The Best Dividend Aristocrat Stocks to Buy Now
Dividend aristocrat stocks are some the highest quality dividend stocks out there. They have been increasing their dividends for 25 consecutive years or more. I love investing in dividend growth stocks as they combine the best opportunity for residual income and long-term capital appreciation.
What is a dividend aristocrat stock?
The companies that comprise dividend aristocrats include all eleven sectors within the Standard & Poor’s 500 Index and can include both large cap growth and value companies. The companies have increased their dividend for at least 25 years. These companies typically generate significant free cash flow, which enables them to reward investors through dividends and (at times) stock buybacks as well.
Why invest in a dividend aristocrat stock?
These companies typically generate significant free cash flow and have demonstrated a significant track record of rewarding investors, making them safe, lucrative investments. The Dividend Aristocrat index has returned almost 4% more per year than the S&P 500 index with lower risk. If you invest wisely in undervalued dividend aristocrats, you can generate significant opportunity for enviable investment returns.
These stocks give you a great opportunity to take advantage of compound interest. I like to take any dividend proceed that I receive from my investments and reinvest them into dividend growth stocks. This has an immense ‘snowball’ effect on wealth building. At times, dividend aristocrats are at premium valuations due to their outstanding track record and high-quality operating performance. Therefore, value can be hard to come by. Develop a plan to buy these stocks at suppressed valuations. You will be surprised at how effective this method of investing can be.
List of Undervalued Dividend Aristocrat Stocks
I like buying dividend growth stocks that are attractively valued, have a strong financial position and which are forecast to grow earnings per share. This ensures that I will have stability and avoid the potential of a capital loss. You are in a position that you know the company is not about to cut their dividend or remove it as a whole. There is limited waiting for the valuation to approach market value either.
The companies are already outperforming their peers. Please note that I like to mainly evaluate undervalued dividend stocks based on their forward earnings per share. Unless, the stock is extremely undervalued based on their current earnings per share. The stock market is always forward looking. Do not forget that.
My Picks: 7 Undervalued Dividend Stocks:
- AFLAC Inc. (Ticker: AFL)
- Price / Earnings Ratio: 8.12x
- AT&T Inc. (Ticker: T)
- Price / Earnings Ratio: 8.0x
- Nucor Corporation (Ticker: NUE)
- Price / Earnings Ratio: 18.90x
- Forward Price / Earnings Ratio: 12.31x
- Cardinal Health, Inc. (Ticker: CAH)
- Price / Earnings Ratio: 19.66x
- Forward Price / Earnings Ratio: 11.61x
- T. Row Price Group, Inc. (Ticker: TROW)
- Price / Earnings Ratio: 18.41x
- Forward Price / Earnings Ratio: 14.31x
- Walgreens Boots Alliance, Inc. (Ticker: WBA)
- Price / Earnings Ratio: 20.29x
- Forward Price / Earnings Ratio: 11.57x
- Franklin Resources (Ticker: BEN)
- Price / Earnings Ratio: 34.24x
- Forward Price / Earnings Ratio: 12.06x
Investing is not always easy. Pick quality dividend stocks and you will be in great shape. Do not follow for the trap on investing in the next high-flying growth stocks. I recommend that you choose to invest in dividend growth stocks which will provide you with the best of both worlds (dividends AND growth).
What dividend aristocrat stocks are you currently buying? What dividend aristocrats do you think are undervalued? Please leave a comment below. I’d love to hear from you and discuss.
