With all of the attention focused on the Magnificent 7 tech stocks, AI, and biotech stocks that are all high flying and turbo charging the S&P 500, it’s easy to overlook other growth opportunities. For example, although it may seem oxymoronic, there are Dividend Aristocrat stocks that some analysts are forecasting 30% to as high as over 60% 12-month price target upsides.
Usually the prime focus of income-hungry retirees and conservative investors seeking the security of dividends to offset volatile growth, Dividend Aristocrats share the following traits:
- 25 or more consecutive years of dividend increases;
- Well established leadership presence in their respective industrial sectors;
- Strong institutional shareholder participation, along with sizable pension fund and retirement account allocation.
Although a company may annually raise dividends, its long history of business growth making it able to afford dividend increases should not be dismissed. While perhaps not in triple figures, Dividend Aristocrats with double digit growth forecasts are very likely to meet their targets with considerably less volatility than with tech stocks, and they are often categorized in consumer defensive or other sectors that are notoriously steady. Prices based on market quotes at the time of this writing.
Becton Dickinson Co.
Becton Dickinson has regained practically all of its lost ground caused by the recall of its Alaris IV pimp devices. since the problems were rectified.
Becton Dickinson Co. (NYSE: BDX | BDX Price Prediction)
Price: $180.80
Target Price: Evercore ISI predicts $275 – $290.00 (+60.84%)
Companies that can annually raise dividends are often the envy of their rivals. When those companies can continually do so even when making gaffes that cause their stock prices to fall, they get on analysts’ radars for signs of a turnaround.
Although the company is the world’s largest manufacturer and distributor of medical and surgical products, Becton Dickinson’s stock hit the skids on a series of mishaps, with the primary one being the recall of its Alaris infusion pump systems, which regulate IV drips. The potential class action liabilities sent the stock into a tailspin. However, the company has since steered the ship back on course with the following steps:
- Resurgent leadership in its pharmaceutical division.
- Recapture of lost Alaris market share business, with any technical glitches rectified.
- Acquisition of the Edwards Lifesciences’ Critical Care monitoring business.
- An announcement to combine Becton Dickinson’s life sciences business with Water WAT – targeted to close in 2026.
Although its dividend payout ratio has increased to 68%, Becton Dickinson’s reputation among institutions seems solid. John G. Ullman and Associates increased its holdings to 11.18%, and T. Rowe Price added to its stake to reach 36.1%. Morningstar’s fair value estimate on Becton Dickinson is $270. The general consensus on Wall Street is a target of roughly $212, although the high estimate is in the $275 – $290 vicinity.
Abbvie Inc.
Biotech pharmaceutical company Abbvie has a menu of oncology, autoimmune deficiency, and other treatments it has developed.
Abbvie Inc. (NYSE: ABBV)
Price: $189.31
Target Price: Morgan Stanley predicts $250.00 (+32%)
Chicago headquartered Abbvie Inc. is one of the top 5 largest biotech and pharma companies, with treatments for various forms of blood, skin, prostate, and organ cancers, as well as autoimmune diseases, skin ailments, and gastrointestinal disorders.
Abbvie’s newly approved Emrelis differs uniquely in a number of ways from its competitors in the solid tumor oncology space and is causing a buzz in the cancer treatment industry. Emrelis has an approach towards targeting, strategic positioning, and methodology of action that has no similarity to any other oncology drugs, making it stand apart. Focusing on C-MET biomarkers, versus HER2 or TROP2, it can more precisely target small-cell lung cancer tumors without the potential DNA damage risk that is inherent with current treatments from some of Abbie’s rivals.
As the solid tumor category has long been one in which Abbvie lagged, Emrelis could be a big boost for the company’s fortunes. Morgan Stanley apparently thinks so; it has a $250 target price for Abbvie.
Procter & Gamble Company
Procter & Gamble have been in business for over 180 years, and its products have millions of loyal customers.
Procter & Gamble Company (NYSE: PG)
Price: $152.88
Target Price: D.A. Davidson has a target of $209.00 (+36.7%)
Personal consumer products and household staples are the stock in trade of Procter & Gamble Company, which is only 15 years shy of closing in on two centuries of active business.
P&G is in the midst of uncertainty over the impact of the revised US trade deals and changes in tariffs that may be levied upon them for raw materials imported from other nations. Additionally, the company is slow-walking a CEO change, with Shailesh Jejurikar stepping in for the departing Jan Moeller at the end of the year. P&G has already announced some price increases to come in anticipation of increased raw material costs. Management is relying on these additional revenues from its customers’ robust brand loyalty to offset added costs which are estimated to be possibly as high as $1 billion, spending on the final tariff tallies.
Nevertheless, Wall Street apparently has faith in P&G’s future, with D.A. Davidson’s price target of $209.00 at the top of range.
Brown-Forman Corp.
Keith Richards’ omnipresent Jack Daniel’s bottle became synonymous with the rock and roll lifestyle during the 1970s – showcasing the brand worldwide.
Brown-Forman Corp. Class A (NYSE: BF.A)
Price: $29.20
Target Price: Barclays has a target of $49.00 – $53.00 (81.5%)
Besides music, there is one product that links such disparate artists as Frank Sinatra, Keith Richards, Slash, Bono, Lemmy, Jimmy Page, and Eric Church: Jack Daniel’s Tennessee whisky.
Brown-Forman Corp. has been in the distilling business for over 150 years, and the addition of its maple charcoal filtering process is what sets it apart from traditional bourbons. Jack Daniels’ association with music royalty is part of what propelled it to become the best selling American whiskey brand in the world.
In addition to Jack Daniel’s, Brown-Forman owns Woodford Reserve and Old Forrester bourbons, as well as Chambord liqueur, and a number of scotch, Irish whiskey, tequila, rum and gin brands. The lowering of tariffs on US goods by other nations making new trade deals with the Trump Administration should be a boost to Brown-Forman: 55% of its sales come from Europe, Latin America and Australia.
Brown-Forman’s growth prospects are viewed very favorably by analysts for several additional reasons:
- The high-end whiskey industry is trending towards premiumization.
- The lengthy maturation process creates a sizable entry barrier for new competitors.
- The Jack Daniel’s brand and trademark is recognized worldwide.
- A collaboration with Coca-Cola is preparing the global launch of the Jack and Coke premix cocktail, which will piggyback on Coca-Cola’s global distribution brand clout and supply-chain reach.
Morningstar has a fair Brown-Forman valuation calculated at $42.00. Barclays’ target range is $49.00 on the low end to $53.00 at the high end.
Dividend Aristocrat stocks as a growth play may seem odd, but can actually be the solution for investors seeking steady growth while lacking the stomach for high-flyers. Each dividend payment effectively lowers the cost basis of a stock position the longer it is held past each ex-dividend date. The steady dividends can be quarterly reassurance while the growth builds by each fiscal quarter, instead of each week, resulting in a reduction of sleepless nights and heartburn.
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