Dividend aristocrats are stocks from stable, large-cap companies that have consistently increased their dividends for at least 25 years. In the current market environment, marked by economic uncertainty and inflation concerns, these stocks offer reliable income and can enhance portfolio stability.

Therefore, investors may consider adding dividend aristocrats General Dynamics Corporation (GD), The Clorox Company (CLX), and Stanley Black & Decker, Inc. (SWK), which are showing tech-like growth potential.

The U.S. economy is mixed, showing strong GDP growth of 2.8% in Q2 2024 but a forecasted slowdown in H2 2024 due to high prices and interest rates impacting consumer and business spending. Amid this uncertainty, investing in dividend aristocrats provides diversification and potential long-term returns, especially in dividend-focused portfolios, with reinvested dividends further boosting gains.

Meanwhile, inflation in the U.S. is easing but remains above 2%, with ongoing price pressures and high wage growth. Despite expected Federal Reserve rate cuts, inflation is projected to stay above 2% until at least 2026. This environment often benefits dividend aristocrats, as their financial strength and ability to pass on higher costs allow them to maintain stable returns.

Therefore, since investing in dividend aristocrats is a long-term strategy for steady income and growth, and they are showing rapid growth similar to high-tech companies, offering both reliable dividends and potential for strong capital appreciation, let’s analyze the fundamental aspects of the three dividend aristocrat picks.

General Dynamics Corporation (GD)

GD operates as a global aerospace and defense company through four segments: Aerospace, Marine Systems, Combat Systems, and Technologies.

On August 15, 2024, GD’s Aerospace announced the successful first flight of its all-new Gulfstream G400, marking the start of its flight test program. The aircraft features advanced performance, efficiency, and comfort, setting a new standard in its segment.

On August 5, 2024, GD’s Electric Boat received a $1.30 billion contract modification to purchase long lead time materials for Virginia-class Block VI submarines. This funding supports increased production and capacity for the U.S. Navy’s advanced submarine fleet.

In terms of the trailing-12-month net income margin, GD’s 7.89% is 27.6% higher than the 6.18% industry average. Its 6.39% trailing-12-month Return on Total Assets is 30.7% higher than the 4.89% industry average. Likewise, its 0.83x trailing-12-month asset turnover ratio is 6.7% higher than the industry average of 0.78x.

GD has paid dividends for 32 consecutive years. Its annual dividend is $5.68, which translates to a yield of 1.93% at the current share price. Its four-year average dividend yield is 2.28%. Moreover, the company’s dividend payouts have increased at a CAGR of 7% over the past five years.

GD’s revenue for the second quarter which ended on June 30, 2024, increased 18% year-over-year to $11.98 billion. Its operating earnings rose 20.2% from the year-ago quarter to $1.16 billion. Moreover, the company’s net earnings amounted to $905 million and $3.26 per share, up 21.6% and 20.7% over the previous year’s quarter, respectively.

Street expects GD’s EPS and revenue for the quarter ending September 30, 2024, to increase 22.6% and 15.1% year-over-year to $3.73 and $12.17 billion, respectively. It surpassed the consensus EPS revenue in each of the trailing four quarters. Over the past year, the stock has gained 31.3% to close the last trading session at $294.47.

GD’s POWR Ratings reflect strong prospects. It has an overall rating of B, which translates to a Buy in our proprietary system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

It is ranked #7 out of 70 stocks in the Air/Defense Services industry. It has a B grade for Growth, Momentum, Stability, and Sentiment. Click here to see GD’s ratings for Value and Quality.

The Clorox Company (CLX)

CLX engages in the manufacture and marketing of consumer and professional products worldwide through four segments: Health and Wellness, Household, Lifestyle, and International.

On August 6, 2024, CLX announced the launch of Clorox EcoClean Disinfecting Wipes, which are plant-based and free from bleach, ammonia, and alcohol. These eco-friendly wipes are designed to kill 99.9% of germs and are part of CLX’s expanded EcoClean product line.

In terms of the trailing-12-month gross profit margin, CLX’s 43.21% is 21.3% higher than the 35.62% industry average. Its 17% trailing-12-month Return on Total Capital is 145.6% higher than the 6.92% industry average. Also, its 102.19% trailing-12-month Return on Common Equity is 838.7% higher than the 10.89% industry average.

CLX pays an annual dividend of $4.88, which translates to a yield of 3.24% at the current share price. Its four-year average dividend yield is 2.96%. In addition, the company’s dividend payouts have increased at a CAGR of 4.1% over the past five years. CLX has paid dividends for the past 46 years.

In the fiscal fourth quarter that ended June 30, 2024, CLX’s net sales came in at $1.90 billion. Likewise, its gross profit came to $884 million. Its adjusted EBIT stood at $308 million, up 4.8% year-over-year. In addition, the company’s adjusted earnings per share rose 9% from the year-ago value to $1.82.

For the quarter ending September 30, 2024, CLX’s EPS and revenue are expected to increase 186.1% and 18.9% year-over-year to $1.40 and $1.65 billion, respectively. CLX surpassed the Street EPS estimates in three of the trailing four quarters. Over the past three months, the stock has gained 12.3% to close the last trading session at $150.94.

CLX’s robust outlook is reflected in its POWR Ratings. CLX has a B grade for Growth and Quality. Within the B-rated Consumer Goods industry, it is ranked #36 out of 53 stocks. To see CLX ratings for Value, Momentum, Stability, and Sentiment, click here.

Stanley Black & Decker, Inc. (SWK)

SWK provides hand tools, power tools, outdoor products, and related accessories in the United States, Canada, other Americas, Europe, and Asia. It operates through the Tools & Outdoor and Industrial segments.

In terms of the trailing-12-month levered FCF margin, SWK’s 10.26% is 56.8% higher than the 6.54% industry average.

SWK’s annualized dividend of $3.28 per share translates to a dividend yield of 3.32% on the current share price. Its four-year average yield is 2.76%. Its dividend payouts have increased at a CAGR of 5% over the past three years. Also, SWK has paid dividends for 55 consecutive years.

During the second quarter ended June 29, 2024, SWK’s net sales amounted to $4.02 billion. The company’s non-GAAP gross profit grew 19.4% compared to the same quarter last year, reaching $1.17 billion. Its adjusted net earnings from continuing operations were $164.50 million, or $1.09 per share, compared to an adjusted net loss from continuing operations of $16.90 million, or $0.11 per share, respectively.

Analysts expect SWK’s EPS for the quarter ending December 31, 2024, to increase 64.3% year-over-year to $1.51. Its revenue for the quarter ending March 31, 2025, is expected to grow marginally year-over-year to $3.90 billion. It surpassed the consensus EPS estimates in each of the trailing four quarters. SWK’s stock has gained 13% over the past month to close the last trading session at $98.23.

SWK’s strong fundamentals are reflected in its POWR Ratings. It has a B grade for Growth. Within the B-rated Home Improvement & Goods industry, it is ranked #21 out of 58 stocks. To access SWK’s grades for Value, Momentum, Stability, Sentiment, and Quality, click here.

What To Do Next?

43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.

2024 Stock Market Outlook >

GD shares were trading at $293.08 per share on Thursday afternoon, down $0.99 (-0.34%). Year-to-date, GD has gained 14.59%, versus a 17.58% rise in the benchmark S&P 500 index during the same period.

About the Author: Abhishek Bhuyan

Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments. More...

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