In this article, we will take a look at some of the best dividend aristocrat stocks.
Dividend Aristocrats refer to companies with a strong track record of increasing their dividends for at least 25 consecutive years. These stocks are often favored by investors due to their reputation as dependable sources of income. A company’s ability to raise dividends consistently over decades is considered an indicator of financial resilience and stability. In addition, these stocks have demonstrated strong long-term performance, often surpassing other asset classes. According to a ProShares report citing FactSet data, the Dividend Aristocrat Index delivered a notable return of 27.7% between March 2022 and April 2023, outperforming the broader market, which posted a 25.2% return over the same period.
A company’s history of annual dividend increases, regardless of its length, does not guarantee that future payouts are secure. However, when management frequently highlights these streaks in earnings calls and annual reports, it suggests a strong commitment to maintaining and growing dividends when making capital allocation decisions. Even so, history shows that some Dividend Aristocrats have had to reduce their payouts, leading to their removal from the list.
The year 2020 served as a significant test of dividend durability among these companies. When the COVID-19 pandemic struck in March, consumer demand in several industries declined sharply. As a result, numerous companies either cut or suspended their dividends, some voluntarily and others as a condition of accepting government stimulus funds. By the end of 2020, a total of 66 companies in the broader market had distributed less in dividends than they had in 2019, according to a report by Morningstar.
While a dividend cut poses a risk, it can also create opportunities. Short-term investors focused solely on high dividends often sell their shares when a company reduces its payout. This can open the door for long-term, value-oriented investors to purchase shares at more attractive prices. Simon Adler, value equity fund manager at Schroders, made the following comment about this:
“We would never tell a company what its dividend should or should not be. Instead, we prefer to afford the management teams of companies in which we invest the space and the confidence to cut their dividend if they feel it is unsustainable or the money is better spent elsewhere. Far better it takes that approach than overstretch its balance sheet to pay a dividend it cannot afford.”
Dividend-paying stocks are often linked to value investing, as they typically offer higher yields and stronger financial fundamentals compared to growth stocks. A report from S&P Dow Jones Indices noted that income-focused investment strategies tend to exhibit characteristics associated with value stocks. Companies with high dividend yields and lower valuations frequently draw investor interest. However, the report also highlighted that the Dividend Aristocrats Index is not strictly value-focused. Instead, it maintains a balance between growth and value stocks. A long-term analysis of the index from 1999 to 2022 showed that, on average, 59.04% of its holdings fell into the value category, while 40.94% were classified as growth stocks. Given this, we will take a look at some of the best dividend aristocrat stocks.
Our Methodology:
For this list, we scanned the list of the Dividend Aristocrats, the stocks that have raised their payouts for 25 years or more. From this group, we identified 10 stocks with the lowest price-to-earnings (P/E) ratios. The chosen stocks featured in the list exhibit a forward P/E ratio below 25 as of February 14. The stocks are ranked in ascending order of their P/E ratios.
At Insider Monkey, we are obsessed with hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
10. International Business Machines Corporation (NYSE:IBM)
Forward P/E Ratio: 23.8
International Business Machines Corporation (NYSE:IBM) is an American multinational tech company that offers a wide range of related services and products to its consumers. Oppenheimer believes that investors have yet to fully recognize the company’s shift toward a stronger focus on software. The investment firm began coverage of the tech giant with an “Outperform” rating. Analyst Param Singh set a price target of $320 per share, indicating a potential upside of approximately 28%. Singh also expects IBM’s valuation to increase over time as the market gains a better understanding of its strategic move toward software.
In the fourth quarter of 2024, International Business Machines Corporation (NYSE:IBM) announced revenue of $17.6 billion, marking a 1% increase from the same quarter in the previous year. The Software segment saw double-digit revenue growth, driven by strong demand for Red Hat. Businesses across the globe are turning to IBM for AI-powered transformation, with its generative AI segment exceeding $5 billion in total revenue—an increase of nearly $2 billion from the prior quarter.
International Business Machines Corporation (NYSE:IBM) reported a strong cash performance in 2024, generating $13.4 billion in operating cash flow and $12.7 billion in free cash flow. During the fourth quarter, IBM distributed $1.5 billion to shareholders through dividend payments. It currently offers a quarterly dividend of $1.67 per share and has a dividend yield of 2.57%, as of February 14. IBM is one of the best dividend aristocrat stocks as the company has raised its payouts for 29 consecutive years.
9. Dover Corporation (NYSE:DOV)
Forward P/E Ratio: 21.55
Dover Corporation (NYSE:DOV) is an American manufacturer of industrial products, headquartered in Illinois. The company offers a diverse range of innovative equipment and components. Dover has been adapting to an evolving industrial environment characterized by strategic transitions and market fluctuations. As it gears up for future expansion, both investors and analysts are keeping a close watch on its performance and key decisions. This in-depth review explores the company’s latest financial results, strategic initiatives, and market standing to offer insight into its current position and growth potential. In the past 12 months, the stock has surged by over 26%.
In the fourth quarter of 2024, Dover Corporation (NYSE:DOV) reported revenue of $1.9 billion, reflecting a 1% increase. GAAP earnings from continuing operations totaled $238 million, marking an 8% decline, while GAAP diluted EPS from continuing operations dropped 7% to $1.72. On an adjusted basis, earnings from continuing operations remained steady at $305 million, with adjusted diluted EPS rising 1% to $2.20.
Dover Corporation (NYSE:DOV)’s cash position also remained strong. The company ended the quarter with over $1.8 billion available in cash and cash equivalents, up significantly from $400 million in the same period last year. In FY24, it generated over $1 billion in operating cash flow. The company offers a quarterly dividend of $0.515 per share and has a dividend yield of 1.02%, as of February 14. It holds one of the longest dividend growth streaks in the market, spanning over 68 years, which makes DOV one of the best dividend aristocrat stocks on our list.
8. Nucor Corporation (NYSE:NUE)
Forward P/E Ratio: 19.38
Nucor Corporation (NYSE:NUE) ranks eighth on our list of the best dividend aristocrat stocks. The North Carolina-based steel production company also offers related products to its consumers. In the fourth quarter of 2024, the company posted revenue of $7.08 billion, reflecting a decline of over 8% compared to the same period last year. Despite this drop, the company surpassed analysts’ expectations by $348 million. Management acknowledged that steel demand weakened in 2024 but noted that market conditions are starting to improve and are expected to strengthen further in 2025. As the US economy embarks on several steel-intensive megatrends, Nucor, as the nation’s largest and most diversified steel producer, is well-positioned to capitalize on these opportunities.
Nucor Corporation (NYSE:NUE) is generating strong returns this year, surging by nearly 20% since the start of 2025. The company sets itself apart by expanding into higher-margin specialty products like data center racks and industrial garage doors, which provide stability to its profitability, reducing reliance on the cyclical steel market. Despite recent challenges, the company remains profitable and maintains a low debt-to-equity ratio of 0.33. By strategically utilizing downturns to acquire companies and invest in assets, Nucor is positioning itself well for long-term growth.
Nucor Corporation (NYSE:NUE) currently offers a quarterly dividend of $0.55 per share, having raised it by 1.9% in December 2024. The stock’s dividend yield on February 14 came in at 1.6%. The company has attracted investors due to its strong financial health and dividend strategy. It finished the quarter with more than $4 billion in cash and cash equivalents and generated close to $4 billion in operating cash flow for the fiscal year 2024. The company has been rewarding shareholders with growing dividends for the past 52 years.
7. NextEra Energy, Inc. (NYSE:NEE)
Forward P/E Ratio: 18.8
NextEra Energy, Inc. (NYSE:NEE) is an American clean energy company that generates, transmits, and sells electricity. In the past year, the stock has surged by over 22%. The company is built on a solid foundation and owns one of the largest portfolios of solar and wind energy assets worldwide. This segment has benefited from the global transition away from fossil fuels and toward cleaner, renewable energy sources. As the shift to renewable power continues, the company is well-positioned for sustained growth in the future.
In the fourth quarter of 2024, NextEra Energy, Inc. (NYSE:NEE)’s adjusted earnings per share (EPS) rose by about 2% compared to the previous year, while its full-year EPS grew by 8.2%. Looking ahead, the company is targeting an adjusted EPS growth of 6% to 8% by 2027, meaning it will achieve the upper end of its target in 2024.
NextEra Energy, Inc. (NYSE:NEE) is a reliable dividend payer due to its solid cash flow. In FY24, the company generated more than $13.2 billion in operating cash flow. Looking ahead, it expects to raise its dividends per share by around 10% annually through at least 2026, starting from its 2024 level. Recently, the company declared a 10% hike in its quarterly dividend to $0.5665 per share. This marked the company’s 29th consecutive year of dividend growth, which makes NEE one of the best dividend aristocrat stocks. The stock supports a dividend yield of 3.01%, as of February 14.
6. Caterpillar Inc. (NYSE:CAT)
Forward P/E Ratio: 17.61
Caterpillar Inc. (NYSE:CAT) is an American company that specializes in construction, mining, and other engineering equipment. The company’s leadership in manufacturing heavy machinery and equipment is strengthened by its focus on innovation and operational efficiency. The company actively invests in technology and process enhancements to overcome supply chain challenges and the cyclical nature of the industrial sector. As global infrastructure development and construction projects expand, Caterpillar is well-positioned to capitalize on the rising demand for its products. In the past 12 months, the stock has surged by over 11.5%.
In the fourth quarter of 2024, Caterpillar Inc. (NYSE:CAT) reported revenue of $16.2 billion, which fell by 5% from the same period last year. The decline was mainly attributed to a $859 million drop in sales volume, which was primarily caused by changes in dealer inventories and reduced equipment sales to end users. Dealer inventory fell by $1.3 billion in the fourth quarter of 2024, compared to a $900 million decrease in the same period of 2023. Its profit per share came in at $5.78, compared with $5.28 in the prior-year period.
Caterpillar Inc. (NYSE:CAT) demonstrated a strong cash position in 2024. During the year, the company generated $12.0 billion in operating cash flow and finished the fourth quarter with $6.9 billion in cash. Over the course of the year, it allocated $7.7 billion for repurchasing Caterpillar shares and $2.6 billion for dividend payments. The company offers a quarterly dividend of $1.41 per share and has a dividend yield of 1.6%, as of February 14. It is one of the best dividend aristocrat stocks, as the company has been growing its payouts for 30 consecutive years.
5. Genuine Parts Company (NYSE:GPC)
Forward P/E Ratio: 14.84
Genuine Parts Company (NYSE:GPC) is an American industrial supplies company that deals in automotive and industrial replacement parts. The company runs its automotive parts division under the NAPA brand, consisting of approximately 2,000 company-owned stores and about 4,800 independently operated stores across North America. The Automotive Parts Group is a major part of the business, contributing over 60% of the company’s total revenue. This segment offers a broad selection of replacement parts for cars, trucks, and other vehicles, excluding body parts.
Genuine Parts Company (NYSE:GPC) has not performed well in 2024, as the stock has fallen by nearly 14% in the past 12 months. The company is currently facing two major challenges in demand. The first is a slowdown in industrial production within its main US market, which is more significant than the growth in international demand. The second challenge is a slight drop in sales of replacement automotive parts.
That said, Genuine Parts Company (NYSE:GPC)’s cash position makes it a reliable investment option. In the first nine months of 2024, the company generated $1.1 billion in operating cash flow and $711 million in free cash flow. During this period, it returned $411 million to shareholders in the form of dividends. The company’s quarterly dividend comes in at $1.00 per share for a dividend yield of 3.22%, as of February 14. It maintains a 68-year streak of consistent dividend growth, which makes GPC one of the best dividend aristocrat stocks on our list.
4. Chevron Corporation (NYSE:CVX)
Forward P/E Ratio: 13.97
Chevron Corporation (NYSE:CVX) ranks fourth on our list of the best dividend aristocrat stocks. The American energy company produces crude oil, natural gas, and many other essential products. The company recently announced a partnership to create scalable power solutions using natural gas turbines, coupled with carbon capture and storage, to address the growing energy needs of US data centers. In addition, it successfully commenced gas production at the Sanha Lean Gas Connection project, securing a consistent natural gas supply for the Angola Liquefied Natural Gas facility.
In the fourth quarter of 2024, Chevron Corporation (NYSE:CVX) reported earnings of $2.06 per share, falling short of analyst expectations due to weaker margins, which led its refining business to report a loss for the first time since 2020. However, the company generated $52.23 billion in revenue for the quarter, a 10.7% increase from the previous year, surpassing Wall Street’s forecasts by over $3.8 billion. This growth was driven by a 7% rise in global production and a 19% increase in US production, both hitting record levels for 2024. Moreover, the company raised nearly $8 billion from asset sales and ended the year with a solid balance sheet, maintaining a net debt ratio of 10%.
Chevron Corporation (NYSE:CVX) ended FY24 with a strong cash position, generating $31.5 billion in operating cash flow and $15 billion in free cash flow. The company returned almost $12 billion to shareholders through dividends. Furthermore, it repurchased over $15 billion of its own shares in 2024, continuing a trend of share buybacks it has maintained in 17 of the past 21 years. Chevron currently pays a quarterly dividend of $1.71 per share, having raised it by 4.9% in January. This was the company’s 38th consecutive year of dividend growth. The stock offers a dividend yield of 4.37%, as of February 14.
3. Exxon Mobil Corporation (NYSE:XOM)
Forward P/E Ratio: 13.83
Exxon Mobil Corporation (NYSE:XOM) is an American oil and gas company that is engaged in the exploration, production, refining, and distribution of petroleum products. In Q4 2024, the company posted revenue of $83.4 billion, which represents a 1.1% decrease compared to the same quarter the previous year. Since 2019, the company has generated $12.1 billion in Structural Cost Savings, surpassing its competitors and more than compensating for inflation and growth. Its return on capital employed for the year was the highest in the industry at 12.7%, with a five-year average of 10.8%.
Exxon Mobil Corporation (NYSE:XOM) has surged by about 8% in the past 12 months. The company remains a major player in the global fossil fuel sector while also ramping up its efforts in low-carbon energy. As part of its strategy for 2030, it plans to invest as much as $30 billion in low-emission projects from 2025 to 2030. Furthermore, it has secured the US’ largest offshore carbon dioxide storage site in collaboration with the Texas General Land Office. The company is also progressing in building the world’s largest facility for low-carbon hydrogen production, which is expected to produce up to 1 billion cubic feet of hydrogen daily.
Exxon Mobil Corporation (NYSE:XOM), one of the best dividend aristocrat stocks, currently pays a quarterly dividend of $0.99 per share for a dividend yield of 3.64%, as of February 14. The company reported a robust cash position in FY24, generating $55 billion in free cash flow, marking its third-highest performance in the last ten years. The total free cash flow for the year was $36.2 billion. The company returned $16.7 billion to shareholders in dividends and has plans to continue its $20 billion annual share repurchase program through 2026. In addition, it has been rewarding shareholders with growing dividends for the past 42 years.
2. Chubb Limited (NYSE:CB)
Forward P/E Ratio: 12.44
Chubb Limited (NYSE:CB) is an American Swiss insurance company that offers a wide range of insurance products, including property and casualty, life insurance, and reinsurance, with operations across 54 countries. The stock has fallen by over 2% since the start of 2025. The company is facing a setback due to recent wildfire losses, which are projected to reduce free cash flow by $1.5 billion. However, given its history of successfully managing substantial losses, including those from Hurricane Ian and Hurricane Milton, Chubb remains well-prepared to navigate this challenge.
In the fourth quarter of 2024, Chubb Limited (NYSE:CB) reported net premiums of over $12 billion, reflecting a 4% increase from the same period the previous year. Its main Property & Casualty (P&C) segment, which accounted for approximately 84% of total net premiums written in 2024, saw steady growth with a 7.7% rise year-over-year. Net income for the P&C segment reached $5.8 billion, while the combined ratio remained strong at 86.6%, showing a slight improvement from the prior year. This consistent growth underscores the company’s strong position in its core business.
Chubb Limited (NYSE:CB)’s cash position also came in strong as it generated $4.57 billion in operating cash flow. In addition, the company distributed approximately $1.1 billion to shareholders through dividends and share buybacks. It is one of the best dividend aristocrat stocks on our list as the company has raised its payouts for 31 consecutive years. Currently, it offers a quarterly dividend of $0.91 per share and has a dividend yield of 1.37%, as of February 14.
1. Archer-Daniels-Midland Company (NYSE:ADM)
Forward P/E Ratio: 9.26
Archer-Daniels-Midland Company (NYSE:ADM) is an Illinois-based multinational food processing and commodities trading company. In the fourth quarter of 2024, the company posted revenues of $21.5 billion, which showed a 6.4% growth from the same period last year. GAAP earnings per share reached $1.17, reflecting a 10% increase from the same quarter in the previous year. With market conditions softening and policy uncertainty persisting globally as 2025 approaches, the company remains focused on enhancing operational efficiency, accelerating cost reductions, and streamlining its portfolio. As part of these efforts, targeted measures have been introduced to achieve cost savings of $500–750 million over the coming years.
Archer-Daniels-Midland Company (NYSE:ADM) has fallen by over 8.5% since the start of 2025. Though the company is facing some short-term challenges, it continues to expand its operations. The company specializes in transforming crops into diverse products such as food, animal feed, industrial materials, and energy. As a key player in the global agricultural sector, it operates an extensive network for sourcing, transporting, and processing agricultural commodities. Its operations involve managing intricate supply chains to meet the diverse needs of the market.
Archer-Daniels-Midland Company (NYSE:ADM) also maintains a strong cash position. The company ended the year with $611 million available in cash and cash equivalents. In 2024, it generated $2.8 billion in cash flows from operating activities, while cash flows from operations, excluding working capital, totaled $3.3 billion. On February 4, the company declared a 2% hike in its quarterly dividend at $0.51 per share. This was the company’s 52nd consecutive year of dividend growth. Moreover, it has paid uninterrupted dividends to shareholders for 93 consecutive years. The stock has a dividend yield of 4.44%, as of February 14.
Overall Archer-Daniels-Midland Company (NYSE:ADM) ranks first on our list of the best dividend aristocrat stocks. While we acknowledge the potential for ADM as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ADM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stock To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
