We recently Dividend Aristocrats Yield Ranking: Top 10In this article, we’ll look at how Federal Realty Investment Trust (NYSE:FRT) stacks up against other Dividend Aristocrats.
Investors have always put income first. And when it comes to making money, nothing beats dividend stocks. Research from S&P Dow Jones Indices has demonstrated that over the long term, dividend-paying companies outperform non-dividend paying companies and the overall market on a risk-adjusted basis. While analysts don’t recommend investing in high dividend yields, recent research has shown that dividend yields are a risk factor that can be profitable and have historically produced higher returns than market-cap weighted benchmarks. When combined with other factors such as volatility, quality, momentum, size and value, a dividend yield strategy can potentially tap into a systematic source of income.
Dividend yield and dividend growth are always hot topics among investors. However, few realize that dividend yield is a crucial piece of the puzzle when it comes to dividend growth. When it comes to the Dividend Aristocrats Index, the trick to growing dividends for 25 consecutive years is not to sacrifice yield. The index has consistently outperformed its benchmark by delivering high yields, typically between 2% and 2.9%, for the past 26 years through 2023. On average, the index has yielded 2.5%, beating the market’s 1.8%. Learn more about high dividend stocks here. Best Dividend Stocks with At Least 7% Dividend Yields According to Hedge Funds.
In addition to offering solid yields, Dividend Aristocrats also feature lower volatility than other asset classes. According to a report by S&P Dow Jones Indices, the Dividend Aristocrats Index has outperformed the overall market over the long term, as evidenced by its lower volatility and higher risk-adjusted returns. The index’s ability to protect against downside risk is reflected in its upside and downside capture ratios. These stocks outperformed the market in 69.34% of down months and 43.61% of up months. Additionally, the Dividend Aristocrats Index has experienced less drawdowns compared to its benchmark index. The report further states that the index has an average excess return of 1.05% in down months compared to the broad benchmark.
The 2023 data highlights how eager companies are to increase dividends. This is not simply an impulsive move to attract investors, but is backed by strong corporate balance sheets where companies are reaping more cash flow than ever before. According to Janus Henderson, corporate cash flows will remain strong in most sectors in 2023, allowing companies to have ample resources for dividends and share buybacks. As a result, global dividend growth increased 5% annually, in line with the long-term trend. The firm also offered an upbeat outlook for dividends in 2024. The firm said dividends are expected to remain strong this year, but one-time special dividends are expected to decline from record levels over the past three years. The firm’s forecast projects dividends of $1.72 trillion in 2024, which would represent a 3.9% headline increase and 5% headline growth.
There are many Dividend Aristocrats out there that offer solid yields to shareholders, and in this article we’ll look at some of the best high-yielding Dividend Aristocrat stocks.
Our methodology:
For this list, we looked at 67 Dividend Aristocrats companies known for growing their dividends for 25 years or more. From this list, we selected the 10 stocks with the highest dividend yields as of June 25th and ordered them from lowest to highest yield. We also measured hedge fund sentiment towards each stock based on the Insider Monkey database of 920 funds as of the first quarter of 2024. Why are hedge funds so interested in the stocks they are flooding with? The reason is simple: our research shows that you can outperform the market by mimicking the top stocks of the best hedge funds. Our quarterly newsletter strategy selects 14 small and large stocks each quarter and has returned 275% since May 2014, beating the benchmark by 150 percentage points. (Click here for details).
A wide-angle view of the city skyline, showcasing the company’s investment in urban neighborhoods.
Federal Realty Investment Trust (NYSE:FRT)
Dividend yield as of June 25: 4.34%
Federal Realty Investment Trust (NYSE:FRT) ranks 5th on our list of best dividend aristocrats. This American real estate investment trust company invests primarily in shopping centers and other entertainment properties. The company has a different business approach than its peers. Unlike its competitors who aim to accumulate large real estate portfolios, Federal Realty Investment Trust (NYSE:FRT) emphasizes quality over quantity. As of the end of March 2024, the company owns only 102 properties. However, these properties are very attractive. The company strategically acquires properties in and around large metropolitan areas with high population density and high incomes. This has several advantages for the company. For example, many of its properties have faced occupancy challenges during the pandemic, but they have received inquiries from tenants who want to relocate from nearby areas to secure space in the properties.
Federal Realty Investment Trust’s (NYSE:FRT) strong performance in early 2024 was highlighted by a record number of leasings in the first quarter, with over 566,000 square feet of equivalent retail space leased. Additionally, the company successfully closed leases for approximately 190,000 square feet of office space in prime mixed-use properties during the quarter. This demand highlights the company’s position as a leader in the shopping center industry.
In addition to maintaining a strong portfolio, Federal Realty Investment Trust (NYSE:FRT) has also had an impressive track record when it comes to dividends. The company offers a quarterly dividend of $1.09 per share and has increased its dividend for 56 consecutive years. With a dividend yield of 4.34% as of June 25, FRT is one of the best Dividend Aristocrats stocks on our list.
As of the end of the March 2024 quarter, 22 hedge funds in Insider Monkey’s database held shares in Federal Realty Investment Trust (NYSE: FRT), unchanged from the previous quarter. The combined value of these shares is more than $244 million.
Overall FRT No.5 Check out this list of the best Dividend Aristocrats ranked by dividend yield. Dividend Aristocrats Yield Ranking: Top 10 Let’s take a look at other dividend stocks that hedge funds are watching. While we acknowledge FRT’s investment potential, our conviction is based on the belief that some highly undervalued dividend stocks have greater potential to deliver higher returns in a shorter time frame. If you’re looking for highly undervalued dividend stocks that are more promising than FRT but trade at less than 7x earnings and have yields of almost 10%, check out our report. Very cheap dividend stocks.
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Disclosures: None. This article was originally published on Insider Monkey.
