5 Dividend Growth Stocks With Upside To Analyst Targets

A recent analysis highlights five Dividend Aristocrat stocks, including Polaris (PII) and Colgate-Palmolive (CL), within the SPDR S&P Dividend ETF that analysts project to have notable 12-month price upside, ranging from 6.70% to 22.53%. Despite Dividend Aristocrats often being fully priced, these specific names offer implied total return potential from 8.89% to 26.58% when accounting for current dividend yields, suggesting opportunities for both capital appreciation and growing income.

Analysis

This analysis highlights a select group of five 'Dividend Aristocrat' stocks, held within the SPDR S&P Dividend ETF, that exhibit significant upside potential according to consensus analyst estimates, a departure from the cohort's tendency to be fully priced. The identified companies—Polaris (PII), Colgate-Palmolive (CL), McCormick & Co (MKC), Lincoln Electric (LECO), and California Water Service (CWT)—present a projected 12-month capital appreciation ranging from 6.70% for CWT to a substantial 22.53% for PII. When factoring in current dividend yields, the implied total return potential becomes more compelling, spanning from 8.89% to 26.58%. Notably, there is a clear trade-off between total return potential and recent dividend growth; Polaris leads with the highest implied return but has the lowest trailing-twelve-month (TTM) dividend growth at 1.54%, whereas Lincoln Electric shows the strongest TTM dividend growth at 10.94% alongside a projected 11.17% total return. This suggests a potential market inefficiency where the capital gains outlook for these specific high-quality dividend payers may be underappreciated.

Key Decisions for Investors

• Investors seeking total return should evaluate Polaris (PII) for its high implied upside of 26.58%, while acknowledging its recent dividend growth of 1.54% is the most modest of the group.
• For those prioritizing income growth, Lincoln Electric (LECO), McCormick & Co (MKC), and California Water Service (CWT) present more compelling profiles with recent dividend growth rates of 10.94% and 7.69% respectively.
• It is crucial to recognize that this investment thesis is contingent on analyst price targets materializing, so conducting further due diligence into the specific catalysts expected to drive the projected upside for each company is a prudent next step.