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5 Dividend Growth Stocks With Upside To Analyst Targets

By Preferred Stock Channel Staff, Tuesday, March 12, 6:47 AM ET
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To become a "Dividend Aristocrat," a dividend paying company must accomplish an incredible feat: consistently increase shareholder dividends every year for at least 20 consecutive years. Companies with this kind of track record tend to attract a lot of investor attention — and furthermore, "tracking" funds that follow the Dividend Aristocrats Index must own them. With all of this demand for shares, dividend growth stocks can sometimes become "fully priced," where there isn't much upside to analyst targets.

But we here at ETF Channel have looked through the underlying holdings of the SPDR S&P Dividend ETF (which tracks the S&P High Yield Dividend Aristocrats Index), and found these five dividend growth stocks that actually still have fairly substantial upside to the average analyst target price 12 months out. Which means, if the analysts are correct, these are five dividend growth stocks that could produce capital gains in addition to their growing dividend payments.

In the first table below, we present the five stocks. The recent share price, average analyst 12-month target price, and percentage upside to reach the analyst target are presented.

Stock Recent Price Avg. Analyst 12-Mo. Target % Upside to Target
Cullen/Frost Bankers, Inc. (NYSE:CFR) $107.27 $117.47 9.50%
UMB Financial Corp (NASDAQ:UMBF) $81.91 $88.80 8.41%
WEC Energy Group Inc (NYSE:WEC) $82.10 $87.81 6.95%
Northrop Grumman Corp (NYSE:NOC) $459.25 $489.88 6.67%
RenaissanceRe Holdings Ltd. (NYSE:RNR) $235.10 $250.08 6.37%

The average 12-month analyst targets are only targets for the share price however, and each of these stocks are expected to pay dividends during that holding period — so the expected total return if these stocks reach their analyst targets is actually the share price upside seen by the analysts plus the dividend yield shareholders can expect. To ballpark that total return potential, we have added the current yield to the analyst target price upside, in order to arrive at the 12-month total return potential:

Stock Dividend Yield % Upside to Analyst Target Implied Total Return Potential
Cullen/Frost Bankers, Inc. (NYSE:CFR) 3.43% 9.50% 12.93%
UMB Financial Corp (NASDAQ:UMBF) 1.90% 8.41% 10.31%
WEC Energy Group Inc (NYSE:WEC) 4.07% 6.95% 11.02%
Northrop Grumman Corp (NYSE:NOC) 1.63% 6.67% 8.3%
RenaissanceRe Holdings Ltd. (NYSE:RNR) 0.66% 6.37% 7.03%

Another consideration with dividend growth stocks is just how much the dividend is growing. We looked up the trailing twelve months worth of dividends shareholders of each of the above five companies have collected, and then also looked up the same number for the prior trailing twelve months. This gives us a rough yardstick to see how much the dividend has grown, from one trailing twelve month period to another.

Stock Prior TTM Dividend TTM Dividend % Growth
Cullen/Frost Bankers, Inc. (NYSE:CFR) $3.36 $3.63 8.04%
UMB Financial Corp (NASDAQ:UMBF) $1.5 $1.54 2.67%
WEC Energy Group Inc (NYSE:WEC) $2.964 $3.175 7.12%
Northrop Grumman Corp (NYSE:NOC) $6.92 $7.48 8.09%
RenaissanceRe Holdings Ltd. (NYSE:RNR) $1.48 $1.52 2.70%

These five stocks are part of our full Dividend Aristocrats List. The average analyst target price data upon which this article was based, is courtesy of data provided by Zacks Investment Research via Quandl.com.
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This Article's Word Cloud:   Analyst   Aristocrats   Bankers   Corp   Cullen   Dividend   Energy   FREEGet   Financial   Frost   Group   Growth   Grumman   Holdings   NYSE   Northrop   RenaissanceRe   Stock   Target   UMBF   Zacks   analyst   average   dividend   dividends   five   growth   have   hctblstyle   latest   looked   mdash   month   months   much   price   report   research   return   share   stocks   target   targets   that   these   this   total   trailing   twelve   upside

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