Aristocratic dividends are generally an exceptionally reliable source of incremental income for long-term oriented investors. As companies that have increased their dividends for at least 25 consecutive years, they have demonstrated sustainable business models that can weather all kinds of macroeconomic and geopolitical pressures, and are Skilled capital allocator balances long-term growth and competitiveness with unmatched returns – Increased capital for shareholders.
For these reasons, dividend aristocrats are a great place to start looking for attractive additions to a dividend growth portfolio.
Here, we’ll cover three newly minted Dividend Nobles that can deliver compelling long-term earnings growth for investors.
With a dividend record like this, it must be good
JM Smucker ( SJM) operates in the packaged food and beverage sector and owns well-known brands including Smucker’s, Jif and Folgers. Furthermore, it also owns a pet food business with well-known brands such as Milk Bone and 9Lives.
While not in a fast-growing industry, Smucker still has some leverage to drive long-term growth. These include the acquisition of smaller businesses that greatly benefit from the synergy that comes with Smucker’s business networks and economies of scale. One of the success stories was Big Heart Pet Brands in 2015, which helped the company get into the pet food market.
Another growth lever is price appreciation. The reason this leverage is so powerful is that it doesn’t require additional market share, but simply leverages the brand strength and customer loyalty it already has.
Last but not least, Smucker has demonstrated a willingness to buy back stock when the opportunity arises. This can also increase earnings per share and enhance long-term profit aggregates for shareholders without gaining market share or increasing prices.
Thanks to these initiatives, we expect the company to drive 5% average annual EPS growth over the long term. We believe in the company’s long-term competitiveness as it possesses considerable economies of scale and brand strength in the segments in which it operates. force its input costs over time without threatening market share. The growing economy of scale allows it to drive growth through cumulative acquisitions and increasing margins.
Furthermore, the company has proven to be very resistant to degradation as their products are generally considered essential rather than discretionary. In fact, during the last major economic downturn, the company’s EPS increased every year from 2007 to 2010.
Continue Truckin’ with this new noble
CH Robinson Global (CHRW) operates in the transportation industry, providing critical logistics solutions that help create stable performance for the company and drive steady growth in dividend income for shareholders.
It provides third-party logistics and multimodal transportation services to customers, from freight and transportation management to brokerage and warehousing. These modes of transportation include trucking, air freight, intermodal, or ocean freight, giving it plenty of resources to serve virtually any customer in any location. In the world.
It’s Freight & Logistics brokerage services are capturing a growing share of the US freight market and will continue to serve as a growth engine for the company going forward. This trend will only accelerate as the industry is moving away from asset-based trucking companies to brokerages like CH Robinson.
Another favorable wind for the company’s growth is extensive investment in digital infrastructure, optimizing and accelerating the scaling process. For example, CH Robinson can now offer customers more advanced and user-friendly products, features and insights, something few of their competitors can match. With economies of scale as vast as theirs, harnessing digital and data-driven technology will only increase its competitive position.
Given these competitive advantages, we expect the company to generate fairly stable EPS during a recession and — when combined with low payout ratios — will lead to dividend growth per share. votes continuously for many years to come. We also expect the company to be able to grow EPS at an annual rate of 4% over the next half-decade, further driving dividend growth per share.
A catalyst for long-term growth
Nordson Corporation (NDSN) is a truly global giant in its industry with a presence in more than 35 countries. The company designs, manufactures and markets products used to deliver adhesives, coatings, sealants, biomaterials, plastics and other materials, with applications ranging from diapers and straws to cell phones and aerospace.
It has many catalysts that will drive the long-term growth of the company along with a steady growing stream of dividends to shareholders. For example, its best-in-class technology makes its products very attractive to customers as it helps them optimize productivity, reduce costs and enjoy global customer service accessibility.
Furthermore, Nordson’s growth profile is enhanced by growing demand/demand for disposable goods, productivity investments, mobile computing, medical devices, and light/lean vehicles , which bodes well for growth in demand for Nordson’s products. As a result, we expect the company to grow EPS at an annual rate of 4% over the next half-decade through a combination of organic revenue growth, continued modest margin expansion and strategic acquisitions.
We also find the company’s global presence gives the company many potential options to drive growth further by exploring new attractive markets to increase market share by taking advantage economies of scale, business networks, and superior technology.
It’s important to note, however, that Nordson is not entirely immune to macroeconomic and geopolitical disruptions. Although its moat is quite strong and its payout ratio is very low, during the Covid-19 outbreak, its EPS has dropped by almost a third. That said, the following year, EPS rebounded to set new all-time highs, and Nordson has continued its relentless streak of growth ever since.
Dividend aristocrats such as JM Smucker, CH Robinson and Nordson have proven to be effective long-term matchers between shareholder wealth and dividend income.
With economic and geopolitical uncertainty running high at the moment, now might be a good time to consider adding some stocks like this to your portfolio.
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