First Published on February 21st, 2023 by Bob Ciura for SureDividend.
DRIP stands for Dividend Reinvestment Plan. When an investor is enrolled in DRIP stocks, it means that incoming dividend payments are used to purchase more shares of the issuing company – automatically.
Many businesses offer DRIPs that require the investors to pay fees. Obviously, paying fees is a negative for investors. As a general rule, investors are better off avoiding DRIP stocks that charge fees.
Fortunately, many companies offer no-fee DRIP stocks. These allow investors to use their hard-earned dividends to build even larger positions in their favorite high-quality, dividend-paying companies – for free.
Dividend Aristocrats are the perfect form of DRIP stocks. Dividend Aristocrats are elite companies that satisfy the following:
- Are in the S&P 500 Index
- Have 25+ consecutive years of dividend increases
- Meet certain minimum size & liquidity requirements
You can download an Excel spreadsheet with the full list of all 65 Dividend Aristocrats (with additional financial metrics such as price-to-earnings ratios and dividend yields) by clicking the link below:
Think about the powerful combination of DRIPs and Dividend Aristocrats…
You are reinvesting dividends into a company that pays higher dividends every year. This means that every year you get more shares – and each share is paying you more dividend income than the previous year.
This makes a powerful (and cost-effective) compounding machine.
This article takes a look at the top 15 Dividend Aristocrats that are no-fee DRIP stocks, ranked in order of expected total returns from lowest to highest.
The updated list for 2023 includes our top 15 Dividend Aristocrats, ranked by expected returns according to the Sure Analysis Research Database, that offer no-fee DRIPs to shareholders.
You can skip to analysis of any individual Dividend Aristocrat below:
- #15: Exxon Mobil (XOM)
- #14: Aflac Incorporated (AFL)
- #13: AbbVie Inc. (ABBV)
- #12: Abbott Laboratories (ABT)
- #11: Illinois Tool Works (ITW)
- #10: Federal Realty Investment Trust (FRT)
- #9: Sherwin-Williams (SHW)
- #8: A.O. Smith (AOS)
- #7: Hormel Foods (HRL)
- #6: Emerson Electric (EMR)
- #5: S&P Global (SPGI)
- #4: Realty Income (O)
- #3: Johnson & Johnson (JNJ)
- #2: 3M Company (MMM)
- #1: Albemarle Corporation (ALB)
Additionally, please see the video below for more coverage.https://www.youtube.com/embed/VwKe03oYrHI
In this article
No-Fee DRIP Dividend Aristocrat #15: Exxon Mobil (XOM)
- 5-year expected annual returns: -1.8%
Exxon Mobil is a diversified energy giant with a market capitalization above $300 billion.
In late January, Exxon reported (1/31/23) financial results for the fourth quarter of fiscal 2022. Production in the Permian reached an all-time high and its total production rose 3%. However, oil and gas prices moderated off their blowout levels in previous quarters. As a result, Exxon’s earnings-per-share declined -24% sequentially, from $4.45 to $3.40.
For the full year, Exxon posted record earnings-per-share of $14.06.
Source: Investor Presentation
Thanks to the sustained tailwind from the sanctions of western countries on Russia, we expect strong earnings-per-share of about $10.50 in 2023. In contrast to previous rallies of oil and gas prices, producers have boosted their output conservatively, fearing that the rally will prove short-lived due to the secular shift of most countries from fossil fuels to clean energy sources.
Exxon also raised its dividend by 3% in the fourth quarter, extending its dividend growth streak to 40 years. It also has a $30 billion share repurchase program for 2022-2023. This could reduce the share count by 7% at current stock prices.
Click here to download our most recent Sure Analysis report on Exxon Mobil (preview of page 1 of 3 shown below):
No-Fee DRIP Dividend Aristocrat #14: Aflac Inc. (AFL)
- 5-year expected annual returns: 0.6%
Aflac was formed in 1955, when three brothers — John, Paul, and Bill Amos — came up with the idea to sell insurance products that paid cash if a policyholder got sick or injured. In the mid-20th century, workplace injuries were common, with no insurance product at the time to cover this risk.
Related: Detailed analysis on the best insurance stocks.
Today, Aflac has a wide range of product offerings, some of which include accident, short-term disability, critical illness, hospital indemnity, dental, vision, and life insurance.
The company specializes in supplemental insurance, which pays out to policy holders if they are sick or injured, and cannot work. Aflac operates in the U.S. and Japan, with Japan accounting for approximately 70% of the company’s revenue. Because of this, investors are exposed to currency risk.
In general terms, Aflac has two sources of income: income from premiums and income from investments. Taking the items collectively, in addition to an active share repurchase program, reasonable expectations would be for 4% annual earnings-per-share growth over the next five years.
Click here to download our most recent Sure Analysis report on Aflac (preview of page 1 of 3 shown below):
No-Fee DRIP Dividend Aristocrat #13: AbbVie Inc. (ABBV)
- 5-year expected annual returns: 5.2%
AbbVie Inc. is a pharmaceutical company spun off by Abbott Laboratories (ABT) in 2013. Its most important product is Humira, which is now facing biosimilar competition in Europe, which has had a noticeable impact on the company. Humira will lose patent protection in the U.S. in 2023.
Even so, AbbVie remains a giant in the healthcare sector, with a large and diversified product portfolio.
Source: Investor Presentation
AbbVie reported its fourth quarter earnings results on February 9. The company generated revenues of $15.1 billion during the quarter, which was 2% more than AbbVie’s revenues during the previous year’s quarter. AbbVie generated slightly lower revenues than the analyst community had forecasted, as it missed the top line consensus by $180 million.
AbbVie’s revenues were positively impacted by compelling growth from some of its newer drugs, including Skyrizi and Rinvoq, while Humira remained AbbVie’s biggest drug in terms of overall revenue contribution.
AbbVie earned $3.60 per share during the fourth quarter, which was 17% more than the company’s earnings-per-share during the previous year’s quarter. AbbVie’s earnings-per-share beat the consensus analyst estimate by $0.02. AbbVie’s guidance for 2023’s adjusted earnings-per-share was announced below the analyst consensus, the company expects to earn $10.70 – $11.10 on a per-share basis this year.
Click here to download our most recent Sure Analysis report on AbbVie (preview of page 1 of 3 shown below):
No-Fee DRIP Dividend Aristocrat #12: Abbott Laboratories (ABT)
- 5-year expected annual returns: 3.7%
Abbott Laboratories is one of the largest medical appliances & equipment manufacturers in the world, comprised of four segments: Nutrition, Diagnostics, Established Pharmaceuticals and Medical Devices.
On December 12th, 2022, Abbott Laboratories raised its quarterly dividend 7.8% to $0.51, extending the company’s
dividend growth streak to 51 years.
On January 25th, 2023, Abbott Laboratories reported earnings results for the fourth quarter and full year for the period ending December 31st, 2022.
Source: Investor Presentation
For the quarter, the company generated $10.1 billion in sales (58% outside of the U.S.), representing a 12.2% decrease compared to the fourth quarter of 2021.
Adjusted earnings-per-share of $1.03 compared unfavorably to $1.32 in the prior year. Revenue was $410 million better than expected while adjusted earnings-per-share topped estimates by $0.10. For 2022, revenue grew 6.4% to $43.7 billion while adjusted earnings-per-share of $5.34 compared to $5.21 in the previous year.
Click here to download our most recent Sure Analysis report on Abbott Laboratories (preview of page 1 of 3 shown below):
No-Fee DRIP Dividend Aristocrat #11: Illinois Tool Works (ITW)
- 5-year expected annual returns: 4.5%
Illinois Tool Works is a diversified multi-industrial manufacturer with seven unique operating segments: Automotive, Food Equipment, Test & Measurement, Welding, Polymers & Fluids, Construction Products and Specialty Products.
On February 2nd, 2023, Illinois Tool Works reported fourth quarter and full year 2022 results for the period ending December 31st, 2022. For the quarter, revenue came in at $4.0 billion, up 8% year-over-year. Sales were up 20% in the Automotive OEM segment, the largest out of the company’s seven segments. Five out of these seven segments had double-digit organic sales growth in the quarter. Net income equaled $907 million or $2.95 per share compared to $609 million or $1.93 per share in Q4 2021.
Illinois Tool Works’ earnings-per-share for the full year was $9.77, exceeding $8.51 earned in 2021 by 15%. Revenue rose 10% year-over-year to $15.9 billion for 2022. Illinois Tool Works initiated 2023 guidance and sees full-year GAAP EPS to be between $9.40 and $9.80.
Illinois Tool Works has an excellent dividend growth history. Its payout ratio was relatively high during the last financial crisis, but the company was not forced to cut the payout. Today the dividend payout ratio sits at 53% of expected earnings, above the company’s long-term target, meaning that future dividend growth may trail earnings growth.
Click here to download our most recent Sure Analysis report on ITW (preview of page 1 of 3 shown below):
No-Fee DRIP Dividend Aristocrat #10: Federal Realty Investment Trust (FRT)
- 5-year expected annual returns: 4.7%
Federal Realty was founded in 1962. As a Real Estate Investment Trust, Federal Realty’s business model is to own and rent out real estate properties. It uses a significant portion of its rental income, as well as external financing, to acquire new properties. This helps create a “snow-ball” effect of rising income over time.
Federal Realty primarily owns shopping centers. However, it also operates in redevelopment of multi-purpose properties including retail, apartments, and condominiums. The portfolio is highly diversified in terms of tenant base.
Source: Investor Presentation
On November 3rd, 2022, Federal Realty reported Q3 results. It generated funds from operations per diluted share of $1.59 for the quarter compared to $1.51 for the third quarter 2021. FRT also generated comparable property operating income growth of 3.7% for the third quarter and 8.8% year-to-date.
It also achieved continued record levels of leasing with 119 signed leases for 562,859 square feet of comparable space in the third quarter, the highest third quarter volume on record. Federal Realty’s portfolio was 92.1% occupied and 94.3% leased, representing year-over-year increases of 190 basis points and 150 basis points, respectively and 10 basis point and 20 basis point increases, respectively quarter-over-quarter.
Click here to download our most recent Sure Analysis report on Federal Realty (preview of page 1 of 3 shown below):
No-Fee DRIP Dividend Aristocrat #9: Sherwin-Williams (SHW)
- 5-year expected annual returns: 4.6%
Sherwin-Williams, founded in 1866, is North America’s largest manufacturer of paints and coatings.
The company distributes its products through wholesalers as well as retail stores (including a chain of more than 4,900 company-operated stores and facilities) to 120 countries under the Sherwin-Williams name.
The company also manufactures Dutch Boy, Pratt & Lambert, Minwax, Thompson’s Waterseal, Krylon, Valspar (acquired in 2017), and other brands.
Source: Investor Presentation
On January 26th, 2023, Sherwin-Williams released Q4 and full year 2022 results for the period ending December 31st, 2022. For the quarter, Sherwin-Williams generated revenue of $5.23 billion, a 9.8% increase compared to Q4 2021. This was driven by a 15.7% increase in the Americas Group and a 4.2% increase in the Performance Coatings Group, offset by a -2.4% decline in the Consumer Brands Group. Adjusted earnings-per-share equaled $1.89 versus $1.34 in Q4 2021.
For the year Sherwin-Williams’ consolidated net sales increased 11.1% to $22.15 billion. Adjusted earnings-per-share equaled $8.73 compared to $8.15 in 2021. Sherwin-Williams also provided 2023 guidance, anticipating sales to be down by a mid-single digit percentage to flat, and adjusted earnings-per-share of $7.95 to $8.65.
Click here to download our most recent Sure Analysis report on Sherwin-Williams (preview of page 1 of 3 shown below):
No-Fee DRIP Dividend Aristocrat #8: A.O. Smith (AOS)
- 5-year expected annual returns: 7.5%
A.O. Smith is a leading manufacturer of residential and commercial water heaters, boilers and water treatment products. A.O. Smith generates the majority of its sales in North America, with the remainder from the rest of the world.It has category-leading brands across its various geographic markets.
A.O. Smith is one of the top water stocks.
A.O. Smith reported its fourth quarter earnings results on January 31. The company generated revenues of $940 million during the quarter, which represents a decline of 6% compared to the prior year’s quarter. A.O. Smith’s revenues were down slightly in North America, while revenues saw a larger decline in the rest of the world, with currency rate movements explaining some of that downward move, with COVID-related headwinds in China playing a role as well.
Source: Investor Presentation
A.O. Smith generated earnings-per-share of $0.86 during the fourth quarter, which was up 1% on a year over year basis. This was possible despite lower revenues, as the company managed to expand its margins while a declining share count also helped.
A.O. Smith has issued its guidance for 2023. The company is forecasting earnings-per-share in a range of $3.15 and $3.45, which reflects that management expects earnings-per-share to grow slightly this year. At the midpoint of the guidance range, A.O. Smith’s earnings-per-share would be up by 5%.
Click here to download our most recent Sure Analysis report on A.O. Smith (preview of page 1 of 3 shown below):
No-Fee DRIP Dividend Aristocrat #7: Hormel Foods (HRL)
- 5-year expected annual returns: 7.0%
Hormel Foods was founded back in 1891 in Minnesota. Since that time, the company has grown into a juggernaut in the food products industry with nearly $10 billion in annual revenue.
Hormel has kept with its core competency as a processor of meat products for well over a hundred years, but has also grown into other business lines through acquisitions.
Hormel has a large portfolio of category-leading brands. Just a few of its top brands include include Skippy, SPAM, Applegate, Justin’s, and more than 30 others.
Hormel reported fourth quarter and full-year earnings on November 30th, 2022, and results were somewhat mixed. Earnings-per-share beat expectations by two cents, coming in at 51 cents. Revenue, however, fell 5% to $3.3 billion, and missed estimates by $50 million.
Organic sales were up 2%, excluding the impact of the additional week that was present in the prior year’s fourth quarter. Operating income was $367 million, up 3%. Operating margin was 11.2%, which was 80 basis points higher than last year’s Q4. Earnings-per-share were flat at 51 cents.
Cash flow from operations came to $372 million, down 34% year-over-year. The company said it expects to see volatile costs and sales for the foreseeable future given supply chain constraints and inflationary pressures.
Click here to download our most recent Sure Analysis report on Hormel (preview of page 1 of 3 shown below):
No-Fee DRIP Dividend Aristocrat #6: Emerson Electric (EMR)
- 5-year expected annual returns: 6.9%
Emerson Electric is an ideal candidate for a no-fee DRIP program, as the company has increased its dividend for over 60 years in a row.
Emerson Electric was founded in Missouri in 1890 and since that time, it has evolved through organic growth, as well as strategic acquisitions and divestitures, from a regional manufacturer of electric motors and fans into a $49 billion diversified global leader in technology and engineering. Its global customer base and diverse product and service offerings afford it about $20 billion in annual revenue. The company has increased its dividend for 65 years in a row.
Emerson reported first quarter earnings on February 8th, 2023, and results were much weaker than expected. Adjusted earnings-per-share came to 78 cents, which was nine cents worse than expected. Revenue was $3.37 billion, which was 6.6% higher than the comparable period a year ago, but missed estimates by $60 million.
Profit increased by 250% to $3.97 per share, or $2.33 billion, year-over-year. However, earnings from continuing operations plummeted from $1.25 per share to 56 cents. Underlying orders were up 5% year-over-year, as net sales were up 7% in total. Organic sales were up 6%. The Americas led the way with 13% growth, while Europe lagged at -2%. Adjusted segment EBITDA was 22.7% of revenue, up 130bps year-over-year.
Click here to download our most recent Sure Analysis report on EMR (preview of page 1 of 3 shown below):
No-Fee DRIP Dividend Aristocrat #5: S&P Global Inc. (SPGI)
- 5-year expected annual returns: 5.7%
S&P Global is a worldwide provider of financial services and business information. The company has generated strong growth over the past several years. It has increased its dividend for 49 consecutive years.
The company posted fourth quarter and full-year earnings on February 9th, 2023, and results were better than expected on both revenue and profits. Adjusted earnings-per-share for the fourth quarter came to $2.54, which was six cents better than expected.
Revenue was up 41% year-over-year to $2.94 billion, which was $60 million ahead of estimates. Market Intelligence revenue soared 83% to $1.037 billion, which was primarily driven by the inclusion of the recently acquired IHS Markit business, in addition to a 3% increase from legacy businesses.
Click here to download our most recent Sure Analysis report on SPGI (preview of page 1 of 3 shown below):
No-Fee DRIP Dividend Aristocrat #4: Realty Income (O)
- 5-year expected annual returns: 8.7%
Realty Income is a retail-focused REIT that owns more than 6,500 properties. It owns retail properties that are not part of a wider retail development (such as a mall), but instead are standalone properties.
This means that the properties are viable for many different tenants, including government services, healthcare services, and entertainment.
Source: Investor Presentation
The company’s long history of dividend payments and increases is due to its high-quality business model and diversified property portfolio.
Realty Income announced its third quarter earnings results on November 3. The trust reported that it generated revenues of $840 million during the quarter, which was 71% more than the revenues that Realty Income generated during the previous year’s quarter.
Realty investments into new properties and its acquisition of VEREIT that closed in late 2021 impacted the year-over-year comparison to a large degree. Realty Income’s funds-from-operations rose substantially versus the prior year’s quarter, although AFFO-per-share growth was lower, due to share issuance.
Realty Income nevertheless managed to generate adjusted FFO-per-share of $0.98 during the quarter. Realty Income expects that its results during 2022 will represent a new record, as funds from operations are forecasted to come in at ~$3.90 on a per-share basis during fiscal 2022.
Click here to download our most recent Sure Analysis report on Realty Income (preview of page 1 of 3 shown below):
No-Fee DRIP Dividend Aristocrat #3: Johnson & Johnson (JNJ)
- 5-year expected annual returns: 8.7%
Johnson & Johnson is a diversified health care company and a leader in the area of pharmaceuticals (~49% of sales), medical devices (~34% of sales) and consumer products (~17% of sales). The company has annual sales in excess of $93 billion.
The company’s most recent earnings report was delivered on January 24th, 2023 for the fourth quarter and full year. For the fourth quarter, adjusted EPS of $2.35 beat by $0.11, while revenue of $23.7 billion missed slightly.
Full-year results can be seen in the image below:
Source: Investor Presentation
For 2023, the company expects 4% adjusted operational sales growth (excluding the COVID-19 vaccine) and 3.5% adjusted earnings-per-share growth.
Johnson & Johnson’s key competitive advantage is the size and scale of its business. The company is a worldwide leader in several healthcare categories. Johnson & Johnson’s diversification allows it to continue to grow even if one of the segments is underperforming.
The company has increased its dividend for 60 consecutive years, making it a Dividend King. The stock is owned by many well-known money managers. For example, J&J is a Kevin O’Leary dividend stock.
Click here to download our most recent Sure Analysis report on JNJ (preview of page 1 of 3 shown below):
No-Fee DRIP Dividend Aristocrat #2: 3M Company (MMM)
- 5-year expected annual returns: 15.7%
3M sells more than 60,000 products that are used every day in homes, hospitals, office buildings and schools around the world. It has about 95,000employees and serves customers in more than 200 countries. 3M is nowcomposed of four separate divisions.
3M announced fourth-quarter and full-year earnings results on January 24th:
Source: Investor Presentation
Fourth-quarter organic revenue increased 0.4%, while total revenue declined 5.9% to $8.1 billion due to the strong U.S. dollar. Adjusted EPS of $2.28 missed estimates by $0.11.
For 2022, revenue decreased 3% to $34.2 billion. Adjusted earnings-per-share for the period totaled $10.10, which compared unfavorably to $10.12 in the previous year and was at the low end of the company’s guidance.
Organic growth for the quarter was 1.2%. Health Care, Transportation & Electronics, and Safety & Industrial grew 1.9%, 1.4%, and 1.3%, respectively. Consumer fell 5.7%. The company will cut 2,500 manufacturing jobs. 3M provided an outlook for 2023, with the company expecting adjusted earnings-per-share in a range of $8.50 to $9.00.
The company also announced that it will be spinning off its Health Care segment into a standalone entity, which would have had $8.6 billion of revenue in 2021.
The transaction is expected to close by the end of 2023.
Click here to download our most recent Sure Analysis report on 3M (preview of page 1 of 3 shown below):
No-Fee DRIP Dividend Aristocrat #1: Albemarle Corporation (ALB)
- 5-year expected annual returns: 17.0%
Albemarle is the largest producer of lithium and second largest producer of bromine in the world. The two products account for nearly two-thirds of annual sales. Albemarle produces lithium from its salt brine deposits in the U.S. and Chile. The company has two joint ventures in Australia that also produce lithium.
Albemarle’s Chile assets offer a very low-cost source of lithium.The company operates in nearly 100 countries and is composed of four segments. Albemarle produces annual sales of more than $5 billion.
Source: Investor Presentation
The company operates in nearly 100 countries and is composed of four segments: Lithium & Advanced Materials (49% of sales), Bromine Specialties (21% of sales), Catalysts (21% of sales), and Other (9% of sales).
Albemarle produces annual sales of $7.3 billion. It is one of the top lithium stocks.
Click here to download our most recent Sure Analysis report on Albemarle (preview of page 1 of 3 shown below):
Final Thoughts
Enrolling in DRIP stocks can be a great way to compound your portfolio income over time.Additional resources are listed below for investors interested in further research for DRIP stocks.
For dividend growth investors interested in DRIP stocks, the 15 companies mentioned in this article are a great place to start. Each business is very shareholder friendly, as evidenced by their long dividend histories and their willingness to offer investors no-fee DRIP stocks.
At Sure Dividend, we often advocate for investing in companies with a high probability of increasing their dividends each and every year.
This article was first published by Bob Ciura for Sure Dividend
Sure dividend helps individual investors build high-quality dividend growth portfolios for the long run. The goal is financial freedom through an investment portfolio that pays rising dividend income over time. To this end, Sure Dividend provides a great deal of free information.
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