Geopolitical risks, tariffs, and angry heads of state are the catalyst for the most recent market pull back – and that’s actually good thing for those looking to pick up quality names, at a discount. My favorite companies are those with predictable and solid financials, stability, and those that reward shareholders. Dividend Aristocrats—companies that have paid increasing dividends for 25 years—fit that bill exactly, which makes them excellent choices for long-term income-investing.
The members of the S&P Dividend Aristocrats list may not make headlines as often as high-growth tech stocks, but they’ve weathered all sorts of market conditions while still providing value to shareholders, and that’s something that income-focused investors like me should focus on.
So, let’s talk about three of the best high-yield, buy-rated Aristocrats on the market today.
Methodology: How I Came Up With This List
For this analysis, I screened my watchlist of Dividend Aristocrats for those with the highest yields. The top four were Federal Realty Investment Trust (FRT), Chevron Corp (CVX), Amcor Plc (AMCR), and Realty Income Corp (O). Then, I arranged them from highest to lowest analysts’ average scores to narrow the search further, which led to me cutting O from the list.
Now, I’ll cover the top three:
Federal Realty Investment Trust (FRT)
Federal Realty is a Dividend Aristocrat and King that owns retail-focused properties, and interestingly, mainly in coastal areas – in markets like Washington D.C., Boston, San Francisco, Los Angeles, etc.
Source: Federal Realty Investment Trust
Apart from regular shopping centers, Federal Realty also owns grocery-anchored retail centers and other mixed-use developments that combine shops with offices. According to FRT’s website, the REIT manages 102 properties with about 3,400 tenants and 3,100 residential units, which covers 27 million square feet of commercial space.
Financial Performance
Source: FRT Q3 FY24 Financials
The company’s Q3 FY24 financials are encouraging. Occupancy metrics increased, with its overall portfolio reaching 94% occupancy, increasing by 170 basis points year over year. Meanwhile, funds from operations or FFO reached record highs at $144.6 million or $1.71 per diluted share, representing a decent uptick from $135.3 million and $1.65 from the same period last year.
How Much Does Each FRT Stock Pay in Dividends?
Federal Realty pays $1.10 a quarter, and its payouts are well-covered. On an annual basis, that brings yields to about 4%, which is slightly higher than the average REIT yields in 2024.
Interestingly, despite the overall positive performance, FRT stock is slightly undervalued. The stock currently trades at a forward P/E of 15.35x, well below the sector average of 28.61x. That means FRT stock’s current price – around $105 per share – is potentially a discounted entry for investors.
Analyst Rating
Source: Barchart.com
Wall Street analysts love FRT stock, which currently has a consensus Strong Buy rating. If high estimates of $135 per share are right, new investors would benefit from a potential 28% upside.
Chevron Corp (CVX)
Next on my list is Chevron, a full-service energy company that handles everything from oil-searching to processing them into products we use daily, like fuel, gas, engine oil, different kinds of chemicals, etc. Chevron has two main business segments, which are Upstream and Downstream. Lately, the company has been testing a new vertical: renewable fuels, which implies that management sees the potential in green energy.
Source: Chevron
Recently, Chevron USA collaborated with Engine No.1 and GE Vernova to power massive data centers across America. The plan is to build power plants near these data centers with natural gas turbines. These “power foundries” infrastructures will use 7 GE Vernova 7HA natural gas turbines. They plan to scatter them across the Southeast, Midwest, and West. I think this collaboration sets Chevron up for significant growth in the expanding data center industry in the United States.
Chevron’s Recent Financials
Source: Chevron Q4 FY24 Financial Report
From Chevron’s Q4’24 financials, we can see significant improvements over past quarters. Fourth quarter revenue increased 10.7% year-over-year to $52.23 billion, while its bottom line surged 43.4% to $3.239 billion, which translated to a $1.84 increase in EPS. Chevron’s improved operational efficiency primarily drives positive movements.
Moreover, it’s worth noting that the energy sector is on an upwards trajectory, which means Chevron will potentially deliver more in the following years, especially with U.S. President Donald Trump’s “Drill, baby, drill” remarks on increasing oil production in the country.
Source: Yahoo Finance
Chevron’s Dividends
Chevron’s dividend profile is also pretty decent and could easily catch any income investor’s attention. Its forward annual dividend of $6.84 currently translates to a 4.46% yield, which I consider “attractive” in today’s market. The payout ratio is around 64.88%. Although it’s a bit higher, I think it’s sustainable for an established company like Chevron.
Moreover, the company increased its dividend payout for 37 consecutive years, which means stability for income-focused investors like me, especially with its 5-year dividend growth rate of 36.97%, which outpaces inflation.
In terms of valuation, one can tell that Chevron caught the attention of investors – CVX stock trades at a trailing P/E of 15.59x, which is above the energy sector’s P/E of 7.20x. However, given Chevron’s dividend profile and recent financials, the valuation seems reasonable – it means the market is appropriately pricing in both the company’s stability and growth prospects.
Analyst Rating
Source: Barchart.com
Wall Street is highly confident about Chevron’s business, issuing a consensus “Strong Buy” rating from 22 market analysts. Not only that, with a $203 high target price on CVX stock, it suggests there’s a 32% upside potential from its current trading price.
Amcor Plc (AMCR)
The last company on my list is another Dividend Aristocrat, Amcor Plc. Amcor is a packaging company that makes containers and wrapping materials for everyday products. The company provides products in two main verticals: Flexible Packaging for films and soft wraps, and Rigid Packaging for hard containers and bottle caps.
Amcor’s wraps and containers can be found worldwide, mainly in the US, Australia, and the UK, where most of their primary branches are. Many products we use or consume, like soda, water, or even sauces, use Amcor packaging.
Source: Amcor plc
Amcor and Berry Global recently submitted their merger paperwork to the SEC and scheduled shareholder votes for February 25 of this year. According to Amcor, this merger aims to create a business that’ll dominate consumer and healthcare packaging solutions, with a target of $650 million in synergies and over $3 billion in annual cash flow. Investors should know about this!
Amcor’s Financial Performance
Amcor’s Q2 FY25 report is somewhat mixed. Specifically, net sales showed a marginal decline of 0.31% to $3.24 billion; however, the company showed strong operational efficiency with a 22.73% increase in operating income to $297 million. More importantly, net income increased by 22.79% to $167 million, which placed its quarterly EPS at $0.092. This potentially means more effective cost management and better margins.
Amcor also reaffirmed its business outlook for FY’25, projecting adjusted EPS of 72-76 cents and free cash flow between $900 million to $1 billion – although nothing is certain from most of the company’s outlook, given Amcor’s current market position, its prospects are worth exploring.
AMCR Dividend Profile
Much like the first two companies on this list, this packaging giant also pays dividends to shareholders. Its forward annual payout of 12.75 cents equals a 5.08% dividend yield, which I also think is “not little” in today’s economy. In my book, its payout ratio of 70.93% indicates that while generous, the dividend is sustainable given the company’s cash flow generation. Most notably, Amcor Plc has increased its dividend payout for 41 consecutive years, with a 5-year dividend growth rate (CAGR) of 16.42%.
Interestingly, AMCR stock trades at a forward P/E of 16.28x, significantly below the sector average of 25.15x. That means AMCR is potentially undervalued. This valuation represents around a 35% discount to its materials sector peers, which means the market may not yet recognize Amcor Plc’s potential. For income-focused investors, this can be an entry point.
Analyst Rating
Source: Barchart.com
Wall Street analysts also seem confident in the company’s trajectory, as ten analysts rate AMCR stock a consensus buy rating. The high price target is $12.50 per share, which means a 24.63% upside potential for investors getting in at a discount.
Dividend Aristocrats As Long-Term Investments
I know it’s exciting to find Dividend Aristocrats that have stood firm through different market cycles. However, every investor’s journey is unique, and there’s no one-size-fits-all approach to building wealth in the stock market.
My analysis for these stocks is meant to inform potential investors, not to be the only factor in your investment decision. So, please do your research. All things fair, if you’re an income-focused investor, these three companies might be a sound option for you.
