5 Dividend Aristocrats Where Analysts See Capital Gains

An analysis of the SPDR S&P Dividend ETF's underlying holdings has identified five Dividend Aristocrat stocks—Abbott Laboratories, Sherwin-Williams, RenaissanceRe, AbbVie, and McDonald's—that offer notable upside to average 12-month analyst target prices. Despite their status as consistent dividend growers and typical demand from tracking funds, these companies are not considered 'fully priced' and present potential for capital gains in addition to their growing dividend payments, suggesting a compelling total return opportunity for investors seeking established dividend growth with price appreciation potential.

Analysis

An analysis of holdings within the SPDR S&P Dividend ETF has identified five Dividend Aristocrat stocks that, contrary to being 'fully priced', still exhibit significant upside based on average analyst 12-month price targets. The identified companies—Abbott Laboratories (ABT), Sherwin-Williams (SHW), RenaissanceRe Holdings (RNR), AbbVie (ABBV), and McDonald's (MCD)—show potential price appreciation ranging from 5.31% for MCD to 8.24% for ABT. By combining this upside with current dividend yields, the implied total return potential is most pronounced for AbbVie at 10.13%, supported by its substantial 4.22% yield, and Abbott Laboratories at 9.69%. Furthermore, the analysis highlights exceptionally strong recent dividend growth momentum, with Abbott Laboratories and AbbVie reporting trailing-twelve-month dividend increases of 57.64% and 40.04% respectively, significantly outpacing the more modest growth from peers like RenaissanceRe (2.86%). This suggests that select opportunities for both capital gains and robust dividend growth exist within this typically stable asset class.

Key Decisions for Investors

• Investors seeking strong total return from established dividend payers should consider focusing on AbbVie and Abbott Laboratories, which the analysis identifies as having the highest implied total return potentials at 10.13% and 9.69% respectively.
• For portfolios prioritizing dividend growth momentum, the exceptional trailing-twelve-month dividend growth rates of Abbott Laboratories (57.64%), AbbVie (40.04%), and Sherwin-Williams (23.13%) make them compelling candidates for further due diligence.
• It is crucial to recognize that the investment thesis hinges on the accuracy of analyst 12-month price targets; therefore, investors should differentiate opportunities based on their own risk tolerance, such as AbbVie's high-yield profile versus the stronger dividend growth momentum seen in Abbott Laboratories.