Updated on May 15th, 2024 by Bob Ciura
The Dividend Aristocrats are a group of 68 companies in the S&P 500 Index, with 25+ consecutive years of dividend increases. The Dividend Aristocrats each have strong business models, with competitive advantages that provide them with the ability to raise their dividends each year.
There are currently 68 Dividend Aristocrats. You can download an Excel spreadsheet of all 68 Dividend Aristocrats (with important financial metrics such as price-to-earnings ratios and dividend yields) by clicking the link below:
Disclaimer: Sure Dividend is not affiliated with S&P Global in any way. S&P Global owns and maintains The Dividend Aristocrats Index. The information in this article and downloadable spreadsheet is based on Sure Dividend’s own review, summary, and analysis of the S&P 500 Dividend Aristocrats ETF (NOBL) and other sources, and is meant to help individual investors better understand this ETF and the index upon which it is based. None of the information in this article or spreadsheet is official data from S&P Global. Consult S&P Global for official information.
In order to become a Dividend Aristocrat, a company must possess a profitable business model and durable competitive advantages, along with the ability to raise dividends even during recessions.
Consumer staples stocks such as Amcor plc (AMCR) have all the necessary qualities of a Dividend Aristocrat.
Amcor has increased its dividend for over 25 years in a row. It has maintained its dividend growth streak thanks to a very strong product portfolio.
Business Overview
Amcor plc that trades on the NYSE today was formed in June 2019 with the completion of the merger between two packaging companies, U.S.-based Bemis Co. Inc. and Australia-based Amcor Ltd.
Amcor develops and manufactures a diverse array of packaging products for many consumer uses all over the world, including food and beverage, medical and medicinal, and home and personal care.
It consists of two main business segments: Flexible Packaging and Rigid Packaging.
Source: Investor Presentation
Amcor reported its third quarter results for Fiscal Year (FY) 2024 on April 30th, 2024. GAAP diluted EPS reached 12.9 cents, with GAAP net income hitting $187 million.
Adjusted EBIT rose by 3% to $397 million on a comparable constant currency basis, while adjusted EPS saw a 1% increase to 17.8 cents.
For the nine months ending March 31, 2024, net sales totaled $10,105 million, with GAAP net income of $473 million and a GAAP diluted EPS of 32.7 cents.
Adjusted EPS stood at 49.1 cents, with Adjusted EBIT reaching $1,106 million. Shareholders benefited from a rise in quarterly dividends to 12.5 cents per share, alongside $30 million in shares repurchased.
Growth Prospects
Amcor is counting on its Bemis acquisition to drive strong growth over the next half decade. The main factors that will drive this growth acceleration are its global footprint opening up new attractive end markets and customers for the company’s products, and greater economies of scale driving efficiencies and higher margins.
Another growth catalyst for Amcor is the emerging markets such as China and Latin America, where economic growth is high and demand for packaging products is rising.
The company is also in the midst of an aggressive share buyback program that should boost per share growth numbers.
Furthermore, its balance sheet is quite strong with a relatively low leverage ratio, giving it flexibility to finance its dividend, share repurchases, and remain opportunistic on future growth opportunities.
Looking ahead, Amcor anticipates sustained growth, with Adjusted EPS for fiscal 2024 projected to range from 68.5 to 71 cents per share and adjusted free cash flow estimated at approximately $850 million to $950 million. The company plans to allocate around $70 million towards share repurchases as part of its ongoing program.
We believe that all of these factors should combine to generate solid 4% annualized earnings per share growth over the next half decade.
Competitive Advantages & Recession Performance
Amcor’s competitive advantages are fueled by its industry leadership position. Although Amcor’s headquarters are in Europe, its largest markets are in the Americas. That means Amcor should be relatively safe from potential future declines to the pound (or to the Australian dollar, for that matter).
In addition, Amcor’s products are used every day around the world. People around the world will continue to need packaging. Amcor’s emphasis on recyclable and reusable products should appeal to more environmentally conscious end users, while the merger with Bemis brings it huge prospects in developing markets.
Plus, with the merger into one gigantic manufacturing entity, Amcor has increased ability to negotiate better costs from its suppliers. This should make Amcor an unstoppable force in the packaging industry.
Amcor is also fairly resistant to recessions. As Amcor as it exists today (post merger) was not a publicly-traded company during the Great Recession, its earnings-per-share performance during the downturn is not available.
It is reasonable to assume Amcor’s earnings-per-share would decline somewhat during a recession, as the company’s global business model is reliant on economic growth. But it should continue paying (and raising) its dividend each year for the foreseeable future.
Valuation & Expected Returns
We expect Amcor to generate earnings-per-share of $0.70 for 2024. Based on this, shares of Amcor are currently trading at a price to earnings ratio of 14.8.
Even using a conservative multiple, we think that a recession-resistant Dividend Aristocrat with mid-single-digit growth prospects such as Amcor should trade for 15 times earnings. Therefore, we view the stock as fairly valued right now.
A fair five-year expected earnings-per-share growth rate of 4.0% and the 4.7% dividend yield will help boost shareholder returns. Overall, we expect annualized total annual returns of approximately 9.0% through 2028.
Final Thoughts
Amcor is uniquely positioned for strong growth in the coming years thanks to its recent acquisition that has opened up several new attractive end markets and provides an opportunity to unlock valuable synergies. Furthermore, the company has the balance sheet to fund growth investments, and share repurchases which should boost EPS moving forward.
As a result, we think that shares offer decent value here. With expectations of ~9% annualized total returns over the next half decade, we view Amcor as an attractive Hold right now.
That said, it could be an opportunity for dividend growth investors with a more conservative outlook, as its 4.1% yield is above average for the S&P 500 and its strong growth track record and recession-resistant business model make it an attractive long-term holding.
Finally, with its solid growth outlook, it will likely continue growing its dividend for the foreseeable future.
If you are interested in finding more high-quality dividend growth stocks suitable for long-term investment, the following Sure Dividend databases will be useful:
- The Dividend Kings List is even more exclusive than the Dividend Aristocrats. It is comprised of 54 stocks with 50+ years of consecutive dividend increases.
- The Dividend Achievers List: a group of stocks with 10+ years of consecutive dividend increases.
- The Dividend Champions List: stocks that have increased their dividends for 25+ consecutive years.
Note: Not all Dividend Champions are Dividend Aristocrats because Dividend Aristocrats have additional requirements like being in The S&P 500. - The Dividend Contenders List: 10-24 consecutive years of dividend increases.
- The Dividend Challengers List: 5-9 consecutive years of dividend increases.
- The Monthly Dividend Stocks List: contains stocks that pay dividends each month, for 12 payments per year.
- The 20 Highest Yielding Monthly Dividend Stocks
- The High Dividend Stocks List: high dividend stocks are suited for investors that need income now (as opposed to growth later) by listing stocks with 5%+ dividend yields.
The major domestic stock market indices are another solid resource for finding investment ideas. Sure Dividend compiles the following stock market databases and updates them monthly: