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3 Dividend Aristocrats For 2024

As we enter a new year, Bob Ciura’s Sure Dividend recommends three Dividend Aristocrats for investors seeking both income and growth.

This is a guest contribution by Bob Ciura of Sure Dividend. Sure Dividend helps individual investors build high quality dividend growth portfolios for the long run.

Investors looking for high-quality dividend stocks should consider the list of Dividend Aristocrats, a group of 68 stocks in the S&P 500 Index with 25+ consecutive years of dividend increases. The Dividend Aristocrats possess durable competitive advantages, highly profitable business models, and long-term growth.

In addition to their dividends, the Dividend Aristocrats have generated strong risk-adjusted total returns. As a result, Dividend Aristocrats such as these 3 could offer better performance going forward, with lower risk than the S&P 500 Index.

Automatic Data Processing (ADP)

Automatic Data Processing is one of the largest business services outsourcing companies in the world. The company provides payroll services, human resources technology, and other business operations to more than 700,000 corporate customers. Automatic Data Processing generates annual revenue of about $18 billion. With 48 years of consecutive dividend increases, it is also a member of the Dividend Aristocrats.


ADP posted first quarter earnings on October 25, 2023, and the company beat on the bottom line. Adjusted earnings-per-share came to $2.08, which was six cents better than expected. Revenue was up 7% year-over-year to $4.5 billion. Employer Services grew 9%, which was driven by strong new business bookings and retention, as well as higher client funds interest revenue. PEO Services revenue rose 3% with new business bookings growth, but margins fell 90 basis points. This was due partly to workers’ compensation reserve adjustments and higher selling costs.

Automatic Data Processing has compounded its adjusted earnings-per-share at a rate of more than 11% per year over the last decade. Beyond 2023, we believe the company is capable of delivering 8% annualized growth in earnings-per-share over full economic cycles. Much of this growth is likely to be driven by the company’s Professional Employer Organization (PEO) Services segment, which continues to deliver very impressive revenue growth.

Importantly, this revenue growth has been accompanied by meaningful margin expansion, which means that the segment’s growth has had an outsized impact on the firm’s bottom line. In addition, the company’s buyback has been a low single-digit tailwind annually for earnings-per-share growth in the past decade, and we expect that will continue moving forward.

ADP has a dividend payout ratio of approximately 55% and a solid yield of 2.4%.

Sysco Corporation (SYY)

Sysco Corporation (SYY) is the largest wholesale food distributor in the United States and is expanding internationally. The company was founded in Houston, Texas, in 1969 and now serves 600,000 locations with food delivery, including restaurants, hospitals, schools, hotels, and other facilities. According to estimates, the company has a 16% market share of total food delivery within the United States.

On October 31st, 2023, Sysco reported first-quarter results for Fiscal Year (FY)2024. In Q1, sales rose to $19.6 billion, a 2.6% increase from the previous year, with gross profit climbing 4.6% to $3.6 billion and gross margin reaching 18.6%. This growth is attributed to higher volumes and effective management of product cost inflation. Operating expenses increased by 3.3%, but adjusted operating expenses only rose by 2.9%. Operating income saw a significant 9.1% increase to $803.6 million, while adjusted operating income rose to $854.3 million, up by 10.6%. U.S. Foodservice Operations experienced profitable growth with Q1 sales reaching $13.7 billion, a 0.9% increase. Gross profit increased by 2.8% to $2.7 billion, and gross margin rose to 19.6%.

Sysco has grown earnings by 4.0% annually over the past five years and earnings growth of 9.6% over the past nine years. Through acquisitions and more recently, the company growth organically, with share buybacks, has increased earnings. The company is also in the process of cutting overhead costs, which should mildly boost bottom-line growth. We anticipate 7.0% earnings growth over the next five years.

Sysco has an economic moat due to its large-scale and entrenched distribution infrastructure, which gives it a cost advantage over most competitors. This moat is evidenced by the company’s double-digit returns on invested capital every year, much higher than its weighted average capital cost.

It’s also quite defensive; the company was almost unfazed by the previous recession and recovered from a mild earnings dip within one year. Thanks to this stability, Sysco has raised its dividend every year since it went public, and we expect it to continue to grow in the years to come.

Target Corporation (TGT)

Target is a giant discount retailer with about 1,850 big box stores, which offer general merchandise and food, as well as serving as distribution points for the company’s burgeoning e-commerce business. Target has a market capitalization of $60 billion and should produce about $107 billion in total revenue this year.

Target posted third quarter earnings on November 15, 2023, and results were much better than expected on both the top and bottom lines. The company’s shares soared in a double-digit rally following the report. Revenue came to $25.2 billion, which was down 4.2% year-over-year, but was $160 million better than expected. Comparable sales fell 4.9%, which was attributable to a physical store sales decline of 4.6%, and a comparable digital sales decline of 6.0%.

Adjusted earnings-per-share came to $2.10, which was a staggering 62 cents better than expected. Margins were the star of the show, as operating margins came to 5.2% of revenue, up sharply from 3.9% a year ago, and despite lower sales. Gross margins were 27.4% of revenue, up from 24.7% a year ago, which was due to lower markdowns and other inventory-related costs, lower freight costs, lower supply chain and digital fulfillment costs, and favorable category mix.

Future growth will be fueled by same-store sales growth as well as growth from new store openings. In addition, earnings-per-share will be boosted by share buybacks. The company has $9.7 billion remaining on its share repurchase plan.

Target has grown its dividend for more than five decades, making it a Dividend King. The company is investing heavily in its business in order to navigate through the changing landscape in the retail sector. The payout is now 53% of earnings for this year, which indicates a safe dividend. TGT stock yields 3.2%.

Sure Dividend helps self-directed investors and investment professionals find high quality dividend growth stocks for the long run. We specialize in long-term investing for rising passive income over time. Sure Dividend was founded in 2014 and is trusted by more than 100,000 investors who receive Sure Dividend’s free dividend information.