Buy These 5 Dividend Aristocrats to Strengthen Your Retirement Portfolio

NYSE: MDT | Medtronic PLC News, Ratings, and Charts

MDT – Given the low-interest-rate environment and current market volatility, dividend investing is gaining popularity. We think investors looking to hedge their retirement portfolios against market volatility could bet on dividend aristocrats Medtronic (MDT), Target (TGT), Archer-Daniels-Midland (ADM), West Pharmaceutical (WST), and A. O. Smith (AOS). These stocks’ outstanding dividend growth histories make them the best predictable income sources amid the current uncertain market conditions. So please, read on.

The resurgence of COVID-19 cases continues to be a major concern for investors. Furthermore, the liquidity crisis at China’s Evergrande Group, which has jolted global markets, is expected to keep the market under pressure. While the Federal Reserve today signaled that it could hike rates six to seven times by the end of 2024, it has kept interest rates at near-zero for now.

Given the market’s volatility and the low-interest-rate environment, investors are betting on dividend stocks to ensure a steady income stream. As a predictable income is essential for a retirement portfolio, investors looking to strengthen their retirement portfolios could bet on fundamentally sound dividend aristocrats. These blue-chip stocks possess healthy balance sheets and have a history of consistent dividend growth.

Medtronic plc (MDT), Target Corporation (TGT), Archer-Daniels-Midland Company (ADM), West Pharmaceutical Services, Inc. (WST), and A. O. Smith Corporation (AOS) could be appropriate dividend aristocrats on which to bet now. These stocks are currently rated ‘Strong Buy’ or ‘Buy’ in our proprietary stock-rating system.

Medtronic plc (MDT)

Based in Ireland, MDT develops therapeutic and diagnostic medical products and technology and sells them to hospitals, physicians, clinicians, and patients worldwide. The company operates through four segments: Cardiovascular; Neuroscience; Medical Surgical; and Diabetes.

MDT is scheduled to pay a $0.63 quarterly cash dividend on October 15, 2021. The stock pays a $2.52 per share dividend annually, which translates to a 1.97% yield. The company’s dividend has grown at an 8.6% rate over the past five years.

On September 13, 2021, MDT announced a collaboration with Mpirik, a healthcare technology company, to address disparities in care to prevent sudden cardiac arrest (SCA). Mpirik’s proprietary artificial intelligence platform, Cardiac Intelligence, will screen electronic health records (EHRs) data at five pilot hospitals to spot patients who meet prespecified clinical criteria for being at risk of SCA. This pilot program is indicative of MDT’s continuing innovation in the interventional and surgical treatment of cardiovascular disease and cardiac arrhythmias.

For the fiscal first quarter, ended July 30, 2021, MDT’s non-GAAP net sales increased 22.7% year-over-year to $7.99 billion. The company’s operating profit came in at $2.26 billion, representing a 109.9% year-over-year improvement. Its non-GAAP net income was  $1.91 billion, up 128.2% from the prior-year period. Its non-GAAP EPS has increased 127.4% year-over-year to $1.41. As of July 30, 2021, the company had $3 billion in cash and cash equivalents.

CAL’s EPS is estimated to rise 26.5% year-over-year to $1.29 in the current quarter, ending October 31, 2021. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Analysts expect its revenue to be $8 billion for the current quarter, representing a 4.6% rise year-over-year. Its EPS is expected to grow at a 13.6% rate per annum over the next five years.

The stock has gained 22% in price over the past year and 9.6% over the past six months. It ended yesterday’s trading session at $127.84. 

MDT’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our proprietary rating system. 

The stock has a B grade for Growth and Stability. Click here to see the additional ratings for MDT’s Value, Momentum, Sentiment, and Quality.

Of the 182 stocks in the C-rated Medical – Devices & Equipment industry, MDT is ranked #19. 

Click here to checkout our Healthcare Sector Report for 2021 

Target Corporation (TGT)

TGT in Minneapolis, Minn., operates as a general merchandise retailer that offers food assortments, apparel, accessories, home decor products, electronics, seasonal offerings, and beauty and household essentials through its stores and digital channels. As of January 30, 2021, the company operated approximately 1,897 stores.

TGT paid a $0.90 quarterly cash dividend on September 10, 2021. The stock pays a $3.60 per share dividend annually, which translates to a 1.49% yield. The company’s dividend has grown at a 5.2% rate over the past five years.

On August 23, 2021, TGT announced the return of Bullseye’s Top Toys for the holiday season. They are available at more than 160 of The Walt Disney Company’s (DIS) stores at Target’s locations across the country. TGT hopes to provide a unique in-store experience and an online presence by offering a curated toy assortment with more exclusives.

TGT’S total revenue for its fiscal second quarter, ended July 31, 2021, increased 9.5% year-over-year to $25.16 billion. The company’s operating income came in at $2.47 billion, up 7.3% from the prior-year period. Its net earnings were  $1.82 billion for the quarter, representing a 7.5% rise from the year-ago period. Its adjusted EPS came in at $3.64, indicating a 7.9% year-over-year improvement. The company had $7.37 billion in cash and cash equivalents as of July 31, 2021.

TGT surpassed consensus EPS estimates in each of the trailing four quarters. The  $24.52 billion consensus revenue estimate  for the current quarter ending October 31, 2021, represents an 8.3% gain from the prior-year period. Analysts expect the stock’s EPS to grow at a 13.3% rate per annum over the next five years.

The stock has gained 61% in price over the past year and 28.7% over the past six months. It closed yesterday’s trading session at $241.31. 

TGT’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree. 

The stock has a B grade for Value, Sentiment, and Quality. Click here to see the additional ratings for TGT (Growth, Stability, and Momentum). 

TGT is ranked #2 of 41 stocks in the A-rated Grocery/Big Box Retailers industry. 

Recently the Reitmeister Total Return Portfolio (RTR) closed a winning trade in TGT for a 65% gain. Learn more about the RTR service here.

Archer-Daniels-Midland Company (ADM)

Chicago’s ADM procures, transports, stores, processes, and merchandises agricultural commodities, products, and ingredients internationally. The company operates through three segments: Ag Services and Oilseeds; Carbohydrate Solutions; and Nutrition. It also offers futures commission merchant and insurance services.

ADM paid a $0.37 quarterly cash dividend on September 8, 2021. The stock pays a $1.48 per share dividend annually, which translates to a 2.47% yield. The company’s dividend has grown at a 4.5% rate over the past five years.

On September 15, 2021, ADM unveiled its ADM Food Technology Co., Ltd., a state-of-the-art, fully automated flavor production facility located  in China. The facility will serve as ADM’s flavor supply hub in APAC, allowing the company to leverage its expertise and leading-edge technologies and build out the ADM pantry to meet customer needs further and advance its growth strategy.

For its fiscal second quarter, ended June 30, 2021, ADM’s revenues increased 40.8% year-over-year to $22.93 billion. The company’s gross profit came in at $1.46 billion, indicating a 32% year-over-year improvement. Its adjusted EBITDA increased 35.6% year-over-year to $1.21 billion. AMD’s adjusted net earnings came in at $754 million, up 58.7% from the prior-year period. Its adjusted EPS was $1.33, representing a 56.5% increase from the year-ago period. As of June 30, 2021, the company had $869 million in cash and cash equivalents.

ADM’s revenue is estimated to rise 6.4% year-over-year to $17.78 billion in the current quarter, ending September 30, 2021. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Its EPS is expected to grow at a 9.6% rate per annum over the next five years.

The stock has gained 21.6% in price over the past nine months and 1.8% over the past month. It ended yesterday’s trading session at $60.02. 

ADM’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our proprietary rating system. 

The stock has a B grade for Growth, Value, Sentiment, and Stability. Click here to see the additional ratings for ADM’s Momentum and Quality.

Of the 32 stocks in the Agriculture industry, ADM is ranked #2.

West Pharmaceutical Services, Inc. (WST)

WST designs and produces containment and delivery systems for injectable drugs and healthcare products and serves pharmaceutical, diagnostic, and medical device companies worldwide. The Exton, Pa., company operates through two segments: Proprietary Products and Contract-Manufactured Products. It distributes its products through its sales force and distribution network, contract sales agents, and regional distributors.

ADM paid a $0.17 quarterly cash dividend on August 4, 2021. The stock pays a $0.68 per share dividend annually, which translates to a 0.15% yield. The company’s dividend has grown at a 7.2% rate over the past five years.

WST’s net sales for its fiscal second quarter, ended June 30, 2021, increased 37.3% year-over-year to $723.60 million. The company’s gross profit came in at $315.10 million, representing a 61.5% year-over-year improvement. Its adjusted operating income was $211.20 million, up 99.2% from the prior-year period. While its adjusted net income increased 97% year-over-year to $186.40 million, its adjusted EPS increased 96.8% to $2.46. As of June 30, 2021, the company had $576.20 million in cash and cash equivalents.

For the current quarter, ending September 30, 2021, analysts expect WST’s EPS to be $1.80, up 56.5% from the prior-year period. It surpassed the Street’s EPS estimates in each of the trailing four quarters. A $687.09 million  consensus revenue estimate for the current quarter represents a 25.4% rise from the prior-year period. Analysts expect WST’s EPS to grow at a rate of 25.8% per annum over the next five years.

WST gained 62.3% in price over the past nine months and 25.3% over the past three months. It ended yesterday’s trading session at $446.27. 

WST’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. 

The stock has an A grade for Sentiment, and a B grade for Growth. We also have graded WST for Value, Quality, Momentum, and Stability. Click here to access all WST’s ratings. 

WST is ranked #27 of 182 stocks in the Medical – Devices & Equipment industry.

Click here to checkout our Healthcare Sector Report for 2021

  1. O. Smith Corporation (AOS)

AOS manufactures and markets residential and commercial water heating and water treatment equipment and in-home air purification products worldwide. The company distributes its products through independent wholesale plumbing distributors, retail channels consisting of hardware and home center chains, and directly to consumers through e-commerce.

AOS paid a $0.26 quarterly cash dividend on August 16, 2021. The stock pays a $1.04 per share dividend annually, which translates to a 1.63% yield. The company’s dividend has grown at an 18% rate over the past five years.

On July 23, 2021, AOS acquired Master Water Conditioning Corporation, a supplier of water softening products and services. The acquisition enables AOS to expand its reach in its growing North America Water Treatment business and deliver innovative, differentiated solutions that heat and treat water.

For its fiscal second quarter, ended June 30, 2021, AOS’ net sales increased 29.5% year-over-year to $859.80 million. The company’s gross profit came in at $321.40 million, up 29.9% from the prior-year period. Its pre-tax income was $151.30 million for the quarter, representing a 73.9% year-over-year improvement. AOS’ adjusted net earnings came in at $118.20 million for the quarter, up 62.4% from the prior-year period. Its adjusted EPS came in at $0.73, representing a 62.2% year-over-year improvement. The company had $444.80 million in cash and cash equivalents as of June 30, 2021. 

Analysts expect AOS’ EPS to improve 4.5% in the current quarter, ending September 30, 2021, to $0.69. AOS surpassed consensus EPS estimates in each of the trailing four quarters. The $855.45 million consensus revenue estimate for the current quarter represents a 19.1% gain from the prior-year period. Analysts expect the stock’s EPS to grow at an 8% rate per annum over the next five years.

AOS has gained 23.1% in price over the past year and 14.4% over the past nine months. It closed yesterday’s trading session at $64.29. 

It’s no surprise that AOS has an overall B rating, which equates to Buy in our POWR Ratings system.

The stock has an A grade for Quality. Click here to see the additional ratings for AOS’ Value, Stability, Growth, Momentum, and Sentiment.

Of the 82 stocks in the A-rated Industrial – Machinery industry, AOS is ranked #28.

Click here to check out our Industrial Sector Report for 2021


MDT shares were unchanged in after-hours trading Wednesday. Year-to-date, MDT has gained 11.16%, versus a 18.26% rise in the benchmark S&P 500 index during the same period.


About the Author: Sweta Vijayan


Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More...


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