5 Dividend Aristocrats Where Analysts See Capital Gains

An analysis of the SPDR S&P Dividend ETF's holdings has identified five Dividend Aristocrat stocks—UGI Corp., Pentair PLC, Albemarle Corp., Bank OZK, and Brady Corp—that present significant upside to average analyst 12-month target prices. Despite dividend growth stocks often being fully priced, these companies offer potential capital gains ranging from 26.34% to 43.09% based on current prices. Factoring in current dividend yields, their implied total return potential over 12 months ranges from 28.29% to 46.89%, positioning them as attractive options for investors seeking both income and capital appreciation.

Analysis

An analysis of the SPDR S&P Dividend ETF's holdings has identified five 'Dividend Aristocrat' stocks—UGI Corp. (UGI), Pentair PLC (PNR), Albemarle Corp. (ALB), Bank OZK (OZK), and Brady Corp (BRC)—that exhibit significant potential upside based on average 12-month analyst price targets. These companies, part of the S&P High Yield Dividend Aristocrats Index, present a notable deviation from the trend of such quality stocks being 'fully priced'. The potential capital appreciation ranges from 26.34% for BRC to 43.09% for UGI. When factoring in current dividend yields, the implied 12-month total return potential is substantial, ranging from 28.29% for BRC to a high of 46.89% for UGI. An examination of their dividend growth reveals varying rates of increase; Bank OZK and Pentair PLC lead with trailing-twelve-month (TTM) dividend growth of 5.38% and 5.19% respectively, while Albemarle Corp shows a more modest growth of 1.30%. This screen suggests a select group of established dividend-paying companies may still offer compelling value for investors seeking both income and capital gains, provided analyst consensus forecasts prove accurate.

Key Decisions for Investors

• Investors seeking growth and income could consider these five identified Dividend Aristocrats, particularly UGI Corp. for its highest implied total return of 46.89% and Bank OZK for its robust TTM dividend growth of 5.38%.
• It is important to weigh the trade-off between implied total return and the rate of dividend growth, as the stocks with the highest upside potential, like UGI and PNR, do not have the fastest-growing dividends in the group.
• Given that the investment thesis is heavily dependent on achieving analyst price targets, investors should scrutinize the underlying assumptions of these forecasts before committing capital, as this represents the primary risk to the capital appreciation component of the return.