5 Dividend Growth Stocks With Upside To Analyst Targets

ETF Channel has identified five Dividend Aristocrat stocks—Toro Company, Cardinal Health, RPM International, New Jersey Resources, and AbbVie Inc.—from the SPDR S&P Dividend ETF that offer notable upside to average 12-month analyst target prices. These companies, known for consistently increasing dividends, exhibit implied total return potential ranging from 10.31% to 14.92% when combining price upside (6.68% to 13.33%) with current dividend yields, suggesting opportunities for both capital appreciation and income growth in typically fully-valued equities.

Analysis

An analysis of the S&P High Yield Dividend Aristocrats Index has identified five constituents that challenge the perception of these stocks being fully priced. The Toro Company (TTC), Cardinal Health (CAH), RPM International (RPM), New Jersey Resources (NJR), and AbbVie (ABBV) all exhibit notable upside to their average 12-month analyst price targets, ranging from 6.68% for ABBV to 13.33% for TTC. When factoring in current dividend yields, the implied total return potential is substantial, with TTC leading at 14.92% and NJR at 13.22%. A closer look at dividend sustainability reveals varied growth rates; RPM, NJR, and TTC show robust trailing-twelve-month (TTM) dividend growth of 8.43%, 7.69%, and 7.58% respectively. In contrast, Cardinal Health's TTM dividend growth is a marginal 1.01%, which may warrant scrutiny despite its Aristocrat status. For income-focused investors, NJR and ABBV present the highest current yields at 3.97% and 3.63%, respectively, complementing their potential for capital gains.

Key Decisions for Investors

• Investors seeking growth at a reasonable price within the stable dividend aristocrat space should consider these five equities, particularly The Toro Company (TTC), which shows the highest implied total return potential of 14.92%.
• For income-oriented portfolios, New Jersey Resources (NJR) and AbbVie (ABBV) appear most attractive, offering the highest dividend yields of 3.97% and 3.63% respectively, combined with single-digit price upside potential.
• A deeper due diligence is warranted for Cardinal Health (CAH), as its minimal 1.01% trailing dividend growth rate is a significant outlier and could signal a weakening in its ability to sustain historical dividend growth trends.