Dividend aristocrats are great places when market waters get really rough. Although they are still collapsing during bear markets, their dividends tend to offer a glimmer of security amid turbulent times.
Dividends of dividend aristocrats were delayed during past crashes, crises, and everything in between. With the growing fear that we will fall into a bear market and recession, insisting on quality can be a wise decision.
In this piece we used TipRanks Comparison Tool to rate three of the most enticing aristocrats on dividends, ahead of the wider S&P 500 on a year-to-date basis.
Chevron is a large oil company that Warren Buffett has been refueling lately. Following the latest Oracle of Omaha assistance, Chevron is now in the top four in Berkshire Hathaway’s portfolio.
Since the beginning of the year, shares of Chevron have risen by more than 40%, much higher than the S&P 500, which is down about 18%. As stocks fluctuate around $ 165 per share, stocks may be at risk of withdrawal if broader markets manage to find support.
In any case, the reality of higher oil prices seems to be sinking for many. With Russia’s invasion of Ukraine, $ 100 a barrel of oil could remain here. If this is the case, Chevron will be rich in cash flow over the next 18 months.
Although it is difficult to pursue an action that has already come out, it is worth noting that the evaluation is still incredibly cheap. The shares are traded with only 15.12 times lower profit, with a dividend yield of 3.5%. It is no mystery why Buffett likes the big oil company. Energy reserves are one of the few places where you can hide from wider volatility, and Chevron is probably one of the best in the group.
With a strong balance sheet and top-level production growth, Chevron seems to be one of the aristocrats of dividends that can continue to feed higher, even in the face of a recession.
Overall, CVX has an analyst consensus rating of moderate buying, based on 15 purchases, 8 retentions and 1 sale. The target average share price of $ 171.58 shows the possibility of only a 4% increase over the current share price of $ 164.71. (See the stock forecast for CVX on TipRanks)
International business machines (IBM)
IBM is an old technology company that is also doing relatively well in the face of market adjustments. IBM shares have risen 2% since the beginning of the year. Although IBM’s innovative capabilities may be tested, there is no denying that the value and dividend yield – currently 5.1% – are contained in the name.
It’s been years since Berkshire Hathaway dropped the IBM towel. Although there were low valuation indicators and high returns, stocks continued to be weaker – and continue to be so today. Shares have continued to fall from their highs since 2013, even when adjusted for dividends. About nine years have passed and shares have not yet recovered.
Going forward, there are reasons for optimism. Kyndryl’s margin suppression business is separate and could pave the way for margin expansion.
Although IBM’s latest results for the first quarter were two cents, management’s guidance was quite encouraging. However, it will be difficult for the company to maintain growth if an economic recession approaches.
Looking at Wall Street, analysts are in the mood, with IBM’s average target of $ 152.11 suggesting a 14.45% increase from today’s levels. (See the forecast for IBM shares in TipRanks)
Johnson and Johnson (JNJ)
Johnson & Johnson is another aristocrat of dividends, which has actually grown by ~ 5% since the year. The health vegemat recently made modest profits ($ 2.67 against the consensus of $ 2.56) despite ongoing challenges in the supply chain.
The oncology segment saw 15% sales growth led by Darzalex and Erleada. Looking ahead, the company expects pharmaceutical revenues to be around $ 60 billion by 2025. The ambitious goal is realistic and will fuel a further increase in dividends for investors, no matter where the economy goes.
With minimal exposure to Ukraine and Russia, Johnson & Johnson is minimally affected by the Russia-Ukraine war. As a health game, the company is also a great defense in times of recession.
At the time of writing, the shares are trading at 23.8 times lower profits and about 5 times higher than sales. With only 0.72 beta, JNJ shares are another dividend aristocrat that must continue to exceed averages amid declines.
The dividend yield of 2.55% is modest, but it is incredibly safe and subject to growth over the years, as the company seeks to meet its 2025 targets with or without a recession.
Addressing the community of analysts, opinions are divided almost equally. 6 purchases and 5 retentions add a consensus rating for moderate purchases. At $ 193.36, the average target price suggests ~ 9% potential up. (See the JNR stock forecast on TipRanks)
Dividend aristocrats may be one of the best places to overtake the S&P 500 in a rather ugly 2022. So far, they’ve done well. Solid foundations must pave the way for more than the same. IBM shares currently have the highest growth potential at ~ 14%, while Chevron has the lowest at ~ 4%.
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