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Time To Back Up Truck On 5 High-Yield Dividend Aristocrats


Money rain. Yes I did it! Portrait of joyous winner, young woman in casual shirt standing with clenched fists and closed eyes, celebrating victory and richness.

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Most investors like it when stocks go up. That’s understandable since we all invest with the goal of making money and growing our income streams.

The good news is that stocks go up 76% of all years.


Charlie Bilello

There are few guarantees on Wall Street. In fact, studies show that just two things are a long-term certainty.

  • Stocks go up over time
  • Diversification increases risk-adjusted returns over time

Today many investors are terrified at the prospect of stagflation, high inflation, and slow growth, causing the Fed to raise rates to the sky and resulting in a potential lost decade for stocks.

Stagflation does indeed hurt market returns, but the good news is that not even 20 years of high inflation has caused the US market to fail to deliver positive returns.


Charlie Bilello

During the late 1940s, we had 20% inflation after WWII, the highest in US history.

From 1929 (an epic bubble top) through 1949 we had the Great Depression, four recessions, WWII, and 20% inflation.

And stocks still delivered positive real returns. Unless you think we’re facing an apocalypse or that the future will be bleaker than 1929 to 1949, staying invested for the long term is the smart call.

And let’s not forget that bear markets are the best time to buy the world’s best companies and lock in Buffett-like returns from blue-chip bargains hiding in plain sight.


Ben Carlson

Are we headed for a recession in 2023?

  • 70% of economists think so
  • 75% of Fortune 500 CEOs think so
  • 85% of investors (according to JPMorgan) think so
  • About 50% of Americans think we’re already in a recession (the economic data clearly shows we’re not)

But guess what? Even if we get a recession in 2023, it’s likely to be mild.

  • No blue-chip economist team (the 16 most accurate in the world) thinks the US will experience a severe recession

How mild?


Deutsche Bank

Deutsche Bank was the first blue-chip economist team to forecast a recession in 2023.

  • They initially thought the Fed would raise rates to 5% to 6%
  • Now they expect a 4% terminal Fed funds rate
  • And -3.1% GDP growth in Q3 2023
  • And -0.4% growth in Q4 2023
  • Followed by positive growth starting in Q1 2024

Deutsche Bank calls this a “severe” recession, but in 2023 they expect -0.5% growth.

  • The 2nd mildest recession in history behind 2001’s -0.4%

In other words, the recession that appears likely (though the bond market disagrees at the moment) next year is likely to be one of the softest “hard landings” in history.

And yet…

  • 11% of US stocks are down 80+%
  • The S&P 500 has fallen 24.5% so far (peak decline)
  • The Nasdaq has been down 31%

And guess what? The bluest of blue-chips, the dividend aristocrats, are also trading at bargain-basement prices if you know where to look.

Some are already priced at valuations you only see at the bottom of severe recessionary bear market lows.

Except that the economy is still strong for now and the recession of 2023 that most people expect is very likely to be one of the mildest in history.

The intelligent investor is a realist who buys from pessimists and sells to optimists.” – Ben Graham, The Intelligent Investor

Or to put it another way, Mr. Market has become so pessimistic that many of the world’s best companies are crazy, stupid, cheap.

Wait for a fat pitch and then swing for the fences.” – Warren Buffett

So today I want to share with you five incredible high-yield dividend aristocrat bear market bargains.

These are some of the world’s safest and most dependable dividend growth blue-chips that are so undervalued analysts think they will deliver:

  • 42% total returns in the next 12 months
  • Fundamentals justify an average 12-month total return of 72%
  • They could potentially double in the next three years

It’s Time To Back Up The Truck On These 5 High-Yield Dividend Aristocrat Bargains


(Source: Dividend Kings Zen Research Terminal)

I’ve linked to deep-dive articles fully analyzing each company’s investment thesis, growth outlook, risk profile, valuation, and total return profile.

In a second I’ll summarize why these are some of the best bear market aristocrat bargains, but here’s the bottom-line up front.

Stanley Black & Decker 2024 Consensus Total Return Potential


(Source: FAST Graphs, FactSet)

If SWK grows as expected and returns to historical fair value, the most undervalued dividend aristocrat could deliver:

  • 132% total returns by 2024
  • 40% annual returns
  • Buffett and Joel Greenblatt-like return potential from a blue-chip bargain hiding in plain sight
  • And trading at a P/E only seen in severe recessionary bear markets
  • Great Recession… Pandemic… today
  • One of these isn’t like the other

Polaris 2024 Consensus Total Return Potential


(Source: FAST Graphs, FactSet)

If PII grows as expected and returns to historical market-determined fair value, it could deliver:

  • 122% total returns by 2024
  • 37% annual returns
  • Buffett and Joel Greenblatt-like return potential from a blue-chip bargain hiding in plain sight

V.F. Corp 2024 Consensus Total Return Potential


(Source: FAST Graphs, FactSet)

If VFC grows as expected and returns to historical market-determined fair value, it could deliver:

  • 94% total returns by 2024
  • 27% annual returns
  • Buffett and Peter Lynch-like return potential from a blue-chip bargain hiding in plain sight

Altria 2024 Consensus Total Return Potential


(Source: FAST Graphs, FactSet)

If MO grows as expected and returns to historical market-determined fair value, it could deliver:

  • 109% total returns by 2024
  • 34% annual returns
  • Buffett and Peter Lynch-like return potential from a blue-chip bargain hiding in plain sight
  • The last times’ MO was trading at the current P/E of under 9… Master Settlement period, Great Recession low, Pandemic… now
  • Even bearish analysts expect a 30% total return within a year

Lowe’s 2024 Consensus Total Return Potential


(Source: FAST Graphs, FactSet)

If LOW grows as expected and returns to historical market-determined fair value, it could deliver:

  • 92% total returns by 2024
  • 28% annual returns
  • Buffett and Peter Lynch-like return potential from a blue-chip bargain hiding in plain sight
  • LOW’s has only traded at a lower P/E in the Pandemic low and the Great Recession low
  • Already pricing in a recession that’s likely to be one of the mildest in history

Why I Trust These Aristocrats And So Can You

These aren’t just blue-chips; they collectively are Ultra SWANs, as close to perfect quality companies as exist on Wall Street.


(Source: Dividend Kings Zen Research Terminal)

How can we confirm that? By comparing their quality to the aristocrats themselves.

Much Higher Quality Than The Dividend Aristocrats

Metric Dividend Aristocrats 5 Aristocrat Bargains Winner Aristocrats

Winner 5 Aristocrat Bargains

Quality 87% 92% 1
Safety 89% 94% 1
Dependability 84% 91% 1
Long-Term Risk Management Industry Percentile 67%- Above-Average 70% Good 1
Average Credit Rating A- Stable A- Stable 1 1
Average 30-Year Bankruptcy Risk 3.01% 3.25% 1
Average Dividend Growth Streak (Years) 44.3 48.6 1
Average Return On Capital 100% 173% 1
Average ROC Industry Percentile 83% 89% 1
13-Year Median ROC 89% 121% 1
Total 2 9

(Source: Dividend Kings Zen Research Terminal)

Ben Graham considered a 20+ year dividend growth streak to be an important sign of excellent quality. These aristocrats average almost 50 years, nearly a dividend king portfolio.

Joel Greenblatt is one of the greatest investors in history.

  • 40% annual returns for 21 years

He considers return on capital to be his gold standard proxy for quality and moatiness.

  • S&P 500 ROC in 2021 14.6%
  • Aristocrats 100%
  • These aristocrats 173% (12X better than the S&P 500)
  • These aristocrats’ ROC is in the top 11% of their peers (wide moat)
  • Their 13-year median ROC is 121% (stable or improving moat)

S&P estimates the average bankruptcy risk over the next 30 years at 3.25% basically matching the aristocrat’s A- stable credit rating.

And six rating agencies estimate these aristocrats’ long-term risk-management is in the top 30% of their peers.

Long-Term Risk Management That You Can Trust

Classification Average Consensus LT Risk-Management Industry Percentile

Risk-Management Rating

S&P Global (SPGI) #1 Risk Management In The Master List 94 Exceptional
Strong ESG Stocks 78

Good – Bordering On Very Good

Foreign Dividend Stocks 75 Good
Ultra SWANs 71 Good
5 Aristocrat Bargains 70 Good
Low Volatility Stocks 68 Above-Average
Dividend Aristocrats 67 Above-Average
Dividend Kings 63 Above-Average
Master List average 62 Above-Average
Hyper-Growth stocks 61 Above-Average
Monthly Dividend Stocks 60 Above-Average
Dividend Champions 57 Average

(Source: DK Zen Research Terminal)

The 4.2% yield these aristocrats offer isn’t just very safe, it’s some of the safest high-yield on earth.

Rating Dividend Kings Safety Score (162 Point Safety Model) Approximate Dividend Cut Risk (Average Recession)

Approximate Dividend Cut Risk In Pandemic Level Recession

1 – unsafe 0% to 20% over 4% 16+%
2- below average 21% to 40% over 2% 8% to 16%
3 – average 41% to 60% 2% 4% to 8%
4 – safe 61% to 80% 1% 2% to 4%
5- very safe 81% to 100% 0.5% 1% to 2%
5 Aristocrat Bargains 94% 0.5% 1.3%
Risk Rating Low-Risk (70th industry percentile risk-management consensus) A- Stable outlook credit rating 3.25% 30-year bankruptcy risk

20% OR LESS Max Risk Cap Recommendation (Each)

(Source: DK Research Terminal)

The average probability of these aristocrats cutting their dividends in a historically average recession since WWII is approximately 0.5%. The probability in a severe recession (Pandemic or Great Recession level) is approximately 1.3%.

Ok, so now that you understand why I own all of these aristocrats, here’s why you might want to buy them today.

The Best Dividend Aristocrat Bargains On Wall Street


(Source: Dividend Kings Zen Research Terminal)

The S&P 500 trades at 15.9X forward earnings, a 6% historical discount.

These aristocrats trade at 11.2X forward earnings, a 41% historical discount to fair value.

  • The last time the S&P traded at 11.2X earnings was 2008, the peak of the Great Recession

Analysts expect 42% total returns in just the next 12 months, and they are so undervalued that a 72% total return would be justified by fundamentals.

Or to put it another way, if these aristocrats grow as expected and return to fair value, they could soar 72% and not become overvalued.

That’s the power of deep value aristocrat bargain hunting in a bear market.

So that’s why it’s potentially worth buying these aristocrats today. But here’s why they are worth owning for the long term.

Long-Term Return Fundamentals That Can Help You Retire In Safety And Splendor


(Source: Dividend Kings Zen Research Terminal)

For context, private equity and Cathie Wood at ARK are trying to achieve 15+% long-term returns.

To do that, they buy highly speculative tech companies or lock up investor money for 7 to 15 years with complex illiquid investments.

OR… you can buy these five aristocrats, some of the world’s best and 100% liquid companies.

Not only do they yield one of the safest 4.2% yields on earth (2.5X more than the S&P 500), but they are growing at 13.1% and analysts expect 17.2% long-term returns.

  • On par with the greatest investors in history

Adjusting the risk of these companies not growing as expected, going bankrupt, and inflation, you can realistically expect them to double your money every 8.4 years.

  • vs. 15 years for the S&P 500

Investment Strategy Yield LT Consensus Growth LT Consensus Total Return Potential Long-Term Risk-Adjusted Expected Return Long-Term Inflation And Risk-Adjusted Expected Returns Years To Double Your Inflation & Risk-Adjusted Wealth

10-Year Inflation And Risk-Adjusted Expected Return

5 Aristocrat Bargains 4.2% 13.06% 17.2% 12.1% 9.6% 7.5 2.50
Nasdaq 0.9% 15.9% 16.8% 11.8% 9.3% 7.8 2.43
Value 2.7% 13.3% 16.0% 11.2% 8.7% 8.2 2.31
High-Yield 3.1% 12.7% 15.8% 11.1% 8.6% 8.4 2.28
Dividend Growth 2.0% 11.5% 13.5% 9.5% 7.0% 10.3 1.96
Dividend Aristocrats 2.4% 8.5% 10.9% 7.6% 5.2% 14.0 1.65
REITs 3.0% 7.8% 10.8% 7.6% 5.1% 14.1 1.64
S&P 500 1.8% 8.5% 10.3% 7.2% 4.7% 15.2 1.59

(Sources: Morningstar, FactSet, YCharts)

Analysts expect these high-yield aristocrats to outperform not just the S&P and aristocrats over time but every major investment strategy, including the Nasdaq.

What does that potentially mean for you?

Inflation-Adjusted Consensus Total Return Potential: $1,000 Initial Investment

Time Frame (Years) 7.6% CAGR Inflation-Adjusted S&P Consensus 8.4% Inflation-Adjusted Aristocrats Consensus 14.7% CAGR Inflation-Adjusted 5 Aristocrat Bargain Consensus Difference Between Inflation-Adjusted 5 Aristocrat Bargain Consensus Vs S&P Consensus
5 $1,445.67 $1,493.29 $1,987.86 $542.18
10 $2,089.97 $2,229.92 $3,951.57 $1,861.60
15 $3,021.42 $3,329.92 $7,855.16 $4,833.74
20 $4,367.98 $4,972.54 $15,614.92 $11,246.94
25 $6,314.67 $7,425.45 $31,040.22 $24,725.55
30 $9,128.95 $11,088.36 $61,703.50 $52,574.55

(Source: DK Research Terminal, FactSet)

Analysts and the bond market expect these aristocrats to potentially double the market’s annual inflation-adjusted returns over time.

That means a potentially life-changing amount of wealth compounding.

Time Frame (Years) Ratio Aristocrats/S&P Consensus Ratio Inflation-Adjusted 5 Aristocrat Bargain Consensus vs S&P consensus
5 1.03 1.38
10 1.07 1.89
15 1.10 2.60
20 1.14 3.57
25 1.18 4.92
30 1.21 6.76

(Source: DK Research Terminal, FactSet)

These aristocrats are expected to potentially outperform the S&P and Nasdaq by 2X over the next 10 years, almost 4X over the next 20, and possibly as much as 7X over the next 30 years.

OK, so the world’s best companies, trading at a 40% discount and 11X earnings, and the potential to double the market’s real returns for years or even decades.

Sounds great in theory. But what evidence do we have that these aristocrats can deliver anything close to 17% long-term returns?

Historical Returns Since October 1987 (Annual Rebalancing)

The future doesn’t repeat, but it often rhymes – Mark Twain

Past performance is no guarantee of future results, but studies show that blue-chips with relatively stable fundamentals over time offer predictable returns based on yield, growth, and valuation mean reversion.

valuation is axlxmost allx that matters for long-term stock returns

Bank of America

So how did these aristocrats do over the last 35 years, when 97% of the returns were the results of fundamentals, not luck?


(Source: Portfolio Visualizer Premium)


(Source: Portfolio Visualizer Premium)

Including the 24% decline in 2022 (the reason these aristocrats are such bargains today) these Ultra SWANs have delivered 16% annual returns over the last 35 years.

  • 174X returns
  • 69X inflation-adjusted returns
  • 7X better than the S&P 500
  • What analysts expect in the future

What if we smooth out for bear markets?


(Source: Portfolio Visualizer Premium)

What do analysts expect in the future? 17.2% annual returns. What did these aristocrats deliver over the last 35 years? Average 15-year rolling returns of 17.2%.

That’s double the S&P 500’s 8.1% return. Analysts expect 2X the market’s returns in the future, just like they’ve delivered for the last 35 years.

From bear market lows, they are capable of as much as 23% annual returns for the next 15 years.

  • 23.3X return in 15 years
  • vs. the S&P 500’s best 15-year return from bear market lows of 5.7X

And what about income growth?

Portfolio 1988 Income Per $1,000 Investment 2022 Income Per $1,000 Investment Annual Income Growth Starting Yield 2021 Yield On Cost
5 Aristocrat Bargains $27 $6,952 17.73% 2.7% 695.2%

(Source: Portfolio Visualizer Premium)

How does 18% annual income growth sound? That’s on par with what the Nasdaq has delivered over the last 20 years but from a group of companies that yields 4X as much.

What about the future? Here’s what analysts expect.

Analyst Consensus Income Growth Forecast Risk-Adjusted Expected Income Growth Risk And Tax-Adjusted Expected Income Growth

Risk, Inflation, And Tax Adjusted Income Growth Consensus

19.1% 13.3% 11.3% 8.8%

(Source: DK Research Terminal, FactSet)

Analysts expect 19% annual income growth. Adjusting for the risk of these companies not growing as expected, inflation, and taxes you can reasonably expect 8.8% long-term real income growth.

Now compare that to what they expect from the S&P 500.

Time Frame S&P Inflation-Adjusted Dividend Growth S&P Inflation-Adjusted Earnings Growth
1871-2021 1.6% 2.1%
1945-2021 2.4% 3.5%
1981-2021 (Modern Falling Rate Era) 2.8% 3.8%
2008-2021 (Modern Low Rate Era) 3.5% 6.2%
FactSet Future Consensus 2.0% 5.2%

(Sources: S&P, FactSet, Multipl.com)

What about a 60/40 retirement portfolio?

  • 0.5% consensus inflation, risk, and tax-adjusted income growth.

In other words, these 5 dividend aristocrat bargains offer:

  • Almost 2.5X the market’s yield (and a much safer yield at that)
  • Almost 4.5X its long-term inflation-adjusted consensus income growth potential
  • 17X better long-term inflation-adjusted income growth than a 60/40 retirement portfolio

This is the power of dividend aristocrat bargain hunting in a bear market.

Bottom Line: It’s Time To Back Up The Truck On These 5 Dividend Aristocrat Bargains

Don’t get me wrong, I’m not saying that if stocks keep falling, these five aristocrat bargains can’t get cheaper.

Dividend safety and fundamental quality have zero to do with short-term price volatility.


(Source: Portfolio Visualizer Premium)

During periods of market turmoil, the world’s safest dividend blue-chips keep growing their dividends but they can fall a lot.


(Source: Portfolio Visualizer Premium)


(Source: Portfolio Visualizer Premium)

But while they can be highly volatile at times, they also tend to recover faster.

After the Great Recession, when they fell 47%, they recovered to new record 2 years earlier than the S&P 500.

How To Turn These 5 Aristocrat Bargains Into An Ultra Sleep Well At Night Retirement Portfolio

  • 33% aristocrat bargains (6.67% each)
  • 33% Vanguard high-yield ETF (VYM)
  • 28.33% long bonds (EDV)
  • 5% cash (VGSH)

Through a prudent allocation to cash and bonds, you can turn these five Ultra SWAN aristocrat bargains into a recession-optimized ultra sleep well at night retirement portfolio.

  • The Zen Extraordinary Ultra SWAN Deep Value Aristocrat retirement portfolio
  • ZEUS Deep Value Aristocrat

Historical Returns Since December 2007 (Annual Rebalancing)


(Source: Portfolio Visualizer Premium)

One that historically has beaten the market with double-digit returns, but with 30% less annual volatility, and half the peak decline of the S&P during the 2nd bigger market crash in US history.

  • 7% smaller decline than a 60/40 retirement portfolio during the Great Recession
  • But with 3.4% higher annual returns
  • 22% better negative volatility-adjusted returns than the aristocrats alone
  • 37% better negative volatility-adjusted returns than a 60/40
  • 50% better negative-volatility adjusted returns than the S&P 500

(Source: Portfolio Visualizer Premium)

This ZEUS deep value aristocrat portfolio delivered 56% better inflation-adjusted returns than a 60/40 and with smaller peak declines in even the most extreme market crashes.

Market and 60/40 beating returns with much higher and safer yield and lower volatility? Now we’re cooking with gas.


(Source: Portfolio Visualizer Premium)

By adding cash and bonds and a high-yield ETF, we built a wonderfully diversified and prudently risk-managed Ultra SWAN portfolio. One that cut the peak pandemic decline by 66%.

  • Lower declines than a 60/40, the Nasdaq (-13%), the S&P and the aristocrats alone

What about future volatility?

75-Year Monte Carlo Simulation: Stress Testing The Future

  • 4% annual withdrawal rate
  • Post-tax returns, top tax bracket (for conservatism)
  • $510K starting value (average retired couple’s savings)

(Source: Portfolio Visualizer Premium)

Including a 4% annual withdrawal rate (2.6% is the safe withdrawal rate for the 60/40 according to FactSet), this portfolio is 80% statistically likely to deliver 6.5% to 9.8% long-term inflation-adjusted returns.

  • 80% likely to suffer 17% to 29% bear markets in the future (not including withdrawals)
  • 24% to 42% bear markets including withdrawals
  • A safe withdrawal rate of 5.5% to 11.2%

Are you worried about rising interest rates, inflation, recession, and one of the most volatile stock markets we’ve ever seen?

Don’t you wish you could trust your hard-earned savings to experts who have an impeccable track record of growing very safe dividends in all economic and market conditions, for over 35 years?

Well then LOW, SWK, PII, VFC, and MO might be just what you’re looking for.

  • Very safe 4.2% yield
  • A- average credit rating
  • 70th percentile long-term risk management
  • Higher quality and safer than the dividend aristocrats
  • 13% consensus long-term growth
  • 17% consensus long-term total return potential vs. 17% returns since 1987
  • 41% undervalued
  • 11.2X earnings
  • Analysts expect 42% total return within a year
  • 72% total return would be justified by fundamentals

Whether you buy these aristocrats separately, together, or combined with a prudent allocation to other ETFs, cash, and bonds, the point is clear.

Fortunes are made in bear markets.” – Todd Sullivan

“Be greedy when others are fearful.” – Warren Buffett

“Luck is what happens when preparation meets opportunity.” – Seneca

If you want to retire rich and stay rich in retirement, you need to take charge of your financial destiny and make your own luck on Wall Street.

And by focusing on safety and quality first, and prudent valuation and sound risk management always, retiring in safety and splendor becomes a function of time, patience, and discipline… not luck.

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