Income is fundamental to investing success, and few income streams are as safe and reliable as dividends from the Dividend Aristocrats. The Dividend Aristocrats are S&P 500 companies with a track record of at least 25 consecutive annual dividend increases, and many qualify as Kings. Dividend Kings have increased their payments for at least 50 years and are businesses with the ability to withstand adverse conditions, paying a consistently increasing distribution throughout the business cycle. 

However, even Dividend Aristocrats fall out of favor from time to time, which can provide an opportunity for investors. Adverse conditions can lead to lower stock prices, discounted stock prices, and attractive entry points to start or build on an existing position. Today, we’re looking at the three highest-yielding Dividend Aristocrats in mid-2024. These stocks are beaten down; they are the dogs of the Dividend Aristocrat Index, providing yields above 5%. They all have solid business and outlook for improvement along with capital return; the question is which one(s) are suitable to buy now.  

A Trend-Following Entry Into Reality Income Corporation

Realty Income Corporation (NYSE: O) is the leading REIT focused on commercial properties and shareholder returns. The company owns more than 15,400 properties, primarily on long-term net-lease agreements with commercial companies. The portfolio generates regular, visible, growing cash flow that allows consistent distribution increases, often occurring more than once annually. Another attractive feature is the monthly distribution payout, which helps investors who rely on their investment income stream for living expenses. 

Realty Income Corporation shares are down significantly compared to last year, setting up today’s opportunity. Today’s opportunity includes a historically high yield of over 5% and a trend-following entry into the market. The stock price is down but supported by the long-term EMAs, where a trend-following signal is forming. The signal is seen in the price action and indicators set up for a secular-grade swing and point to a minimum 35% upside by 2026. 

Analysts only see a 10% upside at the consensus, but two noteworthy details about the sell-side activity support the outlook for share prices. The first is that the downward trend in the analysts' consensus price target bottomed this year; consensus has begun to rise again. The second is the institutions. They own over 70% of the stock and have bought on balance for the last sixteen quarters. Their activity ramped in Q1 and accelerated in Q2, aligning with the bottom in price action. 

Franklin Resources is a Buy at Historical Lows

Franklin Resources (NYSE: BEN) is a financial asset manager yielding over 5.35%, with shares near a historical low. The low is due to numerous factors, including weak AUM growth over the past half-decade, but a reversal is in sight. The company pivoted back to revenue and earnings growth this year and is expected to accelerate results over the next twelve months. The salient points are that the dividend payment is safe at less than 50% of earnings, the balance sheet is healthy, and the sell-side sentiment has begun to shift. 

The analysts are still in doubt, rating the stock at Reduce, but see it advancing almost 10% at the consensus. The more significant detail is that the institutions, which own about 50% of the stock at the end of June 2024, are buying it in bulk. Institutional activity ramped in Q1 and surged in Q2 when the stock price returned to critical support targets. 

Amcor Stock Boxes Up a Reversal 

Amcor (NYSE: AMCR) is the world’s largest packaging manufacturer and it is set up for a rebound driven by economic normalization post-COVID and the expectation for lower interest rates and improving business conditions. The takeaway is that this stock is trading near the lowest since the 2019 merger that created today’s company. While still technically young, the core Amcor business has been in business for decades and is on track to be crowned Dividend King. 

Amcor is still struggling with growth in 2024, but the shift to easier comps will come soon. The company is expected to post sequential growth this quarter and return to YoY revenue growth in FQ1. The growth will be compounded by a wider margin that improves the distribution outlook, and forecasts may be cautious. The payout is safe, but a high 72% of the earnings is a cause for concern.