’s take a closer look at each.

PepsiCo

Consumer staples titan PepsiCo beat the Zacks Consensus EPS estimate by 7% and reported revenue 3% ahead of expectations thanks to strong consumer demand and continued business momentum. Earnings improved 13% year-over-year, whereas revenue climbed 10% from the year-ago period.

The company’s revenue has remained steady.

Undoubtedly a major positive, PepsiCo lifted its FY23 guidance following the better-than-expected results, now expecting to deliver 10% organic revenue growth (previously 8%) and 12% core EPS growth (previously 9%).

In addition, PEP expects $7.7 billion of cash returns to shareholders throughout FY23, $6.7 billion of which will go to dividend payouts. The company’s shareholder-friendly nature is hard to ignore.

PEP shares currently yield 2.8% annually, above the Zacks Consumer Staples sector average.

AbbVie

AbbVie posted a double-beat, exceeding the Zacks Consensus EPS Estimate by 4% and delivering revenue results modestly ahead of the consensus. Both earnings and revenue declined from the year-ago period but exceeded ABBV’s expectations.

The market reacted strongly to the results, with ABBV shares seeing buying pressure post-earnings.

The company’s shares currently yield a sizable 4%, more than double that of the Zacks Medical sector average. Impressively, the company sports a 10% five-year annualized dividend growth rate.

It’s worth noting that ABBV’s growth is forecasted to slow, with the $11.00 per share Zacks Consensus Estimate for its current fiscal year reflecting a 20% pullback on 8% lower revenues.

Emerson Electric

Emerson Electric beat the Zacks Consensus Estimate by nearly 19% and reported earnings of $1.29 per share, down modestly from the year-ago period. The company generated $3.9 billion in revenue, ahead of expectations and well lower than year-ago sales of $5.0 billion.

Impressively, EMR raised its FY23 guidance following the results, expecting net sales growth of 10.5% and free cash flow in a bracket of $2.2 – $2.3 billion. Like ABBV, the market had a strong reaction to the release, with EMR shares seeing bullish activity post-earnings.

Following the release, analysts have raised their earnings expectations across several timeframes.

Presently, EMR shares yield 2.2% annually, nicely above the Zacks Industrial Products sector average of 1.5%. The company sports a modest 1.5% five-year annualized dividend growth rate.

Bottom Line

The bulk of the Q2 season is in the rearview mirror, with the market eluding the earnings meltdown many had feared.

And for those with a preference for income, all three Dividend Aristocrats above – PepsiCo PEP, AbbVie ABBV, and Emerson Electric EMR – posted better-than-expected results during the period.
Emerson Electric Co. (EMR): Free Stock Analysis Report

PepsiCo, Inc. (PEP): Free Stock Analysis Report

AbbVie Inc. (ABBV): Free Stock Analysis Report

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