4 Dividend Aristocrats That Could Outperform The S&P 500 During Difficult Times

  • Stock Market Analysis
  • The S&P 500 Dividend Aristocrats has frequently outperformed the broad S&P 500 in times of economic distress
  • Companies that compose the dividend aristocrats tend to have lower volatility than the broader market
  • As macroeconomic headwinds continue to bring uncertainty to global stocks, let's look closely at four such companies

As investors scramble for alternatives to high-growth stocks amid a challenging macroeconomic environment, companies that pay solid, reliable dividends emerge as a great portfolio addition. In fact, the S&P 500 Dividend Aristocrats has frequently outperformed the broad S&P 500 in times of economic distress since its inception in 2005.

For a company to join the select club of the S&P 500 Dividend Aristocrats, it must meet the following three requirements:

  • To have increased its dividend for at least 25 consecutive years
  • Be part of the S&P 500 index
  • Have a market capitalization of at least $3 billion

Companies that compose the dividend aristocrats tend to have lower volatility than the broader market, as they often rely on solid balance sheets.

As macroeconomic headwinds continue to bring uncertainty to global stocks, let's look closely at four such companies.

NextEra Energy

With a market cap of about $165 billion, Nextera Energy (NYSE: NEE ) is one of the world's largest wind and solar energy generators, with the largest market share of North American wind capacity. NextEra Energy Daily Chart
Its leading position in the renewable energy sector and a large order backlog exceeding the number of recent projects commissioned provide tailwinds for future gains.

The Juno Beach, Florida-based giant has nuclear power plants in Iowa, New Hampshire, and Wisconsin, but most of its business is in Florida.

NEE is a reliable dividend payer, with a compounded rate of no less than 9.8% over the past decade. The next payout of $0.42 per share is scheduled for September 15.

Air Products & Chemicals

Air Products and Chemicals (NYSE: APD ) is an American provider of essential gases, related equipment, and applications expertise for industrial uses. Headquartered in Pennsylvania, it was founded in 1940 and currently has a market capitalization of about $59 billion.Air Products And Chemicals Weekly Chart

APD also has a significant international presence. Approximately 40% of the company's annual sales are generated in the United States and Canada, with the remainder split between Latin America, Europe, and Asia.

The company generated revenues of $3.19 billion during the last quarter , up 26% year-on-year, comfortably beating forecasts.

Furthermore, it has an attractive dividend, which has been increasing steadily in recent years.

Albemarle

Albemarle Corp (NYSE: ALB ) is a manufacturer of chemical products and materials with customers in sectors as diverse as oil, pharmaceuticals, automotive, electronics, and construction. It has a market capitalization of $28 billion.

The company is the world's largest producer of lithium and the second-largest of bromine. These two products account for approximately 75% of the company's sales.

During its last earnings , the company reported that revenues in the quarter rose 1.7% to $1.48 billion, beating forecasts.

As electric vehicles are expected to account for 22% of all new car sales by 2025, up from just 4.6% in 2020, the company is well positioned to benefit from the trend.

Coca-Cola

Coca-Cola (NYSE: KO ) is the world's largest beverage company. Since its founding in 1886, it has spread to more than 200 countries worldwide and has a market capitalization of more than $270 billion.Coca-Cola Daily Chart

However, the Atlanta, Georgia-based behemoth is also looking to the future; it has recently acquired multiple non-carbonated beverage brands to diversify its business.

The company's management has raised its FY2022 revenue guidance and now expects organic sales growth of 12%-13% (up from 7%-8% previously) while holding steady on its EPS growth of 5%-6%.

Coca-Cola has a dividend yield of 2.7%, considerably higher than the S&P 500 index average yield of 1.4%.

Disclosure: The author currently does not own any of the securities mentioned in this article.

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