Top 7 Dividend Champions To Buy Now | 2021 Dividend Champions List

Up to date on Could 14th, 2021 by Bob Ciura

Earnings traders are all the time on the hunt for high-quality dividend shares. There are numerous methods to measure high-quality shares. A technique for traders to search out nice dividend shares is to give attention to these with the longest histories of elevating dividends.

With this in thoughts, we created a downloadable record of all 142 Dividend Champions. You possibly can obtain your free copy of the Dividend Champions record, together with related monetary metrics like price-to-earnings ratios, dividend yields, and payout ratios, by clicking on the hyperlink beneath:

Traders are probably acquainted with the Dividend Aristocrats, a gaggle of 65 shares within the S&P 500 Index with 25+ consecutive years of dividend will increase. In the meantime, traders must also familiarize themselves with the Dividend Champions, which have additionally raised their dividends for at the very least 25 years in a row.

Whereas their size of dividend will increase is identical, resulting in some overlap, there are additionally some necessary variations between the Dividend Aristocrats and Dividend Champions. Because of this, the Dividend Champions record is way more expansive. There are numerous high-quality Dividend Champions that aren’t included on the Dividend Aristocrats record.

This text will talk about massive cap shares, and an evaluation of our high 7 Dividend Champions, ranked in keeping with anticipated complete returns within the Certain Evaluation Analysis Database.

Desk of Contents

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Overview of Dividend Champions

The requirement to develop into a Dividend Champion is easy: 25+ years of consecutive annual dividend will increase. The Dividend Aristocrats have the identical requirement on the subject of variety of years, however with a number of further necessities.

To be a Dividend Aristocrat, an organization should even be included within the S&P 500 Index, should have a float-adjusted market cap of at the very least $3 billion, and should have a median every day worth traded of at the very least $5 million. These added necessities preclude many firms that possess a adequate observe document of annual dividend will increase, however don’t qualify primarily based on market cap or liquidity causes.

Because of this, whereas there’s some overlap between the Dividend Aristocrats and the Dividend Champions, there are additionally many Dividend Champions that aren’t Dividend Aristocrats. Earnings traders may wish to contemplate these shares resulting from their spectacular histories of annual dividend will increase, so now we have compiled them within the downloadable spreadsheet above.

As well as, now we have ranked the highest 7 Dividend Champions in keeping with complete anticipated annual returns over the following 5 years. Our high 7 Dividend Champions proper now are ranked beneath.

The Prime 7 Dividend Champions To Purchase Proper Now

The next 7 shares symbolize Dividend Champions with at the very least 25 consecutive years of dividend will increase, however in addition they have sturdy aggressive benefits, long-term progress potential, and excessive anticipated complete returns. Shares have been ranked by anticipated complete annual return over the following 5 years, from lowest to highest.

Prime Dividend Champion #7: AT&T Inc. (T)

• 5-year anticipated returns: 9.9%

AT&T is the most important communications firm on the earth, working in three distinct enterprise models: AT&T Communications (offering cellular, broadband and video to 100 million U.S. shoppers and three million companies); WarnerMedia (together with Turner, HBO, Warner Bros. and the Xandr promoting platform); and AT&T Latin America (providing pay-TV and wi-fi service to 11 nations).

AT&T is a mega-cap inventory with a market capitalization above $200 billion.

On April 22nd, 2021 AT&T reported Q1 2021 outcomes for the interval ending March 31st, 2021. For the quarter the corporate generated $43.9 billion in income, up 2.7% from $42.8 billion in Q1 2020, as greater mobility and WarnerMedia income extra than offset declines in home video, enterprise wireline and Latin America.

Supply: Investor Presentation

Reported web earnings equaled $7.5 billion or $1.04 per share. On an adjusted foundation, earnings–per–share equaled $0.86 in comparison with $0.84 within the year-ago quarter. AT&T ended the quarter with a web debt–to–EBITDA ratio of 3.1x. AT&T additionally up to date its full 12 months 2021 outlook, persevering with to anticipate 1% income progress, adjusted earnings–per–share to be steady with 2020 and a dividend payout ratio within the excessive–50% vary.

AT&T is a colossal enterprise, however it’s not a quick grower. From 2007 via 2019 AT&T grew earnings-per-share by 2.2% per 12 months. Whereas the corporate is choosing up progress alternatives, notably in its current acquisition of Time Warner, we acknowledge the premiums paid and the truth that the corporate’s legacy companies are regular or declining.

AT&T is optimistic about producing affordable progress and the payout ratio had been falling, leading to extra funds to divert towards paying down debt. On February twenty fifth, AT&T introduced it is going to spin off a number of property right into a separate firm known as New DIRECTV that may personal and function the DirecTV satellite tv for pc TV enterprise, in addition to AT&T TV and U-verse video. AT&T will personal 70% of the corporate, and can promote 30% possession to TPG for roughly almost $8 billion, which will probably be used to pay down debt.

Two particular person progress catalysts for AT&T are 5G rollout and its recently-launched HBO Max service. AT&T continues to increase 5G to extra cities across the nation. AT&T now offers entry to 5G to elements of 355 U.S. markets, overlaying greater than 120 million folks.

AT&T’s streaming platform HBO Max is one other progress catalyst. AT&T ended the 2021 first quarter with over 44 million mixed home HBO and HBO Max subscribers, and almost 64 million globally. The brand new platform is a crucial step for AT&T to maintain up within the streaming wars.

Shares of AT&T commerce for a price-to-earnings ratio of 10.1, beneath our truthful worth P/E of 11. AT&T can also be a excessive dividend inventory with a 6.4% yield. Mixed with 3% anticipated annual earnings-per-share progress, we anticipate complete annual returns of almost 10% per 12 months over the following 5 years.

Prime Dividend Champion #6: Novartis AG (NVS)

• 5-year anticipated returns: 9.9%

Novartis is a Europe-based healthcare firm. The corporate’s Modern Medicines division affords medicines within the areas of oncology, cardiovascular, dermatology, respiratory and several other others. Its Sandoz division markets generic medication. The corporate has annual gross sales above $48 billion.

Novartis reported first quarter outcomes on 4/27/2021. Income grew 1% to $12.4 billion, whereas adjusted earnings–per–share of $1.52 fell 2.6% year-over-year. Excluding COVID–19 associated purchases in Q1 2020, first quarter income is believed to have elevated by 4%.

Supply: Investor Presentation

Modern Medicines was flat for the 12 months as 4% acquire in quantity was offset by a 4% decline in realized costs. Cosentyx, which treats plaque psoriasis and is the corporate’s high promoting product, continues to carry out properly, producing 11% progress 12 months–over–12 months resulting from beneficial properties throughout indications.

Individually, Entresto, which is used to deal with power coronary heart failure, grew income by 34% because the product is now first–line remedy for coronary heart failure sufferers following suggestions from the Coronary heart Failure Affiliation of the European Society of Cardiology in 2019. Sandoz gross sales fell 13%, largely resulting from pricing strain associated to elevated competitors.

One other key benefit for the corporate is Novartis’ analysis and improvement platform. The corporate spent greater than $9 billion on R&D over the past 12 months. This degree of R&D spending ought to repay, as Novartis expects to deliver to market 14 totally different merchandise over the following two years that every have the potential for at the very least $1 billion in peak gross sales.

Shares at the moment commerce for a P/E just under 14, which is beneath our truthful worth estimate of 16. Along with returns generated by an increasing valuation a number of, we anticipate the corporate to develop EPS by 4% per 12 months, whereas the inventory additionally yields over 3%. Complete returns are estimated to succeed in almost 10% per 12 months over the following 5 years.

Prime Dividend Champion #5: Enterprise Bancorp Inc. (EBTC)

• 5-year anticipated returns: 10.5%

Enterprise Bancorp Inc. was fashioned in 1996 because the mum or dad holding firm of Enterprise Financial institution and Belief Firm, known as Enterprise Financial institution. Enterprise has 26 full–service departmentes in the North Central area of Massachusetts and Southern New Hampshire. The corporate’s major enterprise operation is gathering deposits from most people and investing in business loans and funding securities.

The Financial institution affords business, residential and consumer mortgage merchandise, money administration companies, digital banking choices, insurance coverage companies, in addition to wealth administration. About half of the corporate’s mortgage portfolio is in business actual property and a couple of third is in business development loans. Different subsidiaries beneath Enterprise Bancorp are Enterprise Funding Providers and Enterprise Insurance coverage Providers, which cater to the financial institution’s goal market of enterprise prospects.

Enterprise Bancorp has a market cap of $408 million and is an exceptionally managed financial institution, which has remained worthwhile in each single quarter since its formation. It has additionally raised its dividend for 27 consecutive years.

In late April, Enterprise reported (4/22/21) monetary outcomes for the first quarter of fiscal 2021. The financial institution grew its web curiosity earnings 16% over the prior 12 months’s quarter, primarily due to Paycheck Safety Program loans. As well as, due to a fantastic enchancment in its enterprise outlook, the financial institution lowered its mortgage loss provisions by 89%. Because of this, Enterprise grew its earnings–per–share from $0.34 to $0.86 year-over-year.

Because the financial institution is recovering from the pandemic earlier than anticipated, now we have raised our earnings–per–share forecast from $3.00 to $3.40. Primarily based on this revised EPS forecast, shares of EBTC have a P/E of 10.1, barely beneath our truthful worth estimate of 12.

As well as, we anticipate annual earnings progress of 5.0%, whereas the inventory has a 2.2% dividend yield. We anticipate complete annual returns of 10.5% per 12 months over the following 5 years.

Prime Dividend Champion #4: Eagle Monetary Providers (EFSI)

• 5-year anticipated returns: 10.6%

Eagle Monetary Providers is the holding firm for Financial institution of Clarke County. Eagle Monetary Providers serves retail and business prospects and affords shopper, mortgage and business loans in addition to different banking companies. The corporate was based in 1991 and is headquartered in Berryville, Virginia.

Eagle Monetary Providers reported its first-quarter outcomes on April twenty first. Web earnings of $2.9 million elevated 17% from the identical quarter final 12 months. Development was resulting from greater web curiosity earnings, in addition to lowered curiosity expense on deposit accounts. Web curiosity earnings for the primary quarter grew 19% to $9.5 million.

Eagle Monetary Providers ought to be capable of generate optimistic earnings–per–share progress in in the long term. One issue is ongoing progress within the firm’s mortgage portfolio, a pattern that remained in place over the final decade. Coupled with above–common curiosity margins, this may permit for ongoing curiosity earnings progress over the approaching years.

Rising web curiosity earnings is a significant part for income progress for Eagle Monetary Providers. Coupled with some working leverage –bills is not going to develop consistent with greater revenues –this could permit for a respectable earnings progress price over the approaching years.

We anticipate annual EPS progress of 5%-6% per 12 months over the following 5 years. Mortgage progress will proceed to be a progress catalyst, as will above-average curiosity margins. Loans elevated by $192 million for 2020.

Eagle Monetary Providers has elevated its dividend for over 30 consecutive years, a powerful dividend historical past given the corporate’s small measurement. With a market cap of simply ~$100 million, traders ought to contemplate the dangers of investing in such small shares with low liquidity.

That stated, the corporate has been in a position to elevate its dividend for 3 a long time whereas the inventory has a gorgeous 3.3% yield. The mix of EPS progress, valuation enlargement, and dividends results in complete anticipated returns of 10.6% per 12 months over the following 5 years.

Prime Dividend Champion #3: Becton, Dickinson, & Firm (BDX)

• 5-year anticipated returns: 10.7%

Becton, Dickinson & Co., or BD,is a worldwide chief within the medical provide business. The corporate was based in 1897 and has over 70,000 staff throughout 190+ nations. The corporate generates round $17 billion in annual income, with roughly 43% of revenues coming from outdoors the U.S.

BDX has been very energetic on the acquisition entrance in recent times, and is now comprised of three segments.

Medical Division merchandise embrace needles for drug supply programs, and surgical blades. The Life Sciences division offers merchandise for the gathering and transportation of diagnostic specimens. The Intervention phase contains a number of of the merchandise produced by what was once Bard.

Supply: Investor Presentation

On Could eighth, BDX reported fiscal second-quarter monetary outcomes. Income elevated 15% to $4.9 billion, whereas adjusted earnings-per-share elevated 25%. Medical phase income elevated 4.7%, whereas Biosciences grew double-digits and Interventional was flat. The U.S. reported 1.9% income progress whereas worldwide markets income elevated 26%.

BDX additionally announced that it was spinning off its Diabetes enterprise ($1.1 billion in income in FY 2021). BDX reaffirmed its steerage for fiscal 2021 and expects adjusted EPS within the vary of $12.75 to $12.85.

We really feel that BDX can develop earnings at a price of 10% per 12 months via fiscal 2026 resulting from a mix of mid-single-digit natural gross sales progress, income beneficial properties because of the Bard acquisition, and future share repurchases.

With a P/E of 19.1 in contrast with our truthful worth estimate of 18.6, we see the inventory as barely overvalued. Nonetheless, the mix of 10% anticipated EPS progress and the 1.3% dividend yield result in complete anticipated returns of 10.7% per 12 months over the following 5 years.

Prime Dividend Champion #2: Stryker Company (SYK)

• 5-year anticipated returns: 10.8%

Stryker is a worldwide chief within the medical system sector. The corporate’s product strains embrace surgical tools, neurovascular merchandise and orthopedic implants.

Stryker launched earnings outcomes for the primary quarter on 4/27/2021. Income grew 10% to $3.95 billion, which was $10 million greater than anticipated. Adjusted earnings–per–share of $1.93 was a 4.9% enhance from the prior 12 months. Natural income grew 1.8% 12 months–over–12 months. Worldwide was a shiny spot, with gross sales rising 15% 12 months–over–12 months. Decrease costs lowered outcomes by 0.9%, however volumes elevated 2.7% and acquisitions added 6.2%.

Orthopaedics had an natural sales progress price of 0.5% because of the slowdown in elective procedures. Mako continues to carry out properly resulting from greater installations in worldwide markets, but additionally noticed pickup in procedures within the U.S.

Neurotechnology & Backbone was one of the best performer as natural gross sales improved 11.3%. Interventional backbone, neurosurgical and ear–nostril–and–throat companies all had double–digit progress.

Stryker reaffirmed its natural income progress goal of 8% to 10% in 2021, extra in–line with the corporate’s lengthy–time period progress price.The corporate now expects adjusted earnings–per–share of $9.05 to $9.30 for the 12 months, up from $8.80 to $9.20 beforehand.

Primarily based on the midpoint of 2021 adjusted EPS steerage, Stryker inventory trades for a P/E ratio of 27.4, barely above our truthful worth estimate of 24.5. A small discount in annual returns from a declining P/E a number of will probably be offset by EPS progress (anticipated at 12% per 12 months) plus the 1% dividend yield. Total, complete returns are estimated to succeed in 10.8% for Stryker inventory over the following 5 years.

Prime Dividend Champion #1: Enbridge Inc. (ENB)

• 5-year anticipated returns: 12.5%

Enbridge is an oil & fuel firm that operates the next segments: Liquids Pipelines, Gasoline Distributions, Power Providers, Gasoline Transmission & Midstream, and Inexperienced Energy & Transmission. Enbridge is a large-cap inventory with a market capitalization of ~$78 billion.

Notice: As a Canadian inventory, a 15% dividend tax will probably be imposed on US traders investing within the firm outdoors of a retirement account. See our information on Canadian taxes for US traders right here.

Enbridge reported its first-quarter leads to early Could. Distributable Money Move (DCF) of $1.37 per widespread share elevated 2.2% from the identical quarter final 12 months. Individually, Enbridge reaffirmed its full-year steerage for 2021. The corporate expects EBITDA of $13.9 billion to $14.3 billion and DCF per share of $4.70 to $5.00 for the complete 12 months.

The corporate additionally expects regular progress via 2023.

Supply: Investor Presentation

We anticipate 4.5% annual money circulation per share progress for Enbridge over the following 5 years, due primarily to new initiatives. Enbridge is likely one of the largest pipeline operators in North America. Its huge asset footprint serves as an amazing aggressive benefit, as it could take many billions of {dollars} of investments from new market entrants in the event that they needed to have the ability to compete with Enbridge.

On December eighth, the corporate additionally raised its dividend by ~3%. Shares at the moment yield 7%. The mix of dividends, DCF-per-share progress, and an increasing valuation a number of might result in complete annual returns of 12.5% per 12 months over the following 5 years.

Last Ideas

The assorted lists of shares by size of dividend historical past are a great useful resource for traders who give attention to high-quality dividend shares. To ensure that an organization to lift its dividend for at the very least 25 years, it should have sturdy aggressive benefits, extremely worthwhile companies, and management positions of their respective industries. Additionally they have long-term progress potential and the flexibility to navigate recessions whereas persevering with to lift their dividends.

The highest 7 Dividend Champions offered on this article have lengthy histories of dividend progress, and the mix of excessive dividend yields, low valuations, and future earnings progress potential make them engaging buys proper now.