By: Dividend Sensei
The market continues to march higher, powered by daily increases in earnings growth expectations. However, the market is now 36% historically overvalued.
Over the next five years, analysts expect just 4.3% annual returns from the S&P 500. And over the next 30+ years 7.9%. The dividend aristocrats are expected to deliver 10.6% returns.
The patient and disciplined long-term investor can do much better by buying the world’s best aristocrats that are trading at reasonable to attractive valuations.
One dividend aristocrat is a 4.8% yielding future Ultra SWAN dividend king that analysts expect to grow at almost 11% over time and deliver about 15% annual returns. It’s 30% undervalued and priced for 0.2% growth. Buffett owns almost $3 billion worth.
Another company is one of the fastest-growing dividend aristocrats and the highest quality company in America trading at a reasonable price. It’s the ultimate Buffett-style “wonderful company at a fair price” and expected to grow at almost 15% over time. That results in a long-term consensus total return potential of 17%, matching the market and aristocrat crushing returns it has delivered for 30 years.