Updated on January 24th, 2023 by Bob Ciura
DRIP stands for Dividend Reinvestment Plan. When an investor is enrolled in DRIP stocks, it means that incoming dividend payments are used to purchase more shares of the issuing company – automatically.
Many businesses offer DRIPs that require the investors to pay fees. Obviously, paying fees is a negative for investors. As a general rule, investors are better off avoiding DRIP stocks that charge fees.
Fortunately, many companies offer no-fee DRIP stocks. These allow investors to use their hard-earned dividends to build even larger positions in their favorite high-quality, dividend-paying companies – for free.
Dividend Aristocrats are the perfect form of DRIP stocks. Dividend Aristocrats are elite companies that satisfy the following:
- Are in the S&P 500 Index
- Have 25+ consecutive years of dividend increases
- Meet certain minimum size & liquidity requirements
You can download an Excel spreadsheet with the full list of all 65 Dividend Aristocrats (with additional financial metrics such as price-to-earnings ratios and dividend yields) by clicking the link below:
Think about the powerful combination of DRIPs and Dividend Aristocrats…
You are reinvesting dividends into a company that pays higher dividends every year. This means that every year you get more shares – and each share is paying you more dividend income than the previous year.
This makes a powerful (and cost-effective) compounding machine.
This article takes a look at the top 15 Dividend Aristocrats that are no-fee DRIP stocks, ranked in order of expected total returns from lowest to highest.
The updated list for 2023 includes our top 15 Dividend Aristocrats, ranked by expected returns according to the Sure Analysis Research Database, that offer no-fee DRIPs to shareholders.
You can skip to analysis of any individual Dividend Aristocrat below:
- #15: Exxon Mobil (XOM)
- #14: Aflac Incorporated (AFL)
- #13: Abbott Laboratories (ABT)
- #12: Illinois Tool Works (ITW)
- #11: Sherwin-Williams (SHW)
- #10: Federal Realty Investment Trust (FRT)
- #9: AbbVie Inc. (ABBV)
- #8: S&P Global (SPGI)
- #7: Emerson Electric (EMR)
- #6: Hormel Foods (HRL)
- #5: A.O. Smith (AOS)
- #4: Realty Income (O)
- #3: Johnson & Johnson (JNJ)
- #2: 3M Company (MMM)
- #1: Albemarle Corporation (ALB)
Additionally, please see the video below for more coverage.
No-Fee DRIP Dividend Aristocrat #15: Exxon Mobil (XOM)
- 5-year expected annual returns: -1.8%
Exxon Mobil is a diversified energy giant with a market capitalization above $300 billion. In 2021, the upstream segment generated 62% of the total earnings of Exxon while the downstream and chemical segments generated 8% and 30% of the total earnings, respectively.
In late October, Exxon reported (10/28/22) financial results for the third quarter of fiscal 2022. Its production in the Permian reached an all-time high but its total production remained flat sequentially. Oil prices dipped 12% sequentially but gas prices skyrocketed and refining margins improved due to the sanctions of western countries on Russia for its invasion in Ukraine. As a result, Exxon grew its earnings-per-share 7% sequentially, from $4.14 to an all-time high of $4.45, and exceeded the analysts’ consensus by $0.65.
Moreover, Exxon raised its dividend by 3% and thus it extended its dividend growth streak to 40 years. It also has a $30 billion share repurchase program for 2022-2023.
Click here to download our most recent Sure Analysis report on Exxon Mobil (preview of page 1 of 3 shown below):
No-Fee DRIP Dividend Aristocrat #14: Aflac Inc. (AFL)
- 5-year expected annual returns: 0.6%
Aflac was formed in 1955, when three brothers — John, Paul, and Bill Amos — came up with the idea to sell insurance products that paid cash if a policyholder got sick or injured. In the mid-20th century, workplace injuries were common, with no insurance product at the time to cover this risk.
Today, Aflac has a wide range of product offerings, some of which include accident, short-term disability, critical illness, hospital indemnity, dental, vision, and life insurance.
The company specializes in supplemental insurance, which pays out to policy holders if they are sick or injured, and cannot work. Aflac operates in the U.S. and Japan, with Japan accounting for approximately 70% of the company’s revenue. Because of this, investors are exposed to currency risk.
In general terms, Aflac has two sources of income: income from premiums and income from investments. Taking the items collectively, in addition to an active share repurchase program, reasonable expectations would be for 4% annual earnings-per-share growth over the next five years.
Click here to download our most recent Sure Analysis report on Aflac (preview of page 1 of 3 shown below):
No-Fee DRIP Dividend Aristocrat #13: Abbott Laboratories (ABT)
- 5-year expected annual returns: 3.7%
Abbott Laboratories is one of the largest medical appliances & equipment manufacturers in the world, comprised of four segments: Nutrition, Diagnostics, Established Pharmaceuticals and Medical Devices.
Abbott has increased its dividend for 50 years. Abbott has a large and diversified product portfolio, with leadership across multiple categories.
On October 19th, 2022, Abbott Laboratories reported third quarter results for the period ending September 30th, 2022. For the quarter, the company generated $10.4 billion in sales (61% outside of the U.S.), representing a 4.8% decrease compared to the second quarter of 2021. Adjusted earnings-per-share of $1.15 compared unfavorably to $1.40 in the prior year. Revenue was $750 million better than expected while adjusted earnings-per-share topped estimates by $0.21.
Click here to download our most recent Sure Analysis report on Abbott Laboratories (preview of page 1 of 3 shown below):
No-Fee DRIP Dividend Aristocrat #12: Illinois Tool Works (ITW)
- 5-year expected annual returns: 4.5%
Illinois Tool Works is a diversified multi-industrial manufacturer with seven unique operating segments: Automotive, Food Equipment, Test & Measurement, Welding, Polymers & Fluids, Construction Products and Specialty Products.
On October 25th, 2022, Illinois Tool Works reported third quarter 2022 results for the period ending September 30th, 2022. For the quarter, revenue came in at $4.0 billion, up 13% year-over-year. Sales were up 25% in the Automotive OEM segment, the largest out of the company’s seven segments.
Source: Investor Presentation
Five out of these seven segments had double-digit organic sales growth in the quarter. Net income equaled $727 million or $2.35 per share compared to $639 million or $2.02 per share in Q3 2021.
Illinois Tool Works updated its 2022 guidance and now sees full-year GAAP EPS to be between $9.45 and $9.55.
Illinois Tool Works has an excellent dividend growth history. Its payout ratio was relatively high during the last financial crisis, but the company was not forced to cut the payout. Today the dividend payout ratio sits at 53% of expected earnings, above the company’s long-term target, meaning that future dividend growth may trail earnings growth.
Click here to download our most recent Sure Analysis report on ITW (preview of page 1 of 3 shown below):
No-Fee DRIP Dividend Aristocrat #11: Sherwin-Williams (SHW)
- 5-year expected annual returns: 4.6%
Sherwin-Williams, founded in 1866, is North America’s largest manufacturer of paints and coatings.
The company distributes its products through wholesalers as well as retail stores (including a chain of more than 4,900 company-operated stores and facilities) to 120 countries under the Sherwin-Williams name.
The company also manufactures Dutch Boy, Pratt & Lambert, Minwax, Thompson’s Waterseal, Krylon, Valspar (acquired in 2017), and other brands.
Source: Investor Presentation
On October 25th, 2022, Sherwin-Williams released Q3 2022 results for the period ending September 30th, 2022. For the quarter, Sherwin-Williams generated revenue of $6.05 billion, a 17.5% increase compared to Q3 2021. This was driven by a 21.4% increase in the Americas Group, a 13.7% increase in the Performance Coatings Group and an 8.5% increase in the Consumer Brands Group. Adjusted earnings-per-share equaled $2.83 versus $2.09 in Q3 2021.
Sherwin-Williams also updated its 2022 guidance, anticipating low-double digit sales growth and $8.50 to $8.80 in adjusted earnings-per-share.
Click here to download our most recent Sure Analysis report on Sherwin-Williams (preview of page 1 of 3 shown below):
No-Fee DRIP Dividend Aristocrat #10: Federal Realty Investment Trust (FRT)
- 5-year expected annual returns: 4.7%
Federal Realty was founded in 1962. As a Real Estate Investment Trust, Federal Realty’s business model is to own and rent out real estate properties. It uses a significant portion of its rental income, as well as external financing, to acquire new properties. This helps create a “snow-ball” effect of rising income over time.
Federal Realty primarily owns shopping centers. However, it also operates in redevelopment of multi-purpose properties including retail, apartments, and condominiums. The portfolio is highly diversified in terms of tenant base.
Source: Investor Presentation
On November 3rd, 2022, Federal Realty reported Q3 results. It generated funds from operations per diluted share of $1.59 for the quarter compared to $1.51 for the third quarter 2021. FRT also generated comparable property operating income growth of 3.7% for the third quarter and 8.8% year-to-date.
It also achieved continued record levels of leasing with 119 signed leases for 562,859 square feet of comparable space in the third quarter, the highest third quarter volume on record. Federal Realty’s portfolio was 92.1% occupied and 94.3% leased, representing year-over-year increases of 190 basis points and 150 basis points, respectively and 10 basis point and 20 basis point increases, respectively quarter-over-quarter.
Click here to download our most recent Sure Analysis report on Federal Realty (preview of page 1 of 3 shown below):
No-Fee DRIP Dividend Aristocrat #9: AbbVie Inc. (ABBV)
- 5-year expected annual returns: 5.2%
AbbVie Inc. is a pharmaceutical company spun off by Abbott Laboratories (ABT) in 2013. Its most important product is Humira, which is now facing biosimilar competition in Europe, which has had a noticeable impact on the company. Humira will lose patent protection in the U.S. in 2023.
Even so, AbbVie remains a giant in the healthcare sector, with a large and diversified product portfolio.
AbbVie reported its third quarter earnings results on October 28. Revenues of $14.8 billion which was 3% more than AbbVie’s revenues during the previous year’s quarter. Revenue missed consensus by $130 million. Revenues were positively impacted by compelling growth from some of its newer drugs, including Skyrizi and Rinvoq, while Humira remained AbbVie’s biggest drug in terms of overall revenue contribution.
AbbVie earned $3.66 per share during the third quarter, which was 29% more than the company’s earnings-per-share during the previous year’s quarter. AbbVie’s earnings-per-share beat the consensus analyst estimate by $0.10. AbbVie’s guidance for 2022’s adjusted earnings-per-share was lowered slightly since our last update, the company now expects to earn $13.76 – $13.96 on a per-share basis this year.
Click here to download our most recent Sure Analysis report on AbbVie (preview of page 1 of 3 shown below):
No-Fee DRIP Dividend Aristocrat #8: S&P Global Inc. (SPGI)
- 5-year expected annual returns: 5.7%
S&P Global is a worldwide provider of financial services and business information. The company has generated strong growth over the past several years. It has increased its dividend for 49 consecutive years.
S&P reported third quarter earnings on October 27th, 2022, and results were mixed. Adjusted earnings-per-share came to $2.93, which was 13 cents better than expected. Revenue, however, despite rising 37% year-over-year to $2.86 billion, was $60 million light against estimates. Adjusted operating profit declined 200bps to 46.0% of revenue from the year-ago period.
The company has completed $11 billion of its $12 billion accelerated share repurchase program put in place earlier this year, and expects to complete the final $1 billion in December. Adjusted revenue fell 8% year-over-year, and declined 6% on a constant currency basis. The company is struggling as rates have risen, as that results in fewer debt issuances from around the world. On an adjusted basis, earnings-per-share declined from $3.05 to $2.93.
Click here to download our most recent Sure Analysis report on SPGI (preview of page 1 of 3 shown below):
No-Fee DRIP Dividend Aristocrat #7: Emerson Electric (EMR)
- 5-year expected annual returns: 6.9%
Emerson Electric is an ideal candidate for a no-fee DRIP program, as the company has increased its dividend for over 60 years in a row.
Emerson Electric was founded in Missouri in 1890 and since that time, it has evolved through organic growth, as well as strategic acquisitions and divestitures, from a regional manufacturer of electric motors and fans into a $49 billion diversified global leader in technology and engineering. Its global customer base and diverse product and service offerings afford it about $20 billion in annual revenue. The company has increased its dividend for 65 years in a row.
Emerson reported fourth quarter and full-year earnings on October 31st, 2022, and results were better than expected. The company posted adjusted earnings-per-share of $1.53, which was 14 cents better than expected. Revenue was up more than 8% to $5.36 billion, and was $30 million better than expected.
Emerson’s results were overshadowed by some very large portfolio moves. The company sold its InSinkErator food waste disposer business for $3 billion to Whirlpool Corporation (WHR). In addition, Emerson is selling a 55% stake in its Climate Technologies business to Blackstone for $9.5 billion, valuing the business at $14 billion. That includes about $5 billion in annual sales.
Emerson previously announced its divestiture of Them-O-Disc earlier this year, bringing total proceeds from divestitures to about $18 billion in cash for this year.
Click here to download our most recent Sure Analysis report on EMR (preview of page 1 of 3 shown below):
No-Fee DRIP Dividend Aristocrat #6: Hormel Foods (HRL)
- 5-year expected annual returns: 7.0%
Hormel Foods was founded back in 1891 in Minnesota. Since that time, the company has grown into a juggernaut in the food products industry with nearly $10 billion in annual revenue.
Hormel has kept with its core competency as a processor of meat products for well over a hundred years, but has also grown into other business lines through acquisitions.
Hormel has a large portfolio of category-leading brands. Just a few of its top brands include include Skippy, SPAM, Applegate, Justin’s, and more than 30 others.
Hormel reported fourth quarter and full-year earnings on November 30th, 2022, and results were somewhat mixed. Earnings-per-share beat expectations by two cents, coming in at 51 cents. Revenue, however, fell 5% to $3.3 billion, and missed estimates by $50 million.
Organic sales were up 2%, excluding the impact of the additional week that was present in the prior year’s fourth quarter. Operating income was $367 million, up 3%. Operating margin was 11.2%, which was 80 basis points higher than last year’s Q4. Earnings-per-share were flat at 51 cents.
Cash flow from operations came to $372 million, down 34% year-over-year. The company said it expects to see volatile costs and sales for the foreseeable future given supply chain constraints and inflationary pressures.
Click here to download our most recent Sure Analysis report on Hormel (preview of page 1 of 3 shown below):
No-Fee DRIP Dividend Aristocrat #5: A.O. Smith (AOS)
- 5-year expected annual returns: 7.5%
A.O. Smith is a leading manufacturer of residential and commercial water heaters, boilers and water treatment products. A.O. Smith generates the majority of its sales in North America, with the remainder from the rest of the world.It has category-leading brands across its various geographic markets.
Source: Investor Presentation
A.O. Smith is one of the top water stocks.
A.O. Smith reported its third quarter earnings results on October 27. The company generated revenues of $870 million during the quarter, which represents a decline of 4% compared to the prior year’s quarter. Revenues were flat in North America and declined by 13% in the rest of the world, due to currency rate movements and COVID-related shutdowns in China as well.
A.O. Smith generated earnings-per-share of $0.69 during the third quarter, which was down 15% on a year over year basis. This can mostly be explained by the combination of lower revenues and some margin headwinds from inflation and negative operating leverage. A.O. Smith has reaffirmed its guidance for 2022.
The company is forecasting earnings-per-share in a range of $3.05 and $3.15. At the midpoint of the guidance range, A.O. Smith’s earnings-per-share would grow by 3% for 2022.
Click here to download our most recent Sure Analysis report on A.O. Smith (preview of page 1 of 3 shown below):
No-Fee DRIP Dividend Aristocrat #4: Realty Income (O)
- 5-year expected annual returns: 8.7%
Realty Income is a retail-focused REIT that owns more than 6,500 properties. It owns retail properties that are not part of a wider retail development (such as a mall), but instead are standalone properties.
This means that the properties are viable for many different tenants, including government services, healthcare services, and entertainment.
Source: Investor Presentation
The company’s long history of dividend payments and increases is due to its high-quality business model and diversified property portfolio.
Realty Income announced its third quarter earnings results on November 3. The trust reported that it generated revenues of $840 million during the quarter, which was 71% more than the revenues that Realty Income generated during the previous year’s quarter.
Realty investments into new properties and its acquisition of VEREIT that closed in late 2021 impacted the year-over-year comparison to a large degree. Realty Income’s funds-from-operations rose substantially versus the prior year’s quarter, although AFFO-per-share growth was lower, due to share issuance.
Realty Income nevertheless managed to generate adjusted FFO-per-share of $0.98 during the quarter. Realty Income expects that its results during 2022 will represent a new record, as funds from operations are forecasted to come in at ~$3.90 on a per-share basis during fiscal 2022.
Click here to download our most recent Sure Analysis report on Realty Income (preview of page 1 of 3 shown below):
No-Fee DRIP Dividend Aristocrat #3: Johnson & Johnson (JNJ)
- 5-year expected annual returns: 8.7%
Johnson & Johnson is a diversified health care company and a leader in the area of pharmaceuticals (~49% of sales), medical devices (~34% of sales) and consumer products (~17% of sales). The company has annual sales in excess of $93 billion.
The company’s most recent earnings report was delivered on January 24th, 2023 for the fourth quarter and full year. For the fourth quarter, adjusted EPS of $2.35 beat by $0.11, while revenue of $23.7 billion missed slightly.
Full-year results can be seen in the image below:
Source: Investor Presentation
For 2023, the company expects 4% adjusted operational sales growth (excluding the COVID-19 vaccine) and 3.5% adjusted earnings-per-share growth.
Johnson & Johnson’s key competitive advantage is the size and scale of its business. The company is a worldwide leader in several healthcare categories. Johnson & Johnson’s diversification allows it to continue to grow even if one of the segments is underperforming.
The company has increased its dividend for 60 consecutive years, making it a Dividend King. The stock is owned by many well-known money managers. For example, J&J is a Kevin O’Leary dividend stock.
Click here to download our most recent Sure Analysis report on JNJ (preview of page 1 of 3 shown below):
No-Fee DRIP Dividend Aristocrat #2: 3M Company (MMM)
- 5-year expected annual returns: 15.7%
3M sells more than 60,000 products that are used every day in homes, hospitals, office buildings and schools around the world. It has about 95,000 employees and serves customers in more than 200 countries.3M is now composed of four separate divisions. The Safety & Industrial division produces tapes, abrasives, adhesives and supply chain management software as well as manufactures personal protective gear and security products.
The Healthcare segment supplies medical and surgical products as well as drug delivery systems. Transportation & Electronics division produces fibers and circuits with a goal of using renewable energy sources while reducing costs. The Consumer division sells office supplies, home improvement products, protective materials and stationary supplies.
3M announced fourth-quarter and full-year earnings results on January 24th:
Source: Investor Presentation
Fourth-quarter organic revenue increased 0.4%, while total revenue declined 5.9% to $8.1 billion due to the strong U.S. dollar. Adjusted EPS of $2.28 missed estimates by $0.11.
The company also announced that it will be spinning off its Health Care segment into a standalone entity, which would have had $8.6 billion of revenue in 2021.
The transaction is expected to close by the end of 2023.
Click here to download our most recent Sure Analysis report on 3M (preview of page 1 of 3 shown below):
No-Fee DRIP Dividend Aristocrat #1: Albemarle Corporation (ALB)
- 5-year expected annual returns: 17.0%
Albemarle is the largest producer of lithium and second largest producer of bromine in the world. The two products account for nearly two-thirds of annual sales. Albemarle produces lithium from its salt brine deposits in the U.S. and Chile. The company has two joint ventures in Australia that also produce lithium.
Albemarle’s Chile assets offer a very low-cost source of lithium.The company operates in nearly 100 countries and is composed of four segments. Albemarle produces annual sales of more than $5 billion.
Source: Investor Presentation
The company operates in nearly 100 countries and is composed of four segments: Lithium & Advanced Materials (49% of sales), Bromine Specialties (21% of sales), Catalysts (21% of sales), and Other (9% of sales).
Albemarle produces annual sales of $7.3 billion. It is one of the top lithium stocks.
Click here to download our most recent Sure Analysis report on Albemarle (preview of page 1 of 3 shown below):
Final Thoughts and Additional Resources
Enrolling in DRIP stocks can be a great way to compound your portfolio income over time.Additional resources are listed below for investors interested in further research for DRIP stocks.
For dividend growth investors interested in DRIP stocks, the 15 companies mentioned in this article are a great place to start. Each business is very shareholder friendly, as evidenced by their long dividend histories and their willingness to offer investors no-fee DRIP stocks.
At Sure Dividend, we often advocate for investing in companies with a high probability of increasing their dividends each and every year.
If that strategy appeals to you, it may be useful to browse through the following databases of dividend growth stocks:
- The High Yield Dividend Aristocrats List is comprised of the 20 Dividend Aristocrats with the highest current yields.
- The Dividend Achievers List is comprised of ~350 stocks with 10+ years of consecutive dividend increases.
- The Dividend Kings List is even more exclusive than the Dividend Aristocrats. It is comprised of 48 stocks with 50+ years of consecutive dividend increases.
- The High Yield Dividend Kings List is comprised of the 20 Dividend Kings with the highest current yields.
- The Blue Chip Stocks List: stocks that qualify as Dividend Achievers, Dividend Aristocrats, and/or Dividend Kings.
- The High Dividend Stocks List: stocks that appeal to investors interested in the highest yields of 5% or more.
- The Monthly Dividend Stocks List: stocks that pay dividends every month, for 12 dividend payments per year.
- 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.