Summer’s here, and since the market is known to move sideways during this season, it might be a good idea to look into passive income. Make your money work for you instead of the other way around—and who knows? It could be the start of a profitable, income-generating retirement portfolio. Buying at the highest-yielding Dividend Aristocrats can be a good place to start if you’re looking for that.
To belong to the Dividend Aristocrats list, a company must be in the S&P 500 and consistently increase its dividend payouts for at least 25 years.The company must also have a float-adjusted market cap of $3 billion, an average daily volume of $5 million in the three months before rebalancing, and positive earnings growth.
These qualifications eliminate a good chunk of the market, leaving only some of the most attractive companies.
These are the three of the best, and the stocks are arranged from highest to lowest yield.
Amcor (AMCR)
Source: shutterstock.com/zedspider
While Amcor (NYSE:AMCR) as a business may not be as exciting as tech stocks, it has a foot in the door in major companies in sectors like pharmaceutical, medical, personal care, and other products with its packaging solutions. The company operates in two main segments:
- Flexibles: beverage, medical, personal care, food, and other industry products with flexible and film packaging.
- Rigid Packaging: containers and packaging for beverages, beers, dressings, etc., that require rigid containers.
Amcor’s strong drive to reduce global waste and responsible packaging solutions have given the company strong collaborative ties with companies like Avon.
In other news, Peter Konieczny has replaced Ron Delia as CEO, effective April 15. Konieczny previously held the title of chief commercial officer. Delia will stay on board until Sept. 30, taking an advisory role.
Amcor’s 2023 revenue was flat year over year. However, earnings per share increased from 53 cents to 70 cents (a 32% growth), and the company expects 2024’s results to end between 67 cents and 71 cents per share. AMCR stock also has a 50-cent forward annual dividend rate, translating to a 5% yield. I’d say it more than deserves its spot in the list of highest-yielding Dividend Aristocrats.
T. Rowe Price Group (TROW)
Source: Pavel Kapysh / Shutterstock.com
The financial sector faces headwinds as the challenging economic environment continues to batter its bottom line. Experts agree that the sector will stay in consolidation as margins shrink. Despite that, T. Rowe Price Group (NASDAQ:TROW) stood its ground as a premier global asset management company.
The company offers a wide range of investments across asset classes globally. In addition to offering financial services, it is committed to equipping its investors with financial knowledge to help them manage their accounts effectively.
T. Rowe Price’s partnership with Ascensus aims to build strong client relationships and improve the online and mobile experience for 529 plan account owners. The partnership aims to provide dedicated mobile access, easy-to-use websites and apps, electronic payments, and a secure gifting platform.
Like most of the sector, T. Rowe Price faced significant challenges last year due to the high interest rate environment. Regardless, the company improved earnings by 16%, ending the year with $7.78 in EPS, up from $6.73 last year.
The company also pays a forward dividend rate of $4.96, reflecting a 4.2% yield, making it a compelling choice for investors looking for the highest-yielding Dividend Aristocrats.
International Business Machines (IBM)
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Today, the tech world is dominated by companies involved in AI. However, while in growth mode, many companies aren’t yet paying dividends to their shareholders. International Business Machines (NYSE:IBM) is different. The company holds a record of 30 years of dividend increases that consistently beat even most dividend stocks.
As a tech company, IBM operates in four key segments:
- Software: the segment is dedicated to Hybrid Platform & Solutions businesses.
- Infrastructure: caters to clients infrastructure support.
- Consulting: focuses on business transformation and consultancy.
- Financing: offers financing to its personal and commercial clients.
The company is currently in partnership with Palo Alto Networks (NASDAQ:PANW) to develop AI-powered software security jointly.
IBM’s 2023 results were decent, with revenue increasing 2%, driven by software and consulting revenue growth. Diluted earnings per share also increased by 13%.
CEO Arvind Krishna said, “Client demand for AI is accelerating and our book of business for watsonx and generative AI roughly doubled from the third to the fourth quarter.” This is good news for investors as the company’s AI offerings are expected to experience accelerated growth.
IBM stock pays a $6.68 forward dividend rate, translating to a 3.8% yield. If you are looking for high-yield Dividend Aristocrats with a strong history, growth potential, and an established presence in the industry, then IBM should be on your watchlist.
On the date of publication, Rick Orford did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Rick Orford is a Wall Street Journal best-selling author, investor, influencer, and mentor. His work has appeared in the most authoritative publications, including Good Morning America, Washington Post, Yahoo Finance, MSN, Business Insider, NBC, FOX, CBS, and ABC News.
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