3 Dividend Aristocrats Set to Increase Payouts in June

Dividend Aristocrats are second only to Dividend Kings in terms of stability. These companies have been increasing their dividends for 25 consecutive years, and the club only consists of a few dozen companies. And among these companies, even fewer are defensively oriented and offer good-enough dividends to be worth considering for your portfolio.

The broader market is increasingly focusing on defensive and dividend stocks due to market volatility increasing. These stocks are safe havens if you want extra income when things go wrong, or if you just want more ballast for your portfolio. Here are three Dividend Aristocrat stocks to look into.

Target (TGT)

Very few companies can match Target (NYSE:TGT) in consistency. The company traditionally announces its annual dividend increase in March. Last year, Target raised its quarterly dividend by 1.8% to $1.12 per share. The dividend yield is approaching 4.7%, so it’s a good time to consider the retail giant for your dividend portfolio before dividends are hiked again.

Target has a track record of 231 consecutive quarterly dividends paid since October 1967, when the company went public. Last year’s increase in June was quite modest compared to previous years, but it still maintained the company’s decades-long streak of annual dividend growth. The next regular dividend payment is scheduled for June 1, 2025, to shareholders on record on May 14. You should watch Target closely for the announcement of another increase shortly after that payment.

Target has a forward payout ratio of 47.35%, so there’s plenty of room for future increases even if earnings face pressure. The management has explicitly stated that paying dividends regularly is high on their priority list.

TGT stock was one of the biggest winners in the retail space in 2020 and early 2021, but it has since declined by 63% from that peak. You can now buy the stock for less than 11 times earnings.

Realty Income (O)

Realty Income (NYSE:O) is one of the most consistent names in the current market environment. Reliable income is increasingly hard to find, and despite this company being in the real estate sector, it is a beacon of consistency. This Dividend Aristocrat has increased its payouts for the past 30 years.

It pays dividends monthly and has a trend of increasing its monthly dividends in June. It declared its 121st dividend increase on June 13, 2023, and its 126th dividend increase on June 11, 2024.

The current 5.66% dividend yield is one of the best in the market among big defensive companies. Even though it’s a real estate company, it is very solid no matter the environment. It acquires and manages free-standing, single-tenant commercial properties subject to NNN (triple-net) leases. Under these agreements, tenants are responsible for property expenses. This means the income streams are quite predictable.

Real estate investments often deter investors in times like these, since fears that property values might drop or that tenants might default can cause sleepless nights. That’s exactly why O stock is trading at a discount even when you compare it to pre-pandemic prices. It’s not a very rational fear since the company has carefully selected and diversified tenants. Their top ten tenants constitute only 22% of their rent, with no single tenant exceeding 3.5%. Problems with any single tenant won’t really impact its performance. And it’s unlikely to happen in the first place since most of its tenants are recession-resistant.

Caterpillar (CAT)

Caterpillar (NYSE:CAT) is a stalwart of American industry, and it is likely to increase its dividends in June. It has a consistent pattern of raising its dividends every year in June. Investors can expect CAT’s Board of Directors to approve another raise to its quarterly payout and follow that pattern this year as well. The company boosted its dividend by 8% to $1.41 per share in June 2024.

The company has paid a cash dividend every year since its formation and has maintained quarterly dividends since 1933. Beyond dividends, the company also does share repurchases. It is the world’s biggest manufacturer of construction and mining equipment and had revenue of $64.8 billion in 2024.

The margins are some of the best in the industry. Operating margin of 20.2% is better than almost 95% of competitors, and it has a 3-year FCF growth rate of 27.9%. The 3-year average share buyback ratio of 3.7% is also better than 95.3% of companies in its industry.

The stock is down 20% in the past six months due to trade tensions and tariffs, and the company has been hit by fears over construction equipment. Management expects first-quarter 2025 revenue to be lower than 2024’s level, with weakening operating profit margins. This pessimistic forecast spooked investors since Caterpillar could potentially slow down.

Regardless, this isn’t going to affect dividends, and any slowdown will likely be temporary. The construction sector isn’t going anywhere soon and will rise and fall with the economic cycle. This stock follows that trend and is worth buying on the dips. You’re only paying 14 times earnings, and it comes with a 1.84% dividend yield. That may not seem like much, but you should remember Caterpillar also does solid buybacks.

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