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The Dividend Aristocrats are widely viewed as some of the best dividend growth stocks in the market, and there is good reason for this. The Dividend Aristocrats have provided strong risk-adjusted returns, with lower volatility than the S&P 500 Index over the last 10 years.

However, not all Dividend Aristocrats have safe dividends. Occasionally, a Dividend Aristocrat with deteriorating fundamentals will cut its dividend, such as AT&T (T) or VFC Corp. (VFC). As a result, investors should focus on safe Dividend Aristocrats such as the 3 discussed below.

Roper Technologies (ROP)

Roper Technologies is a specialized industrial company that manufactures products such as medical and scientific imaging equipment, pumps, and material analysis equipment. Roper Technologies also develops software solutions for the healthcare, transportation, food, energy, and water industries. The company generates around $5.4 billion in annual revenue.

On April 27th, 2023, Roper reported its Q1 results for the period ending March 31st, 2023. On a continuing operations basis, quarterly revenues and adjusted EPS were $1.47 billion and $3.90, indicating a year-over-year increase of 15% and 19%, respectively. The company’s momentum during the quarter remained strong, with organic growth coming in at 8%. Organic growth was once again driven by broad-based strength across its portfolio of niche-leading businesses.

Roper has proven consistent growth in its profitability over the years. Over the past five years, the company has grown its EPS by an annualized rate of 10.9%. The company’s pipeline of high-quality acquisition opportunities remains robust, and its existing software subsidiaries keep growing organically, adding to its recurring revenues.

The stock has a 2023 dividend payout ratio of 17%, which leaves lots of room to continue increasing its dividend. Shares currently yield 0.3%.

Chubb Ltd. (CB)

Chubb Ltd is a global provider of insurance and reinsurance services headquartered in Zurich, Switzerland. The company provides insurance services including property & casualty insurance, accident & health insurance, life insurance, and reinsurance.

Chubb continues to generate strong growth this year. For its fiscal first quarter, Chubb reported net earned premium of $10.1 billion, which was 16% more than the net earned premiums that Chubb generated during the previous year’s quarter. Net written premiums were up 9% year-over-year in Chubb’s P&C segment, and up by 11% at constant currency rates.

Chubb was able to generate net investment income of $1.1 billion during the quarter, which was up 35% year over year. Chubb generated earnings-per-share of $4.41 during the first quarter, which was below what the analyst community had forecasted.

Chubb’s solid profitability during the quarter can be explained by a reasonable combined ratio of 86%, despite some natural disasters that impacted Chubb’s catastrophe losses. Thanks to written premium growth and tailwinds from share repurchases, Chubb’s profits could be strong in the coming quarters, unless the company feels an impact from above-average catastrophe losses, which generally aren’t predictable. Chubb’s book value was up during the period, thanks to net profits and mark-to-market gains, ending the quarter at $127.90.

Chubb has a dividend payout ratio of 19% for the current fiscal year, while the company has increased its dividend for 31 consecutive years. The stock yields 1.8%.

Pentair plc (PNR)

Pentair is a water solutions company that operates in 3 segments: Aquatic Systems, Filtration Solutions, and Flow Technologies.

Pentair reported its first quarter earnings results on April 26. The company was able to generate revenues of $1.03 billion during the quarter, which was 3% more than the company’s revenues during the previous year’s quarter, a result that beat estimates easily.

Pentair recorded earnings-per-share of $0.91 for the first quarter, which was up 7% year-over-year. Pentair’s earnings-per-share beat the analyst consensus by a sizeable $0.14. Pentair updated its guidance for the current year during the earnings report.

Pentair’s dividend has grown consistently for decades, including during the last ten years, but the company cut its dividend in half when it spun off nVent. When we adjust for the spin-off of nVent, Pentair’s dividend growth track record remains intact. The payout ratio is not very high, which makes us believe that the dividend looks quite safe. Even an earnings decline such as the one during the last financial crisis would most likely not result in a dividend cut.

For fiscal 2023, Pentair is now forecasting earnings-per-share of around $3.65, which results in a forward payout ratio of 39%. The stock has a 1.4% yield.

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