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Are dividend stocks boring?

It depends. If you’re more of a risk-taker, willing to lay down thousands to chase a chart-topper, then yes, they probably are… for you.

But some people seem to forget that, even though dividend stocks don’t generate 100%+ returns annually, they do increase in price.

Let me put it this way. From 1928 to 2023, the S&P 500 recorded an average annualized return of 9.90%.

And then, consider a group of companies, like Dividend Aristocrats, with over 25 years of dividend increases.

If you own those stocks in your portfolio that grow 10% or more in a year and generate 2%+ in dividend yields, you’ll immediately beat the indexes’ average returns. Plus, you get increasing yields in the long run.

And that got me thinking. How many highly-rated Dividend Aristocrats are already up 10% this year?

How I Screened For The Following Stocks

I started my search using my pre-prepared Aristocrat Watchlist. Then, I screened these companies using Barchart’s Stock Screener.

After that, I used the following filters:

• Annual Dividend Yield: I left this blank so the column would appear in my search results.
• YTD Percent Change: I set the value to “Greater than 10%” to find Dividend Aristocrats with potential continued growth from recent positive momentum.
• Current Analyst Ratings: I set this to 4 to 5, which indicates the higher end of moderate buy to strong buy ratings among Wall Street analysts to prioritize companies with high confidence from industry experts.

Then, I clicked on “SEE RESULTS,” and I got 8 Aristocrats on my watch. I organized them by clicking the Div Yield(a) column and took the top three.

Without wasting any more time, let’s start with the 3rd highest-yielding Dividend Aristocrat with more than 10% YTD returns:

Cincinnati Financial (CINF)

Cincinnati Financial Corporation is a property casualty insurance company that operates through five segments: commercial lines, Personal lines, Excess and Surplus Lines, Life insurance, Investments, and more. The company also invests in fixed-maturity and equity investments in its portfolio.

Cincinnati Financial's dedication to consistently increasing dividends sets it apart. Its most recent payout was paid in April, bringing the company closer to 64 consecutive years of annual dividend growth. Cincinnati Financial’s current annual dividend is $3.24 per share, translating to a yield of 2.77%.

Meanwhile, Wall Street analysts have shown confidence in the company's prospects. CINF stock is up 12.82% YTD, and analysts rate CINF stock a buy with over 22% upside potential from its current price levels.

NextEra Energy (NEE)

Next in line would be NextEra Energy. Like my last contender, this Dividend Aristocrat operates through several subsidiaries, some of which are NextEra Energy Resources (NEER) and Florida Power & Light Company (FPL). FPL is a rate-regulated electric utility in Florida, while NEER operates electric generation facilities and invests in clean energy businesses in the United States and Canada.

Recently, Entergy and NextEra Energy Resources have announced an agreement to accelerate the development of up to 4.5 gigawatts of new solar generation projects. This five-year contract is expected to facilitate the development of these projects, which provide low-cost, renewable energy to Entergy's customers across the United States.

NextEra Energy certainly doesn’t fall behind in the dividend race. The company has been paying dividends since 1995 and is continuously increasing its payouts NextEra currently pays $2.06 per share annually, reflecting a 2.87% dividend yield.

Despite the varied results, Wall Street’s consensus for the company is still a moderate buy, with an upside potential of over 32% at its current prices. NEE stock is also up 18.26% YTD.

Exxon Mobil Corp (XOM)

Saving the highest-yielding Aristocrat (that’s also up 10%+ YTD) for last: Exxon Mobil Corporation. It’s an international giant that supplies crude oil, natural gas, petroleum products, petrochemicals, and energy. On top of that, the company also pursues alternate opportunities like hydrogen, lower-emission fuels, and others.

Exxon Mobil has increased its dividends for 41 years and counting. Its second-quarter dividend of $0.95 was paid in June of this year and has a forward 3.31% yield.

The consensus among Wall Street analysts is a “strong buy” rating with over 34% upside potential—and that is on top of XOM stock already increasing 14.78% YTD.

On the date of publication, Rick Orford did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.