It’s a good time to be a stock investor. Then again, it’s always a good time to be a stock investor. Being invested in equities exposes you to the natural long-term growth of the world.
While doomsayers sulk and wait for their rare moment in the sun when things crash, long-term optimists are busy making money. Speaking of making money, the S&P 500 is up 16.3% YTD. That’s great.
But what if it could be even better? Well, that’s why I focus so much on high-quality dividend growth stocks.
And when talking about dividend growth stocks, Dividend Aristocrats are the creme de la creme. Dividend Aristocrats are stocks that have increased their dividends for 25 consecutive years or more.
Not only are these some of the best stocks in the world, partially proven out by their ever-higher dividends – many of these stock routinely crush the market’s total return, too.
So it’s safe, growing dividend income you can live off of. And market-beating capital gain. Talk about having your cake and eating it too.
Today, I want to tell you about four Dividend Aristocrats that are crushing the S&P 500 this year. Ready? Let’s dig in.
The first Dividend Aristocrat that’s crushing the market this year is Essex Property Trust (ESS).
Essex is a real estate investment trust that owns and operates a portfolio of US West Coast multifamily properties.
I love apartment REITs. Whereas you can quibble about the discretionary need for a lot of real estate, such as, say, office space, you can’t really say the same about housing. Shelter is a basic need. And apartment companies can profit handsomely by catering to this basic need.
Essex is a Dividend Aristocrat, with 27 consecutive years of dividend increases.
You don’t become a Dividend Aristocrat by running a lousy business. You have to be a world-class organization to be able to produce the reliable, rising profit necessary to sustain reliable, rising dividends for decades on end. Well, Essex has done just that. And with a 10-year dividend growth rate of 7.2% to go on top of the stock’s current yield of 2.6%, this is a compelling combination of yield and growth. Want to know what else is compelling? The capital gain.
Essex is up 40.3% this year alone!
That’s 2.5 times what the S&P 500 has done this year. We put out an analysis and valuation video on Essex late last year when the stock was around $200/share, highlighting what an undervalued opportunity this appeared to be. It’s now at $320/share. Some of the video’s comments were needlessly focused on California’s politics, due to Essex’s West Coast exposure, but a political bias can cause you to miss out on a lot of money. My money’s not red or blue. It’s green.
The second Dividend Aristocrat crushing the market this year is Federal Realty Investment Trust (FRT).
Federal Realty is a real estate investment trust that focuses on owning and managing shopping centers.
See, here’s the thing. If you want to be a successful long-term investor, you have to think counterintuitively. Investors left and right were throwing out retail REITs last year because they were afraid, for some silly reason, that, I suppose, people were suddenly going to stop shopping? Yeah, not happening. When the market hands you huge opportunities due to others’ folly, you really should take advantage.
This is another Dividend Aristocrat, with 54 consecutive years of dividend increases.
Federal Realty didn’t build their business and that kind of track record by not knowing what to do in times of trouble. This 54-year time frame spans wars, recessions, and all kinds of changes in the way people live and shop. They’re still at it and arguably better than ever. With a 3.6% yield and 10-year dividend growth rate of 4.7%, there’s a lot to like here in terms of both income and growth. The market got this stock wrong last year, but it’s getting it right this year.
This stock is up 43.5% YTD.
It’s almost tripled the S&P 500 this year. Amazing. Others might think Dividend Aristocrats are boring. Maybe they don’t like making money. I really don’t know. We highlighted Federal Realty Trust last year as an undervalued opportunity when the stock was less than $75/share. It’s now coming up on $120/share. Could be headed a lot higher, too.
Third up is Exxon Mobil (XOM).
Exxon Mobil is a multinational oil and gas corporation.
You’ve heard of Exxon Mobil, right? You might have also heard that it’s dead. Kaput. Gone. Well, its death has been greatly exaggerated. Because it’s not only alive – it’s still doing almost $200 billion in annual revenue. Not as great as it once was, no doubt about it. But it’s still a force to be reckoned with. If you threw this thing away at the lows, you’re regretting it now. Not only have you missed out on an epic run, but you’ve also missed out on those huge dividends.
This Dividend Aristocrat has increased its dividend for 38 consecutive years.
Recent dividend growth has admittedly been nil due to the pandemic, and the 10-year dividend growth rate of 6.9% isn’t huge. However, this stock yields 5.7%. That’s a lot of income when you compare that to the S&P 500’s yield of 1.35%. And it’s not just the yield, either. This stock has been a capital gain monster this year.
It’s up 47.5% YTD!
So it’s lapped the S&P 500 almost three times over. Exxon Mobil is dead, some say. Well, if that’s dead, I’d hate to see alive. Despite the huge run, it’s still well below its pre-pandemic pricing. This company lacks the luster it once had. But it’s still got some shine to it. And investors who didn’t give up on it have been rewarded. There may be more of that to come.
Last but not least, let’s talk about Nucor (NUE).
Nucor is a major steel producer.
You might know that a good chunk of US infrastructure needs to be replaced. Some of that infrastructure needs steel. Well, Nucor’s investors have heard the call and come a-running. This stock has been on a tear this year, but it’s not a stock that’s hidden from view. It’s yet another Dividend Aristocrat.
Nucor has increased its dividend for 48 consecutive years.
You might scoff at the 10-year dividend growth rate of 1.1% And the yield of 1.7% isn’t exactly inspiring, either. But don’t tell any of that to Nucor shareholders, because they’re too busy watching the stock go stratospheric.
Nucor is up a jaw-dropping 85% this year!
To be fair, the stock was pretty much flat for about 10 years. So there was a lot of catching up to do. But it’s caught up. And then some. Its YTD gain is five times that of the S&P 500. Dividend Aristocrats don’t always have this kind of explosive move upward in a short period of time. But they can do that. Meanwhile, the true appeal of these stocks is related to the safe, growing dividend income they reliably pump out decade after decade. It’s the kind of passive income that you can count on, live off of, and become financially free with. Then you can go do whatever you want with your life – like I’m doing. If your portfolio isn’t already chock-full of Dividend Aristocrats, you may want to consider changing that.
— Jason Fieber
P.S. If you’d like access to my entire six-figure dividend growth stock portfolio, as well as stock trades I make with my own money, I’ve made all of that available exclusively through Patreon.
Source: DividendsAndIncome.comWe’re Putting $2,000 / Month into These Stocks
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