5 Dividend Growth Stocks With Upside To Analyst Targets

An analysis of Dividend Aristocrat stocks within the SPDR S&P Dividend ETF identifies five companies—Best Buy (BBY), Lancaster Colony (LANC), Federal Realty Investment Trust (FRT), Hormel Foods (HRL), and Exxon Mobil (XOM)—that offer substantial 12-month upside to average analyst target prices. These selections, typically considered fully priced, present implied total return potentials ranging from 12.07% to 22.42% when combining capital appreciation and current dividend yields, indicating opportunities for both growth and income despite their established dividend growth track records.

Analysis

An analysis of the SPDR S&P Dividend ETF's holdings reveals five Dividend Aristocrat stocks that, contrary to the perception of being fully priced, show significant potential upside based on average analyst 12-month price targets. The identified companies—Best Buy (BBY), Lancaster Colony (LANC), Federal Realty Investment Trust (FRT), Hormel Foods (HRL), and Exxon Mobil (XOM)—exhibit potential capital appreciation ranging from 8.78% to 18.20%. By combining this projected price upside with current dividend yields, the article calculates an implied total return potential between 12.07% for Exxon Mobil and 22.42% for Best Buy. Furthermore, the analysis provides context on the recent dividend growth of these firms, with trailing-twelve-month (TTM) dividend growth rates varying from 0.92% for Federal Realty to 5.88% for Lancaster Colony. This screen suggests a potential dual opportunity for investors: capturing capital gains if consensus targets are met, while also benefiting from the income and established dividend growth history characteristic of Dividend Aristocrats.

Key Decisions for Investors

• Investors seeking total return should evaluate these five names, as they present a combination of income through established dividends and notable capital appreciation potential based on consensus analyst targets.
• For those prioritizing higher growth potential, Best Buy warrants attention for its standout 18.2% upside to its target price, while Lancaster Colony is notable for its superior recent TTM dividend growth of 5.88%.
• The investment thesis is heavily reliant on the accuracy of analyst price targets; therefore, it is critical to monitor for any revisions to consensus estimates that could materially impact the implied upside.
• When comparing these opportunities, consider the significant variance in dividend growth rates, such as the low 0.92% for FRT versus 4.35% for XOM, as this is a key indicator of the future pace of income compounding.