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Why These 9 Dividend Aristocrats Are Surging Today

By Jason Hall - Apr 14, 2020 at 4:15PM

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Each stock in this typically stable group was up 5% or more on Tuesday.

What happened

As a class of stocks, Dividend Aristocrats are generally pretty stable. That should be expected from a group of companies that have all paid and raised their dividends every year for at least 25 years straight. To make that list, it takes a great business with durable competitive advantages and strong management. 

However, April 14 saw at least nine Dividend Aristocrats gain 5% or more during trading: 

Dividend Aristocrat Price Change on 4/14/20 High Price on 4/14/20
Brown-Forman Corp (BF.B 0.98%) 5.5% 7.1%
Clorox Co (CLX 1.22%) 4.6% 4.7%
Colgate-Palmolive Co (CL 0.99%) 4.5% 5.7%
Johnson & Johnson (JNJ -1.10%) 4.7% 5.3%
Kimberly-Clark Corp (KMB 0.63%) 5.4% 5.5%
Procter & Gamble (PG 0.97%) 4.2% 4.6%
Target Corp (TGT 1.70%) 3.4% 5.1%
Walgreens Boots Alliance (WBA 1.30%) 4.0% 4.8%
W.W. Grainger (GWW 2.39%) 4.3% 4.9%

Data sources: Yahoo! Finance and YCharts. Data as of 3:22 p.m. EDT.

So what

With the exception of Johnson & Johnson, which reported first-quarter results and raised its dividend 6%, there wasn't a lot of material news to drive this group of stocks higher today. 

To the contrary, part of their gains could be investors moving away from another popular category of dividend stocks: megabanks. JPMorgan Chase (JPM 1.66%) reported a decline in profit in the first quarter today and also said it increased its provision for credit losses by $1.5 billion to $8.3 billion. The second quarter -- and potentially even beyond that -- is expected to be challenging for many financial services providers as an economy in neutral freezes what had been a healthy period of lending growth. 

A blue line curving higher with "dividends" written on it

Image source: Getty Images.

While banks could struggle, investors look to be moving more capital into the relative safety represented by the companies above. With the exception of Grainger, which provides industrial supplies to businesses, all of the others offer consumer staples, medicines, or (in the case of Brown-Forman) booze. These are all things people still buy -- sometimes more frequently -- during an economic downturn. 

Now what

As a group, I think the market generally has it right in that these are likely to prove the kinds of companies that will hold up well during an economic downturn. They should be able to ride out what looks like potentially the deepest dive into a recession in American history.

Here's how their stocks have performed so far this year: 

CL Chart

CL data by YCharts.

With the exception of Walgreens and W.W. Grainger, that's better than the broader S&P 500 has done. Looking out over the next year or so, if you're an investor looking for stability and a dependable dividend, you could do a lot worse than assembling a basket of these stocks and sitting tight. 

There's no guarantee they will all be able to maintain their dividends -- almost 20 Aristocrats had to cut their payouts last recession -- but if you invest in a large group such as these nine, that diversification should help offset any potential losers. 

Jason Hall has no position in any of the stocks mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Walgreens Boots Alliance, Inc. Stock Quote
Walgreens Boots Alliance, Inc.
WBA
$40.59 (1.30%) $0.52
JPMorgan Chase & Co. Stock Quote
JPMorgan Chase & Co.
JPM
$122.13 (1.66%) $1.99
Johnson & Johnson Stock Quote
Johnson & Johnson
JNJ
$165.30 (-1.10%) $-1.84
The Clorox Company Stock Quote
The Clorox Company
CLX
$146.37 (1.22%) $1.76
The Procter & Gamble Company Stock Quote
The Procter & Gamble Company
PG
$146.67 (0.97%) $1.41
Target Corporation Stock Quote
Target Corporation
TGT
$172.48 (1.70%) $2.88
W.W. Grainger, Inc. Stock Quote
W.W. Grainger, Inc.
GWW
$579.88 (2.39%) $13.52
Kimberly-Clark Corporation Stock Quote
Kimberly-Clark Corporation
KMB
$135.48 (0.63%) $0.85
Brown-Forman Corporation Stock Quote
Brown-Forman Corporation
BF.B
$76.14 (0.98%) $0.74
Colgate-Palmolive Company Stock Quote
Colgate-Palmolive Company
CL
$80.29 (0.99%) $0.79

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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