10 Best Dividend Aristocrat Stocks (January 2018)

Best Dividend Aristocrat Stocks

Happy New Year!

Welcome to 2018 everyone!

We’re a couple weeks in so let’s see a show of hands for anyone still following their new year’s resolution.

Since I can’t see any of you I’m just going to assume you all are.


Again, 2017 was a fantastic year for the market.

The question is will 2018 look the same, pull back, or continue to go up but not like last year?

I think it will be the third option, but time will tell.

When it comes to dividend investing though, we’re not as concerned with the entire stock market.

The market is made up of individual companies and there are still great opportunities out there.

With that in mind, using the 7 Truths of Dividend Investing, let’s look at the best dividend aristocrat stocks for January 2018.

10. Sysco Corporation (SYY)

Payout Ratio: 38.04%

5-Year Historical EPS Growth: 3.43%

Dividend Growth Streak: 47 Years

Dividend Yield: 2.17%

5-Year Dividend Growth: 3.79%

Sector: Consumer Defensive

Herbert Irving, John F. Baugh, and Harry Rosenthal founded Sysco in 1969.

The company became public on March 3, 1970. In their first year, the company had sales of $115 million.

It’s been nowhere but up since then.

In 2005, the company operated 170 facilities throughout the United States and Canada.

Fortune magazine ranked Sysco No. 204 in the annual Fortune 500 based on their sales volume.

As of 2016, the company had over $55 billion in sales.

For the last 40+ years, Sysco has grown to become the world’s largest broadline distributor.

Sysco distributes every food product imaginable. Fresh and frozen foods. Dairy and beverage products.

It even provides non-food products like tableware, cookware, and restaurant supplies.

The company has a wide range of customers with restaurants in the lead by a wide margin:

  • Restaurants (69%)
  • Healthcare (9%)
  • Education/Government (9%)
  • Travel/Leisure (9%)
  • Other (12%)

If you’re eating at a restaurant, there is a good chance Sysco had some involvement with your meal.

Future Growth Potential

Because 69% of Sysco’s sales come from the restaurant industry, growth depends on the success of restaurants.

Sadly, we’re currently in the middle of what many are calling a restaurant recession.

Restaurant traffic has been declining over the last year or so. Foot traffic at malls is also on the decline and most restaurant locations are at or near malls.

As a result, Sysco’s sales declined 0.5% for fiscal year 2017.

But, it’s not all bad news. The company has been able to cut costs and increase their margins by .48%.

That might not sound like much but even a slight growth in margin can have a big impact.

And while the U.S. segment hasn’t been doing well, things are booming overseas.

The international segment nearly doubled last year and is expecting to keep growing rapidly.

The U.S. restaurant recession will end and sales will start climbing. The international segment will continue to grow.

Sysco’s P/E ratio is hovering right around market value but they’ve been growing their dividend for 47 straight years. When sales turnaround, there will be significant value growth as well.

They’re at the top of a highly profitable industry and an excellent buy for long term holders.

9. Ecolab (ECL)

Payout Ratio: 31.21%

5-Year Historical EPS Growth: 8.65%

Dividend Growth Streak: 25 Years

Dividend Yield: 1.1%

5-Year Dividend Growth: 12.16%

Sector: Basic Material

Ecolab started as Economics Laboratory in 1923. Their original product was Absorbit, a product designed to quickly clean carpets in hotel rooms.

That was soon followed by Soilax, a dishwasher soap.

Throughout much of the next 30 years, Economics Laboratory dealt with dishwasher cleaning, maintenance, and repair.

From the 50s on through the 80s, the company expanded globally and increased their product offerings.

They pioneered the concept of pest elimination. They also started offering products to clean pipes at dairy factories without any hand washing.

In 1986, the company changed their name to Ecolab and went public.

It has continued its global expansion and broadened its focus through to today.

Ecolab is now a provider of water, hygiene, energy technologies.

They offer services to the food, energy, healthcare, industrial, and hospitality markets.

All told, they do a lot for a lot of different companies.

The company has four main principles: clean water, safe food, abundant energy, healthy environment.

Those four principles guide everything Ecolabs does.

They operate in three major business segments: global industrial, global institutional, and global energy. All are about the same in size.

Global industrial focuses on water treatment, cleaning, and sanitation for industrial customers.

Global institutional specializes in cleaning and sanitation products for foodservice, hospitality, lodging, healthcare, and retail industries. Products for housekeeping and general food safety.

Global energy operates under the Nalco Champion name. Nalco and Ecolab merged in July of 2011 and became a wholly owned subsidiary of Ecolab.

It serves the treatment needs of global petroleum and petrochemical industries.

Future Growth Potential

Like other companies with significant global exposure, Ecolab’s growth can fluctuate with changes in currency value.

But, fluctuating currency values is no reason to stay away from a great company.

Approximately 25% of Ecolab’s annual revenue comes from Asia, Latin America, the Middle East, and Africa.

If they can continue to increase that number and ride the growth in China and India, Ecolab will continue to be a Dividend Aristocrat for years to come.

8. Sherwin-Williams Co. (SHW)

Payout Ratio: 24.21%

5-Year Historical EPS Growth: 18.19%

Dividend Growth Streak: 39 Years

Dividend Yield: 0.83%

5-Year Dividend Growth: 17.14%

Sector: Basic Material

The housing recovery since 2007 has been good for a lot of companies, but possibly none more than Sherwin-Williams.

Founded by Henry Sherwin and Edward Williams, the company has been around for over 150 years.

Started in 1866 in Cleveland, Ohio, the company operates through four segments: Paint Stores, Consumer Group, Latin America Coatings Group, and Global Finishes Group.

Most people in the US know Sherwin-Williams for their paint stores. It was the first section of the company established back in the 1880s and is still the backbone of the company.

The stores market and sell Sherwin-Williams branded paints and coatings.

In 2016, the paint stores group operated 4,080 stores across the country.

The same year, Sherwin-Williams topped $11 billion in sales.

It’s no surprise the paint stores group is the main driver of those sales, taking up 68% of that $11 billion.

Consumer Group and the Global Finishes Group both have around 15% of sales. Latin America Coatings sits at around 4%.

Future Growth Potential

Being so reliant on paint store sales means they also swing with the housing economy.

When new homes are being built or remodeled and the economy is doing well, Sherwin is doing well.

If the economy isn’t doing well, Sherwin isn’t doing very well.

This can be said for most companies, but it is especially true with Sherwin-Williams.

Beyond that, the company still has plenty of growth opportunities.

They’re working to expand into China and India and tap into their booming middle classes.

7. Beckton Dickinson and Co. (BDX)

Payout Ratio: 30.77%

5-Year Historical EPS Growth: 12.78%

Dividend Growth Streak: 45 Years

Dividend Yield: 1.4%

5-Year Dividend Growth: 9.77%

Sector: Healthcare

Maxwell W. Becton and Fairleigh S. Dickson met during a sales trip in 1987.

The trip must have gone well because the two decided to form Becton Dickinson. Their first sale was a Luer-all-glass syringe that sold for $2.50.

In 1898 they acquired their first patent for a medical product.

But things really started to take off in 1906 when they built a manufacturing facility in East Rutherford, New Jersey.

It was the first facility in the U.S. to specifically produce thermometers, hypodermic needles, and syringes.

In 1951, BD opened its first manufacturing facility in Canada. Followed by Mexico in 1952, France in 1955, and Brazil in 1956.

Throughout the rest of the 1900s, the company continued to grow and expand within the US and internationally.

After more than 100 years in the medical devices industry, BD announced in 1999 a new corporate identity.

All their independent brand names were replaced by a single name: BD.

Throughout its history, BD has been on the forefront of medical innovation.

Future Growth Potential

Beckton Dickson has two business segments: BD Medical and BD Life Sciences.

BD Medical consists of three divisions: Medical & Procedural Solutions, Pharmaceutical Systems, and Diabetes care.

BD Life Sciences also has three divisions: Preanalytical Systems, Diagnostic Systems, and Biosciences.

The 120 year old company has revenues of $12 billion, with 40,000 employees in over 50 countries.

Roughly 55% of annual sales come from the U.S., with the remaining 45% from the international market.

The future of Beckton Dickson is tied up with C.R. Bard. BD announced their intention to acquire the other dividend aristocrat, making it the biggest medical technology device company in the world.

Once the deal is finalized, BD will create a third business segment BD Interventional.

C.R. Bard will be integrated into that segment.

The company performed a similar move in 2014 with the acquisition of CareFusion. That deal worked out well and the expectation is this one will do the same.

The merger of two Dividend Aristocrats in the growing medical field is just too good to pass up.

Becton Dickinson has been growing their dividend for over 45 years and has a long history of success.

This acquisition will only accelerate future growth.

6. General Dynamics (GD)

Payout Ratio: 29.49%

5-Year Historical EPS Growth: 11.58%

Dividend Growth Streak: 26 Years

Dividend Yield: 1.65%

5-Year Dividend Growth: 10.88%

Sector: Industrials

The history of General Dynamics goes back to 1896 where they developed the first U.S Navy submarine in Elizabethport, New Jersey.

Back then the company was ran by John Philip Holland and known as the Holland Torpedo Boat Company.

Dubbed the Holland VI, the revolutionary sub launched in May of 1897 and commissioned by the Navy in October of 1900.

The Navy loved the revolutionary boat so much they placed an order for more. Holland grew short on funds to build the boats so he had to sell his interest to a financier named Isaac Leopold Rice.

Rice renamed the company the Electric Boat Company.
Electric Boat took full advantage of wars around the world. They began selling submarines to Japan, Russia, England, and the Netherlands.

During the post-World War II wind-down, Electric Boat was flush with cash and started to look for ways to diversify.

They bought Canadair for $10 million in 1946 and entered the plane production business.

Canadair continued to operate as a separate entity, eventually winning the Canadian military contract for the Royal Canadian Air Force.

As Canadair continued to grow, it made no sense to continue operating under the Electric Boat Company.

On April 24, 1952, Electric Boat reorganized as General Dynamics.

General Dynamics sold Canadair back to the Canadian government in 1976 for $38 million.

They’ve been a major defense contractor for the United States ever since.

Future Growth Potential

General Dynamics operates under four main business segments:

  • Aerospace
  • Combat Systems
  • Information Systems and Technology
  • Marine Systems

The nice thing about being a defense contractor is their is a steady flow of orders coming in from the government.

Such is the case with General Dynamics. There is a huge amount of work that will keep the company growing into the future.

The total value of the backlog is in the range of $85 million and spread across the various segments.

This backlog of work will be the driver of General Dynamics’ growth over the next few years.

The company will also take advantage of the new administration. Trump is expected to increase military spending somewhere between $500 billion and $1 trillion.

A large share of that will flow into General Dynamics.

As long as there is a need for defense spending by governments, General Dynamics is in a good position to reap the benefits.

5. Hormel Foods Corp (HRL)

Payout Ratio: 43.04%

5-Year Historical EPS Growth: 15.15%

Dividend Growth Streak: 51 Years

Dividend Yield: 1.87%

5-Year Dividend Growth: 19.16%

Sector: Consumer Defensive

George A. Hormel worked in a Chicago slaughterhouse before becoming a traveling wool and hide buyer.

His travels took him to Austin where he borrowed $500 and started a meat business for himself.

In 1891 he opened George A. Hormel & Co. in an old creamery building in NE Austin.

By the end of 1891, the company had six employees and sold 610 head of livestock. By the end of 1893, they’d processed 1,532 hogs.

During the first 10 years of the 1900s, Hormel opened distribution centers in St. Paul, Minneapolis, Duluth, San Antonio, Dallas, Chicago, Atlanta, and Birmingham.

George traveled to England in 1905 and soon after started exporting his meats overseas.

In 1926, the company introduced the first ever canned ham called Hormel Flavor-Sealed Ham.

It continued to expand its food offerings and now generates over $9 billion in annual sales.

Hormel operates in five different segments: Refrigerated Foods, Jennie-O Turkey, Grocery Products, Specialty Foods, International & Other.

Refrigerated foods lead the pack with 50% of sales. That’s followed by Jennie-O Turkey with 18% and Grocery Products at 17%.

Wander the grocery store isles and some of the most recognizable brands Hormel owns: Skippy Peanut Butter, Spam, Dinty Moore, Muscle Milk, Jennie-O, and on and on.

Future Growth Potential

Hormel’s long history on the list of dividend aristocrats is due to its ability to adapt and change with consumer tastes.

The business grew in the early 20th century because Hormel recognized people’s love of pork.

Today it’s taking advantage of the shift to turkey. Consumers have become very health conscious and prefer less red meat.

The acquisition of Jennie-O in 2001 proves the strong leadership and vision the Hormel has.

That same vision and adaptability will continue to fuel Hormel’s growth.

In 2014, Hormel acquired CytoSport Holdings which is the maker of MuscleMilk.

Applegate Farms was acquired in 2015 because of their organic prepared meats. It’s the number one brand in the natural and organic meat category.

As consumers become more health conscious, Hormel will continue to get more health focused properties.

4. AbbVie (ABBV)

Payout Ratio: 42.94%

5-Year Historical EPS Growth: 12.09%

Dividend Growth Streak: 44 Years

Dividend Yield: 2.65%

5-Year Dividend Growth: 13.26%

Sector: Healthcare

On October 19, 2011, Dividend Aristocrat Abbott Laboratories announced its plan to split. They would become two separate companies, each with a different direction.

Abbott Labs would focus on medical devices, diagnostic equipment, and nutrition.

The newly created organization would focus on research-based pharmaceuticals. That new company would be AbbVie.

To understand the history of AbbVie, you need to understand the history of Abbott Labs.

Abbott Labs was founded in 1888 by Wallace Abbott at the age of 30. He’d graduated from the University of Michigan and was a practicing physician and pharmacist.

He developed a process to use the active part of medicinal plants for medicine. The active element is usually an alkaloid so the company became Abbott Alkaloidal Company.

Examples of alkaloids derived from plants would be morphine, strychnine, or codeine.

Abbott expanded outside the United States in 1907 with an affiliate in London.

Expansion continued in 1962 when Abbott entered into a joint venture with Dainippon Pharmaceutical in Osaka, Japan.

The next 50 years saw Abbott Labs grow through acquisitions until 2011 when the company decided to split.

The split became effective January 1, 2013 and AbbVie was officially listed on the New York Stock Exchange.

Some thought the AbbVie creation was to shield Abbott’s device business from the potential losses facing the drug division.

That thought proved wrong as the company earned over $25 billion in revenue in 2016.

AbbVie has used the same model as Abbott since their 2013 split to grow through mergers and acquisitions.

Future Growth Potential

AbbVie technically can’t be a Dividend Aristocrat because it hasn’t been around for 25 years.

Because it’s a spinoff of Abbott, everyone applies Abbott’s dividend history to AbbVie.

And to AbbVie’s credit, they’ve been continuing to raise their dividends every year since 2013.

The concerns surrounding AbbVie’s split from Abbott are still valid.

Most healthcare companies like having pharmaceuticals tied to medical devices. The device business can even-out the ups and downs of drug revenue.

But, AbbVie isn’t going that route. They’re a pure play pharmaceutical company.

Humira is the bread and butter of AbbVie. Revenue from the drug is expected to reach $18 billion by 2020.

Luckily, the company plans to generate between $25-30 billion by that year from a host of new drug launches.

AbbVie also acquired Pharmacyclics and their top offering, Imbruvica.

Many think Imbruvica has the potential to become AbbVie’s next $1 billion dollar offering.

While the pharmaceutical industry can have more ups and downs than most, the future of AbbVie looks to be up.

3. Cintas Corporation (CTAS)

Payout Ratio: 26.18%

5-Year Historical EPS Growth: 17.67%

Dividend Growth Streak: 34 Years

Dividend Yield: 1.04%

5-Year Dividend Growth: 18.61%

Sector: Industrials

When we think about the operation of a business, we don’t always consider the amount of cleaning that goes on at the business itself.

Uniforms need washing, bathrooms cleaned, carpets need cleaning…the list could go on.

Someone needs to do it and that is where Cintas comes in.

Cintas Corporation began in 1929 as the Acme Industrial Company.

The founder, Richard Farmer, collected chemical soaked rags from factories, washed them, and returned them for a fee.

In the 1940s, shop towels and table cloths replaced rags.

By the 1960s, Richard’s grandson had an idea to open small uniform rental plants across the country.

The rental plants would provide uniforms to businesses as well as collect, wash, and return them.

In October of 1968, the first uniform rental plant opened in Cleveland, Ohio.

Since then, it’s been nothing but up for Cintas.

They went public in 1983 and have been growing ever since.

The company has three main businesses: Uniform Rental and Facility Services, First Aid and Safety Services, and “All Other.”

Uniform rental is roughly 77% of Cintas’ sales. First aid makes up 9% and the other 14% makes up “all other.”

Roughly 30% of the market share in uniforms belongs to Cintas.

In 2016, the company brought in almost $5 billion in revenue.

Future Growth Potential

A majority of their recent growth has come from acquisitions of more than 220 companies.

Acquisitions and cost cutting will continue to be the cause of Cintas’ growth.

They sold interest in Shred-It International due to the reduction in paper use by companies and acquired G&K Services.

G&K Services will add almost $1 billion in annual revenue and give Cintas an even stronger hold on the branded uniform business.

This dividend aristocrat has increased its dividend for 34 consecutive years. It doesn’t look like they’ll be stopping anytime soon.

2. Cardinal Health (CAH)

Payout Ratio: 34.33%

5-Year Historical EPS Growth: 10.35%

Dividend Growth Streak: 25 Years

Dividend Yield: 3.02%

5-Year Dividend Growth: 12.65%

Sector: Healthcare

Cardinal Health is one of the younger companies in the list of Dividend Aristocrats.

Founded in 1971 in Dublin, Ohio, Cardinal specializes in the distribution of pharmaceuticals and medical products. They serve more than 100,000 locations across the globe.

They weren’t always a healthcare company, though.

In 1971, Cardinal Health was Cardinal Foods and was a food wholesaler. The acquisition of Bailey Drug Company in 1979 started the transition to wholesaling drugs.

The company went public in 1983 as Cardinal Distribution.

From 1991 to 1996, the company grew from $1.2 billion to $8.9 billion.

They are one of a handful of large U.S. companies that achieved earnings-per-share growth over 20% for 15 years straight.

The company changed their name to Cardinal Health in 1994.

In 2016 their revenue reached $121.5 billion.

Cardinal Health was able to grow so quickly because of their large and very profitable business model.

Cardinal Health provides medical products to over 75% of the hospitals in the United States.

It also teamed with CVS in 2013 to become the largest generic drug sourcing operation in the United States.

Things haven’t been all sunshine for the company over the last five to ten years.

They lost a major contract to Walgreen Boots Alliance and the recession of 2007 didn’t help either.

Yet, during all the turmoil, they were still able to grow earnings-per-share 1.5% over the last century.

Future Growth Potential

Things should be smoother going forward.

Cardinal Health looks to capitalize on the aging US population.

They’ve also made some major acquisitions.

Those buys have boosted their distribution in the pharmaceutical and medical distribution.

These include Cordis in 2015, Tradex International in 2015, and, most recently, Medtronic in early 2017.

An aging population paired with smart expansion leads to a bright future for Cardinal Health.

1. Lowe's Companies (LOW)

Payout Ratio: 29.49%

5-Year Historical EPS Growth: 22.27%

Dividend Growth Streak: 55 Years

Dividend Yield: 1.76%

5-Year Dividend Growth: 22.52%

Sector: Consumer Cyclical

If you own any sort of property or do any kind of at-home projects, there is a good bet you’ve been to Lowe’s.

The first Lowe’s store opened in North Wilkesboro, North Carolina by Lucius Smith Lowe in 1929. The store was called Lowe’s North Wilkesboro Hardware.

After the death of Lucius in 1940, his son Jim took over with Carl Buchan as a partner.

Buchan anticipated an increase in construction following the end of World War 2. He focused the store on hardware and building material.

Up until then, the store had included dry goods, horse tack, snuff, produce and groceries.

Lowe and Buchan had different ideas for expansion, though.

In 1952, Buchan took control of the hardware and building supply business. Lowe took control of various other joint ventures they controlled.

Buchan became the sole owner of Lowe’s.

By 1955, Buchan had opened up stores across North Carolina. By 1961 Lowe’s operated 21 stores and had annual revenues of $32 million.

The company began trading on the New York Stock Exchange in 1979.

Lowe’s had some rough times in the 1980s due to the popularity of Home Depot and the shift to big-box stores.

Lowe’s was slow to adapt but eventually adopted the new style and has been growing ever since.

In 1999, Lowe’s bought the Renton, Washington based Eagle Hardware & Garden. This fueled their national growth even further.

Future Growth Potential

Not only is Lowe’s part of the dividend aristocrats, it holds a spot on the exclusive list of Dividend Kings. To be a Dividend King, a stock must have 50+ years of consecutive dividend increases.

Lowe’s has used the post-2007 housing collapse to fuel its growth.

They’ve focused on allocating capital to only the highest value opportunities. One of which has been on digital sales.

New stores continue to open and they’ve begun refurbishing existing ones.

The company is also expanding internationally after the acquisition of Canadian home improvement retailer Rona.


It looks like the markets weren’t ready to let go of 2017 quite yet.

From a top 10 perspective, things didn’t change from December. There was a little shuffling but no new entries to start of 2018.

As a recap, here are the top 10 Best Dividend Aristocrats for January 2018:

  1. Lowe’s Companies (LOW)
  2. Cardinal Health (CAH)
  3. Cintas Corporation (CTAS)
  4. AbbVie (ABBV)
  5. Hormel Foods Corp (HRL)
  6. General Dynamics (GD)
  7. Beckton Dickinson and Co. (BDX)
  8. Sherwin-Williams Co. (SHW)
  9. Ecolab (ECL)
  10. Sysco Corporation (SYY)

Are any of these on your watchlist?  Do you like any other Dividend Aristocrat Stocks for 2018?

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