The Dividend Aristocrats are components of the S&P 500 stock index that have each increased their dividend payments for at least 25 consecutive years. Like the overall stock market, the Dividend Aristocrats had a solid year in 2017 as a group, but there have been a few standout performers.
Here are the three highest-performing stocks out of the 51 components in the S&P 500 Dividend Aristocrats for 2017, why each one has done so well, and what could be in store for 2018.
|
Company |
2017 Total Return |
Years of Consecutive Dividend Growth |
|---|---|---|
|
AbbVie (ABBV 0.25%) |
61.3% |
44 |
|
S&P Global (SPGI 0.31%) |
57.1% |
44 |
|
Sherwin-Williams (SHW -0.25%) |
55.1% |
38 |
Data source: yCharts (total return) and www.dividend.com (years of dividend growth). Note: AbbVie's dividend streak includes the years prior to its spinoff from Abbott Labs.
1. AbbVie
Unless something dramatic happens in the last few trading days of the year, AbbVie is the best-performing Dividend Aristocrat of 2017.
As my Foolish colleague Cory Renauer pointed out, AbbVie absolutely crushed it this year. The company's Humira patents expired, but supplemental patents will keep competition away for longer than anticipated. Humira, AbbVie's key revenue generator, saw sales grow by 16% year over year, and further double-digit growth is expected by 2020.
Image source: Getty Images.
AbbVie had a few other notable wins this year, including strong performance from an experimental psoriasis drug and promising clinical trial results for a leukemia treatment. And even after the gains, AbbVie trades for a lower P/E multiple than the S&P 500 average, so there could be even more room to the upside if 2018 is another strong year.
2. S&P Global
A look at the company's results shows why S&P Global has done so well this year. Earnings are up by 19% year over year on stronger margins and double-digit organic revenue growth. In fact, since 2013, S&P Global's operating margin has expanded from 34% to 47% and EPS has grown from $3.35 to an annualized rate of twice that amount.
Going forward, the company's S&P Dow Jones Indices business (which includes the S&P 500 Dividend Aristocrats index) has particularly strong growth potential if the trend toward passive investing continues. In a nutshell, S&P Global generates fee income from funds that are based on its indexes. For example, if you invest in a S&P 500 ETF such as the SPDR S&P 500 Index (NYSEMKT: SPY), a portion of the fund's expense ratio goes to S&P Global. There are currently more than $1.1 trillion of assets in S&P-based ETFs, and this could swell considerably in the coming years.
3. Sherwin-Williams
With a total return of more than 55% for the year, paint manufacturer Sherwin Williams takes the bronze medal for 2017. Despite taking a hit from the hurricanes earlier this year, the company has been able to capitalize on the strong housing market and grow its sales impressively.
In its most recent results, Sherwin-Williams reported 37% revenue growth and earnings that exceeded analysts' expectations. Same-store sales grew by 5.2%, and the company's acquisition of Valspar seems to be working out even better than expected. In fact, about one-fourth of the company's stock price gain came as a result of its third-quarter earnings.
Going forward, Sherwin-Williams stands to do well as long as the housing market continues to stay strong. And since the housing market is showing little weakness as 2017 comes to a close, 2018 could turn out to be yet another robust year.
