Here Is Why These 2 Dividend Aristocrat Stocks Are Hot Right Now

Given the concerns about interest rates, investors hungry for income should consider two top-notch dividend-drivers: 3M (MMM) and Pentair (PNR) .

Both offer over 2% yields, are recognized for decades of rising payouts and are poised to keep delivering profits to investors.

3M has earned its place in the record books by increasing dividends for 57 consecutive years.

With a yield of 2.55%, 3M, which is often viewed as a conglomerate, is ahead of sector rivals such as Crane, Danaher, PPG Industries and United Technologies.

Add to that a stellar record of returning wealth to shareholders by giving back $1.4 billion via dividends and share buybacks in the third quarter, and 3M is definitely a compelling opportunity.

The company also carries one of the largest exposures to emerging markets, and a gradual recovery in the landscape will only increase its chances to register greater gains.

Rates are expected to stay low for a while, and 3M could continue to offer competitive yields. The company is also well covered by almost $5 billion in free cash flow annually.

The stock, up 15.69% this year, boasts a robust financial position and solid fundamentals.

Meanwhile, industrial equipment and components provider Pentair is driven by its bargain valuation and fundamentals.

Interestingly, with nearly four decades of consistent dividend growth, Pentair is a lesser rival to industry heavyweights such as Emerson Electric and Parker Hannifin, both with nearly six-decade long track records.

However, Emerson Electric's payout ratio is above 75%, which is a basic cut-off for dividend safety, while Parker Hannifin's yield at less than 2% make for weaker alternatives.

Pentair has made a series of strategic moves that have raised expectations.

The company's valves and controls business, though its biggest, was a laggard in cash generation, and Chief Executive Randy Hogan was looking to cut losses and dispose of the division. Pentair successfully sold off that business to Emerson Electric for more than $3 billion.

The company's residual segments -- flow and filtration Solutions, water quality systems and technical solutions, should grow at a healthy pace.

In addition, Pentair's sales growth, tax rate reduction and smart capital allocation will help push earnings per share toward double-digit growth in the medium to long term.

Pentair's sustainable competitive advantages in other spheres, its ability to look for other areas and opportunities for expansion, the solid dividend numbers and its capital appreciation prospects make it a great investment option.

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The author is an independent contributor who at the time of publication owned none of the stocks mentioned.

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