10 Best Dividend Aristocrat Stocks for October 2017

There was a little bit of shuffling to the top 10 dividend aristocrat stocks for October.

Grainger and Air Products both had great months. That pushed their price up and forced them off the top 10 for October.

Don’t be sad. That’s what we like to hear!

We want the value to go up. That gives us opportunities to look for other great deals.

Since two dropped out of the top 10, two newcomers were added to the list for October.

The order of top recommendations has also shuffled a bit.

Did our top pick from September stay atop the charts? Read on to find out.

Best dividend aristocrat stocks for October 2017

10. VF Corporation (VFC)

Payout Ratio: 51.86%

5-Year Historical EPS Growth: 5.56%

Dividend Growth Streak: 44 years

Dividend Yield: 2.61%

5-Year Dividend Growth: 17.3%

Sector: Consumer Cyclical

Logo for VF Corp, a dividend aristocrat stock

If someone asked you to name a clothing company, you might say Nike. Or Gap. Tommy Hilfiger or Levis.

VF Corp is not one that comes to mind and yet it is one of the largest publicly held clothing companies in the world.

The company started out as Reading Glove and Mitten Manufacturing Company in 1899.

John Barbey and a small group of investors started the company working out of a 320-square-foot factory in Pennsylvania.

Expansion began around 1910 when they started producing silk lingerie. The switch to lingerie also came with a name change: Schuylkill Silk Manufacturing.

Through a contest, “Vanity Fair” became the brand name for the lingerie line.

Because the line became so popular, the company decided to change their name to Vanity Fair Mills, Inc.

Shares were initially sold to the public in 1951.

The H.D. Lee Company (better known as Lee Jeans) was acquired in 1969 along with another name change to VF Corporation.

In the 1970s, VF Corp paid their first dividend.

VF Corporation became the largest publicly held clothing company in 1986 with the acquisition of Blue Bell Inc.

Blue Bell owned Wrangler and JanSport along with a few other top brands.

This also made VF Corp one of the two largest jeans makers in the world. They had a 25% share of a $6 billion market.

Future Growth Potential

The business has continued to grow ever since by acquiring iconic brands that withstand the test of time.

Currently they bring in over $12 billion in annual revenue.

Five product categories make up the company: Outdoor & Action Sports, Jeanswear, Imagewear, and Sportswear.

Outdoor & Action Sports has brands such as The North Face, Reef, and Timberland.

Jeans has names like Wrangler, Lee, and Rock and Republic.

Imagewear houses the likes of Dickies, Bulwark, and Red Kap.

Sportswear has Nautica as the main player.

VF Corp is a global company with 36% of its revenue coming from outside the United States.

Revenue growth over the last few years has slowed because of a strong dollar and economic uncertainty around the world.

Earnings per share growth has been in the 2% range for the last couple years.

Over the long term, though, VF Corp has been fantastic. From 2006 to 2015, the company grew EPS an average of 10% annually.

They do this by keeping a finger on the pulse of fashion. The company adapts when it needs to and acquires iconic brands in the process.

This dividend aristocrat has been raising dividends for 44 years and is looking like a great buy right now.

9. McCormick & Company (MKC)

Payout Ratio: 43.3%

5-Year Historical EPS Growth: 5.7%

Dividend Growth Streak: 31 years

Dividend Yield: 1.94%

5-Year Dividend Growth: 8.43%

Sector: Consumer Defensive

McCormick & Company, MKC, a dividend aristocrat

McCormick & Company has been adding flavor to your food for over a century.

25-year-old Willoughby M. McCormick created the company in 1889. McCormick & Company manufactures spices, herbs, and flavorings for retail, commercial, and industrial markets.

Their brands in the United States include:

  • McCormick
  • Zatarain’s
  • Lawry’s
  • Old Bay Seasoning
  • Mojave Foods
  • Thai Kitchen
  • Simply Asia.

In Europe: Ducros, Drogheria & Alimentary, Kamis, Galeo, Margao, Silvo and Vahine.

In Canada: Club House spices and Billy Bee Honey.

As of 2016, it offers brands for shoppers in 150 countries and territories.

61% of their sales are direct to consumer.

39% are through their industrial channels.

McCormick & Company, MKC, brands

Future Growth Potential

Moving forward, McCormick’s is looking to grow through acquisition and further global expansion.

Management expects 33% of growth to be from acquisitions.

Recent buys have shed a little light on what these acquisitions will look like:

Drogheria and Alimentari: Expands McCormick’s presence in Italy.

Brand Aromatics: Includes an organic product portfolio which should only grow in the coming years. Expands the lineup of savory products for industrial customers

Stubb’s: Builds on the list of BBQ sauces and available grilling products.

On the global expansion front, management is eying China and India as targets. Their huge populations and growing middle class provide a lot of opportunities.

McCormick & Company are firmly on the dividend aristocrats list with 31 years of increasing dividends.

8. Sherwin-Williams (SHW)

Payout Ratio: 25.1%

5-Year Historical EPS Growth: 18.4%

Dividend Growth Streak: 39 years

Dividend Yield: 0.89%

5-Year Dividend Growth: 17.1%

Sector: Basic Material

Sherwin Williams, SHW, a dividend aristocrat

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, industrial and marine products, and original manufacturer product finishes.

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. Walgreens Boots Alliance (WBA)

Payout Ratio: 31.4%

5-Year Historical EPS Growth: 14.9%

Dividend Growth Streak: 41 years

Dividend Yield: 2.26%

5-Year Dividend Growth: 7.45%

Sector: Consumer Defensive

Walgreens Boots Alliance, a dividend aristocrat stock

Walgreens Boots Alliance may seem a little weird when you first read it.

Most of us in the United States think of Walgreens as a pharmacy store. They offer other small other essential items, but mainly it’s known for the drive-thru pharmacy.

Where does this whole “boots” thing come into play? They make shoes?

No, they don’t.

Walgreens Boots Alliance came about from the merger of Walgreens and Alliance Boots out of Switzerland.

Walgreens had previously purchased 45% of the company in 2012 and increased that stake to 55% in December of 2014.

Walgreens began in 1901 as a small corner drug store in Chicago that owned by Charles Walgreen.

By 1913, Walgreens had grown to four stores on Chicago’s South Side.

Prohibition was actually a successful time in Walgreens history. While alcohol was illegal, prescription whiskey was available and sold by Walgreens.

By the mid-1920s there were 44 stores with annual sales of $1.2 million.

Stores continued to pop up throughout the century with various acquisitions thrown in along the way.

By 2011, Walgreens had over 8,000 stores and was expanding into Guam and Puerto Rico.

To expand globally, Walgreens acquired Alliance Boots and has since become a global behemoth.

Future Growth Potential

The acquisition of Boots created a global company that has done very well for itself.

Revenue in 2016 was over $117 billion.

The company now operates in three divisions: Retail Pharmacy USA, Retail Pharmacy International, and Pharmaceutical Wholesale.

Boots pharmacies are about as well known in the UK as Walgreens are in the United States.

Boots branded stores are also in the United Arab Emirates, Bahrain, Norway, LIthuania, The Netherlands, and Thailand.

The merger of Walgreens and Boots improved growth and the hope is the same will happen with the acquisition of Rite Aid.

Walgreens announced in 2015 the purchase of Rite Aid for $17.2 billion. The Federal Trade Commission approved the buy in September of 2017.

That adds 1,932 stores to the Walgreens portfolio.

Walgreens Boots Alliance isn’t resting on its previous success which means this dividend stock is in a prime "buy" situation.

6. C.R. Bard (BCR)

Payout Ratio: 8.93%

5-Year Historical EPS Growth: 14.8%

Dividend Growth Streak: 45 years

Dividend Yield: 0.32%

5-Year Dividend Growth: 6.63%

Sector: Healthcare

C.R. Bard, BCR, a dividend aristocrat

C. R. Bard decided to drop the “C. R.” and is now simply known as Bard.

Charles Russell Bard started the company in 1907. In the beginning, he imported a European cure all called Gomenal to the United States.

Gomenal had cured Bard’s urinary discomfort from tuberculosis. He thought others could experience the same benefit.

In 1934, Bard became the exclusive dealer of the Foley catheter. The first latex catheter ever created.

From there, Bard has grown into a global leader in the medical field.

Bard is a leading multinational manufacturer and marketer of medical equipment and supplies.

They design, manufacture, package, distribute and sell medical, surgical, diagnostic and patient care devices.

Their product offerings are wide ranging. They sell to hospitals, individual healthcare professionals, extended care facilities and many other medical sites across the globe.

Bard operates in four main segments: vascular, urology, oncology, and surgical specialties.

None of the segments command more than 28% of the company’s total revenue.

Future Growth Potential

With an aging population, Bard finds themselves in a very good position to continue their run as a dividend aristocrat.

As a global healthcare supplier, the older people get around the globe, the more demand there is for Bard’s products.

In the US alone, the demand from Baby Boomers is going to increase Bard’s revenue.

China is another market that Bard is targeting for expansion due to their growing middle class.

5. Cintas Corporation (CTAS)

Payout Ratio: 27.0%

5-Year Historical EPS Growth: 17.2%

Dividend Growth Streak: 34 years

Dividend Yield: 0.89%

5-Year Dividend Growth: 18.6%

Sector: Industrials

Cintas, CTS, a dividend aristocrat

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 to be washed, 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 and looks to continue doing so.

4. Cardinal Health (CAH)

Payout Ratio: 33.4%

5-Year Historical EPS Growth: 10.9%

Dividend Growth Streak: 25 years

Dividend Yield: 2.85%

5-Year Dividend Growth: 12.7%

Sector: Healthcare

Cardinal Health, CAH, a dividend aristocrat

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.

3. Ecolab (ECL)

Payout Ratio: 31.8%

5-Year Historical EPS Growth: 9.91%

Dividend Growth Streak: 25 years

Dividend Yield: 1.12%

5-Year Dividend Growth: 12.2%

Sector: Basic Materials

Ecolab, ECL, a dividend aristocrat

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

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.

Basically 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 process chemical and water treatment needs of the global petroleum and petrochemical industries.

Future Growth Potential

Like other companies with significant global exposure, Ecolab’s growth can fluctuate with the change in currency values.

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.

2. Hormel Foods Corp (HRL)

Payout Ratio: 35.8%

5-Year Historical EPS Growth: 15.5%

Dividend Growth Streak: 51 years

Dividend Yield: 2.18%

5-Year Dividend Growth: 19.2%

Sector: Consumer Defensive

Hormel, HRL, a dividend aristocrat

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 introduces 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.

Brands offered by Hormel

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.

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

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.

1. Lowe's Companies (LOW)

Payout Ratio: 30.7%

5-Year Historical EPS Growth: 22.1%

Dividend Growth Streak: 55 years

Dividend Yield: 2.01%

5-Year Dividend Growth: 22.5%

Sector: Consumer Cyclical

Lowe's, LOW, a dividend aristocrat

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.

Conclusion

Turns out Lowe's did hang on to the top spot.

Even though it's up 3% from our recommendation a month ago, the home improvement store is still a great buy.

Walgreens Boots Alliance entered the list with a bang and jumped all the way to number 7.

Our other newcomer, VF Corp, rounded out the top 10.

Happy investing and keep those snowballs rolling!

Are any of these on your watchlist?  Do you have any other Dividend Aristocrats you're keeping an eye on?

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