Carlisle Companies Inc At Robert W Baird Global Industrial Conference

To become a Dividend King, it takes fifty years of consecutive dividend increases - which is hard to pull off, regardless of company size, sector, or market share. So, there are less than seventy of them today. That’s why joining this elite rank is an achievement—and who doesn’t get excited about stocks that are about to achieve something great?

How I Came Up With The Following Stocks

As a dividend investor, I like to keep tabs on dividend-growth stocks, so I have a watchlist of Dividend Aristocrats (MidCap & S&P 500). After accessing this list, I screened them using the following criteria:

• Annual Dividend Yield: Left blank.
• Current Analyst Rating: 4 (Moderate Buy) to 5 (Strong Buy).

After hitting “See Results,” I got four hits and arranged the results from highest to lowest dividend yields.

Now that I have my list, let’s look at why these companies should be on your radar, starting with the top one.

McDonald's Corporation

McDonald's Corporation is a multinational fast-food company and one of the largest restaurant chains in the world, with thousands of locations across over 100 countries. Its business model relies heavily on franchising, where individual operators run McDonald’s restaurants under the brand, contributing to its global presence and profitability.

McDonald’s is still the world's top reigning QSR (quick-service restaurant) based on revenue. And I mean to be honest, even if you don’t like its food, you have to admit the company’s global presence and substantial market share makes it an excellent investment choice.

But its market share isn’t all that McDonald's has going for it. The company also holds the title of Dividend Aristocrat, with a record of 48 consecutive years of increases. The company pays $1.77 per share quarterly, which translates to $7.08 annually and a 2.40% yield.

Chairman and CEO Chris Kempczinski underlines what makes the company thriving despite increasing global competition. “We will stay laser-focused,” he says, “on providing an unparalleled experience with simple, everyday value and affordability that our

consumers can count on as they continue to be mindful about their spending.”

Pentair Ltd

Pentair Ltd. specializes in water treatment and sustainable solutions. It offers a wide range of products and services to help manage, filter, purify, and conserve water.

Pentair’s offerings include residential water filtration systems, pool and spa equipment, industrial water treatment solutions, and commercial filtration systems. The company also focuses on sustainable solutions for water preservation.

The company’s latest quarterly dividend was 23 cents per share. This translates to a 92-cent annual rate and an admittedly less-than-stellar 0.89% yield. Still, the company has a lot of headroom for dividend increases due to its significantly low 21.83% dividend payout ratio. The company is also expected to hike payments in its next quarter, which will mark its 49th year of consecutive dividend increases.

Some people who were aware of Pentair in the late 2010s might wonder how the company had kept its Dividend Aristocrat status when quarterly dividends were 30 cents or more. This is because Pentair spun off its electrical business into nVent Electric plc, which has also increased its dividends since its inception.

Carlisle Companies Inc

Carlisle Companies Inc. is a manufacturing company based in the United States. It is known for providing construction materials and weatherproofing technology focusing on energy efficiency. It used to provide more diversified products and solutions like fluid tech and break and friction systems but has pivoted into a pure-play building products manufacturer in 2018.

The transformation was well-managed and well-received, with the company’s financials and stock performance seeing significant growth afterward.

It’s common for dividend companies to lose their status after such massive operational changes. We saw it with 3M Company (when it spun off Solventum and slashed its dividend) and Telephone and Data Systems (when it cut its dividends to support its 5G business venture).

However, Carlisle Companies continued to increase its dividends despite these changes. The company recently increased payouts from 85 cents to $1.00 per share quarterly, representing a 0.89% annual yield based on current prices. This is its 48th year of consecutive increases.

Final Thoughts

Reaching Dividend King status is challenging. The companies on this list have demonstrated that they have what it takes to compete on the global stage, and their exceptional commitment to shareholder value makes them top choices for income investors all around. As usual, be sure to do your research before making any investment decisions.

On the date of publication, Rick Orford did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

Launched on 05/22/2000, the iShares Core S&P Mid-Cap ETF (IJH) is a passively managed exchange traded fund designed to provide a broad exposure to the Mid Cap Blend segment of the US equity market.

The fund is sponsored by Blackrock. It has amassed assets over $92.96 billion, making it the largest ETFs attempting to match the Mid Cap Blend segment of the US equity market.

Why Mid Cap Blend

Compared to large and small cap companies, mid cap businesses tend to have higher growth prospects and are less volatile, respectively, with market capitalization between $2 billion and $10 billion. Thus they have a nice balance of growth potential and stability.

Blend ETFs are aptly named, since they tend to hold a mix of growth and value stocks, as well as show characteristics of both kinds of equities.

Costs

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

Annual operating expenses for this ETF are 0.05%, making it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 1.27%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Industrials sector--about 23% of the portfolio. Financials and Consumer Discretionary round out the top three.

Looking at individual holdings, Illumina Inc (ILMN) accounts for about 0.77% of total assets, followed by Carlisle Companies Inc (CSL) and Emcor Group Inc (EME).

The top 10 holdings account for about 1.51% of total assets under management.

Performance and Risk

IJH seeks to match the performance of the S&P MidCap 400 Index before fees and expenses. The S&P MidCap 400 Index measures the performance of the mid-capitalization sector of the U.S. equity market.

The ETF has added roughly 14.85% so far this year and it's up approximately 29.20% in the last one year (as of 11/06/2024). In the past 52-week period, it has traded between $48.10 and $63.91.

The ETF has a beta of 1.11 and standard deviation of 20.16% for the trailing three-year period, making it a medium risk choice in the space. With about 412 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares Core S&P Mid-Cap ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, IJH is a sufficient option for those seeking exposure to the Style Box - Mid Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.

The iShares Russell Mid-Cap ETF (IWR) and the Vanguard Mid-Cap ETF (VO) track a similar index. While iShares Russell Mid-Cap ETF has $37.77 billion in assets, Vanguard Mid-Cap ETF has $70.57 billion. IWR has an expense ratio of 0.19% and VO charges 0.04%.

Bottom-Line

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

Zacks Investment Research

The Vanguard S&P Mid-Cap 400 Growth ETF (IVOG) was launched on 09/09/2010, and is a passively managed exchange traded fund designed to offer broad exposure to the Mid Cap Growth segment of the US equity market.

The fund is sponsored by Vanguard. It has amassed assets over $1.07 billion, making it one of the average sized ETFs attempting to match the Mid Cap Growth segment of the US equity market.

Why Mid Cap Growth

With market capitalization between $2 billion and $10 billion, mid cap companies usually contain higher growth prospects than large cap companies, and are considered less risky than their small cap counterparts. These types of companies, then, have a good balance of stability and growth potential.

Qualities of growth stocks include faster growth rates compared to the broader market, as well as higher valuations and higher than average sales and earnings growth rates. Further, growth stocks have a higher level of volatility associated with them. When you consider growth versus value, growth stocks are usually the clear winner in strong bull markets but tend to fall flat in nearly all other environments.

Costs

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for this ETF are 0.15%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 1%.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Industrials sector--about 29.90% of the portfolio. Consumer Discretionary and Information Technology round out the top three.

Looking at individual holdings, Carlisle Cos Inc (CSL) accounts for about 1.38% of total assets, followed by Lennox International Inc (LII) and Emcor Group Inc (EME).

The top 10 holdings account for about 8.43% of total assets under management.

Performance and Risk

IVOG seeks to match the performance of the S&P MidCap 400 Growth Index before fees and expenses. The S&P MidCap 400 Growth Index measures the performance of growth stocks of medium-size U.S. companies.

The ETF has gained about 15.16% so far this year and it's up approximately 32.95% in the last one year (as of 11/01/2024). In the past 52-week period, it has traded between $87.33 and $117.16.

The ETF has a beta of 1.08 and standard deviation of 20.96% for the trailing three-year period, making it a medium risk choice in the space. With about 257 holdings, it effectively diversifies company-specific risk.

Alternatives

Vanguard S&P Mid-Cap 400 Growth ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, IVOG is an excellent option for investors seeking exposure to the Style Box - Mid Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.

The Vanguard Mid-Cap Growth ETF (VOT) and the iShares Russell Mid-Cap Growth ETF (IWP) track a similar index. While Vanguard Mid-Cap Growth ETF has $14.26 billion in assets, iShares Russell Mid-Cap Growth ETF has $15.82 billion. VOT has an expense ratio of 0.07% and IWP charges 0.23%.

Bottom-Line

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

Zacks Investment Research