7 Dividend Aristocrats Paying Sky-High Yields: April 2024 7 Dividend Aristocrats Paying Sky-High Yields: April 2024 (2024)

Few investment strategies have performed as well for as long as dividend investing. Numerous studies show that buying stocks that have initiated a dividend and then increased it over time beat all other stocks on the market. That’s why Dividend Aristocrat stocks are the cream of the crop.

To become dividend royalty, companies need to be members of the S&P 500 and to have hiked their payout for 25 consecutive years or more. It would seem a relatively simple task but the rarity of it shows why these stocks are the elite. Of the thousands of stocks on the market, only 67 companies have passed the test.

While the list is always evolving as even some Dividend Aristocrat stocks have trouble maintaining the pace, these companies tend to be profitable, successful businesses that have proven their worth over many business and economic cycles. They have been through war and famine, recessions and depressions, and continue to reward their shareholders by sharing their success.

The following seven Dividend Aristocrat stocks pay some of the highest yields, too. That’s not always a good thing, as it could indicate issues. But let’s take a closer look at these royals and see if they are worth an investment.

Kenvue (KVUE)

One of the newest members of the club, Kenvue (NYSE:KVUE) inherited its Dividend Aristocrat membership card from its former parent, Johnson & Johnson (NYSE:JNJ). The pharmaceutical stock spun off its slower-growing consumer products business so that it could more narrowly focus on its healthcare operations. The separation allows the market to better value the consumer products business on its own merits.

So far, that valuation hasn’t been all that attractive. Kenvue stock is down 12% in 2024 and 30% from when it began trading independently last year. The company is the world’s largest pure-play consumer health products company with name brands such as Band-Aid, Listerine and Tylenol in its stable. It generates some $15 billion in annual sales.

Kenvue stock is down as it saw sales fall in the fourth quarter after discontinuing less popular product lines, seeing customers reduce inventories and experiencing softer-than-expected results from its skin health and beauty division. That led to layoffs in the Neutrogena business.

With product rationalization behind it and an ability to pass on costs to consumers in an inflationary environment, Kenvue remains well-positioned to grow. Its quarterly dividend of 20 cents per share yields 4.2% annually.

Federal Realty Investment Trust (FRT)

Federal Realty Investment Trust (NYSE:FRT) is one of the oldest real estate investment trusts (REIT) in the U.S. It also has the longest track record of any REIT for dividend increases. Federal Realty has increased its payout for 56 consecutive years and the dividend yields 4.3% annually.

Shares of the REIT are essentially flat in 2024 though they are up 20% from their 52-week low. Because Federal Realty Trust focuses on retail properties, typically along both coasts, it is sensitive to interest rate increases. Inflation’s refusal to go away may now cause the Federal Reserve to delay cutting rates, which would continue serving as a drag on the REIT’s performance. Still, many of its properties are in defensive industries like grocery stores and pharmacies that ought to mitigate the worst impact of rising costs.

The other feature of Federal Realty’s portfolio is its position in markets with high barriers to entry, such as New York, Boston and San Francisco. But they also exhibit high demand. Because only 10% of its residential properties have tenants whose demographics have customers under $75,000 in annual income, FRT can absorb a recession without negatively impacting its business. This REIT should weather any storm.

T. Rowe Price (TROW)

Global money management firm T. Rowe Price (NASDAQ:TROW) has been an investor favorite for years as it has a 37-year history of raising its payout, which stands at 4.3% annually.

The stock has fluctuated over time as it suffered from cash outflows from its funds. However, assets under management (AUM) grew to $1.5 trillion in the latest quarter and net outflows of $8 billion during the period were about half of what they were last year. With fewer redemptions and higher sales, business is improving significantly for T. Rowe Price.

Over the past decade, the financial stock has increased its dividend at a healthy 10.9% compounded annual growth rate (CAGR), which explains its popularity. While the shaky economy had many investors worried it would continue to see net outflows of funds, confidence has returned and T. Rowe Price’s dividend is certainly secure.

Franklin Resources (BEN)

Another financial stock, Franklin Resources (NYSE:BEN) is also seeing increases in AUM, with totals hitting $1.45 trillion. Its outflows also declined to $5 billion.

Better known by the Franklin Templeton family of funds it owns, Franklin Resources is subject to many of the same market forces as its peers. Rising markets cause an influx in AUM while declining ones cause assets to fall. That volatility has led the money manager to increasingly pursue private market investments, which are less susceptible to fluctuation.

Over the years Franklin Resources made numerous acquisitions in the space that has sharpened its presence in the private investment field. Among them were Benefit Street Partners, Clarion Partners, and Lexington Partners. The latter tends to buy positions in private equity funds. All three alternative managers, though, saw robust growth in the first quarter with combined net inflows totaling $3.8 billion. It promises to be an avenue of significant growth that will support Franklin Resources’ dividend that yields 5%.

Amcor (AMCR)

Food and beverage packaging giant Amcor (NYSE:AMCR) is another victim of government policies affecting inflation and interest rates. Shares are down 7% this year and 16% over the last 12 months as consumer spending was rattled by rising costs and prices. Still, food and beverages are also a defensive industry because we all need to eat and drink.

Yet Amcor was surprised by lower than expected volumes in the most recent quarter as its customers chose to draw down inventories instead of buying more. That could have been on the hope better conditions would materialize, which doesn’t appear to be happening now. It likely explains why Amcor started to see business turn up again earlier this year and it expects momentum to continue growing going forward.

Like Kenvue, Amcor had a sort of backdoor entry into the Dividend Aristocrat club. It acquired Bemis in 2019, which had been an Aristocrat since 2008 (Bemis had paid a dividend every year since 1922). The dividend, though, yields 5.6% annually. It has a 10-year CAGR of increases of just 2.4%, which means that with the ravages of inflation, investors are actually getting less in dividend payments than they were previously.

Realty Income (O)

Another REIT on the list, Realty Income (NYSE:O) is more unique because it pays its dividend monthly. In fact, it calls itself “The Monthly Dividend Company.” While dozens of REITs now pay dividends monthly, it was among the first to do so. The REIT notes that since its founding in 1969, it has made 646 consecutive monthly dividends. More importantly, it has increased the payout an amazing 124 times since listing on the NYSE in 1994 and has hiked the dividend for 109 straight quarters. Over the past decade, the payout has risen at a 7.7% CAGR. The dividend yields 5.8%.

Realty Incomehas a portfolio of over 15,450 properties with over 272 million square feet of mostly retail space. Grocery stores are the largest tenants in its properties with Walmart (NYSE:WMT), Kroger (NYSE:KR) and Costco (NASDAQ:COST) being the top three. Convenience stores and dollar stores are the next two largest sectors, and all of them provide resistance to recessionary pressures.

3M (MMM)

The highest yielding Dividend Aristocrat stock is industrial conglomerate 3M (NYSE:MMM) whose payout yields 6.4% annually. It is often pointed to as the royalist most likely to cut its payout next.

Facing billions of dollars in legal liabilities from lawsuits surrounding faulty earplugs for the military as so-called “forever chemicals” polluting drinking water, the dividend stock could see all available cash flows sucked dry by the payments. Almost three-quarters of 3M’s free cash flow goes to support the dividend, which it has paid for over 100 years and increased for 64 consecutive years. It just raised it again to $1.51 per share, but because it was by just a penny, it also means investors are receiving less money overall due to inflation.

The industrial conglomerate’s performance improved at the end of last year and its stock has bounced nearly 30% off its lows. If it could settle the legal liabilities without gutting its bank account, there may be a chance for a significant turnaround for this Dividend Aristocrat stock.

On the date of publication, Rich Duprey held a LONG position in JNJ, BEN, AMCR, O and MMM stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Rich Duprey has written about stocks and investing for the past 20 years. His articles have appeared on Nasdaq.com, The Motley Fool, and Yahoo! Finance, and he has been referenced by U.S. and international publications, including MarketWatch, Financial Times, Forbes, Fast Company, USA Today, Milwaukee Journal Sentinel, Cheddar News, The Boston Globe, L’Express, and numerous other news outlets.