In this article, we will take a look at 10 Undervalued Dividend Aristocrats to Buy According to Hedge Funds.
A dividend aristocrat is an S&P 500 company that not only maintains regular dividend payments to shareholders but also increases its payouts annually. To qualify as a dividend aristocrat, a company must raise its dividends consistently for at least 25 consecutive years.
Michael Clarfeld, Portfolio Manager at ClearBridge, recently talked about why companies that consistently grow their dividends are well-positioned to handle the challenges of 2025. With rising costs, tighter margins, higher interest rates, and inflation on the horizon, Clarfeld is still optimistic about the economy. He pointed to strong employment numbers, upbeat consumer sentiment, and confident businesses, especially after the election. Pro-business policies under the Trump administration could drive investments and growth, which sounds great, but there’s a catch. For instance, bringing manufacturing back to the US would create jobs and boost wages, but it could also increase business costs. After two strong years, Clarfeld doesn’t see much room for big capital gains in 2025. Plus, with inflation sticking around, the Federal Reserve is likely to take a more cautious approach. That said, he sees opportunities in sectors like European and global consumer staples and US energy infrastructure.
Clarfeld is a big fan of dividend growth stocks, calling them a timeless investment. They can act as a safety net during volatile markets and provide steady income, which is especially useful when capital appreciation feels out of reach. He also highlighted how dividends help protect your purchasing power by keeping up with inflation. In his view, dividend growth is a smart and reliable strategy for navigating a potentially bumpy 2025.
Paul Baiocchi of SS&C ALPS Advisors sees dividend investing as a smart move, expecting the Fed to ease rates. According to Baiocchi, investors are shifting from money markets and fixed income to dividend-paying stocks, especially companies with leverage that could benefit from lower interest rates. Similarly, Mike Akins of ETF Action also sees dividend ETFs as a defensive play, highlighting that the companies included typically have strong balance sheets. He notes the growing popularity of dividend-focused ETFs, suggesting that consistent dividends give investors confidence in a company’s stability and financial health. Both experts agree that dividends offer a sense of durability and drawdown protection in uncertain markets.
Image by Steve Buissinne from Pixabay
Our Methodology
In this article, we selected stocks from the Dividend Aristocrats List that had a P/E ratio below 20 as of December 23. Our focus was on identifying stocks with the strongest hedge fund sentiment in Q3 2024 among the 66 Dividend Aristocrats that also met our P/E criteria. The stocks are ranked below in ascending order based on the number of hedge fund holders for each company.
At Insider Monkey, we are obsessed with 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. Amcor plc (NYSE:AMCR)
Dividend Yield as of December 23: 5.43%
Number of Hedge Fund Holders: 18
P/E Ratio: 17.67
Amcor plc (NYSE:AMCR) is a global leader in packaging solutions, serving markets in Europe, North America, Latin America, and the Asia Pacific. The company operates through two main divisions – Flexibles, which specializes in film and flexible packaging for industries like food, beverages, healthcare, and personal care, and Rigid Packaging, offering durable containers and plastic caps for beverages, sauces, spreads, and personal care products. It is one of the best dividend aristocrat stocks to invest in, with 41 consecutive years of dividend increases under its belt.
Amcor plc (NYSE:AMCR) kicked off fiscal 2025 with solid financial performance, maintaining the momentum built earlier this year. The company’s results align with its August projections, allowing it to reaffirm its full-year guidance. Safety remains a top priority, with a 13% reduction in injuries compared to last year and 73% of sites injury-free for over a year, reflecting a deeply ingrained safety culture. The company is also emphasizing sustainable packaging solutions, leveraging its innovation centers, and expanding into high-growth categories like healthcare, dairy, and liquid applications.
In Q1, Amcor plc (NYSE:AMCR) saw a 2% volume increase overall, with stronger demand in most markets despite challenges in healthcare and North American beverages. The Flexibles segment grew volumes by 3%, driven by strong demand in emerging markets and across product categories like meat, dairy, and ready meals, though healthcare destocking weighed on performance. Meanwhile, the Rigid Packaging segment faced declines in North America but grew in Latin America and specialty containers, aided by cost reductions and productivity measures.
Amcor plc (NYSE:AMCR) continues to focus on financial stability, using proceeds from a joint venture sale to reduce debt and returning $180 million to shareholders through dividends. The company reaffirmed its fiscal 2025 guidance, expecting adjusted EPS between $0.72 and $0.76 and strong free cash flow of $900 million to $1 billion. Amcor remains committed to delivering sustainable growth, innovation, and value for its customers and shareholders while staying on track to reduce leverage by year-end.
According to Insider Monkey’s Q3 data, 18 hedge funds held long positions in Amcor plc (NYSE:AMCR), down from 21 in the previous quarter. Cliff Asness’ AQR Capital Management is the company’s leading stakeholder, with a stake worth $49 million.
9. T. Rowe Price Group, Inc. (NASDAQ:TROW)
Dividend Yield as of December 23: 4.27%
Number of Hedge Fund Holders: 26
P/E Ratio: 12.72
T. Rowe Price Group, Inc. (NASDAQ:TROW) is a global investment management firm that works with individuals, institutions, retirement plans, and financial advisors. They manage equity and fixed-income mutual funds, investing in markets worldwide. Founded in 1937 in Baltimore, Maryland, T. Rowe Price Group, Inc. (NASDAQ:TROW) has grown into a worldwide presence, with offices across the United States, Europe, Asia, Australia, and the Middle East. TROW ranks 9th on our list of the best dividend aristocrat stocks list, with a history of raising its dividends for the last 38 years.
T. Rowe Price Group, Inc. (NASDAQ:TROW) had a solid third quarter, ending with $1.63 trillion in assets under management (AUM), which is a 3.9% increase since June. This growth is impressive, especially considering $12.2 billion in net outflows during the same period. While those outflows were disappointing, there are plenty of reasons to be optimistic.
T. Rowe Price Group, Inc. (NASDAQ:TROW) is making strides in alternative investments. Their senior private lending fund saw its first close this quarter, contributing to a $3 billion increase in unfunded capital commitments. On the financial side, the company delivered strong results as well. Adjusted net revenue rose 7% year-over-year to $1.8 billion, and operating income jumped 13%. Adjusted earnings per share (EPS) came in at $2.57, an 18% increase from the same time last year. T. Rowe Price Group, Inc. (NASDAQ:TROW) is committed to returning value to shareholders, with over $1.1 billion returned through dividends and share buybacks so far this year.
That said, there are challenges on the horizon. A large variable annuity (VA) termination expected in Q4 will lead to higher outflows for the year, but T. Rowe Price Group, Inc. (NASDAQ:TROW) remains optimistic. The company expects 2024 outflows to be less than half of 2023 levels, even with this setback.
Insider Monkey’s Q3 data suggested that T. Rowe Price Group, Inc. (NASDAQ:TROW) was part of 26 hedge fund portfolios, compared to 28 in the earlier quarter. Ken Fisher’s Fisher Asset Management is the largest stakeholder of the company, with 1.86 million shares valued at roughly $203 million.
8. Genuine Parts Company (NYSE:GPC)
Dividend Yield as of December 23: 3.46%
Number of Hedge Fund Holders: 27
P/E Ratio: 14.89
Genuine Parts Company (NYSE:GPC) specializes in distributing automotive and industrial replacement parts. Its operations are divided into two segments – Automotive Parts Group and Industrial Parts Group. The company supplies automotive parts for hybrid and electric cars, trucks, buses, motorcycles, farm vehicles, and marine equipment. Its customers include repair shops, service stations, fleet operators, auto dealers, and individual consumers. Beyond distribution, the company offers repair and assembly services such as gearbox repairs, hydraulic drive shaft repairs, and hose manufacturing. GPC boasts an exceptional streak of 68 consecutive years of dividend increases, earning its place among the top picks for the best dividend aristocrat stocks.
Genuine Parts Company (NYSE:GPC) has a rich legacy, supported by its long-standing brands like NAPA, which celebrates its 100th anniversary next year, and Motion, a leader in industrial solutions since 1946. With strong operations across Europe, Asia Pacific, Canada, and beyond, GPC positions itself as a unified team leveraging global scale to capitalize on opportunities in its fragmented industries.
GPC adjusted its 2024 outlook due to persistent weak market conditions observed in the third quarter, which impacted demand across its segments. Diluted earnings per share expectations were revised to $6.60–$6.80, down from the earlier projection of $8.55–$8.75, while adjusted EPS guidance was reduced to $8.00–$8.20 from $9.30–$9.50. The company anticipates total sales growth of 1%–2%, driven in part by acquisitions, with Automotive sales expected to grow 3%–4% and Industrial sales declining by 1%–2%.
Challenging market conditions, including inflation, high interest rates, and geopolitical uncertainty, continue to affect both the US and international automotive businesses. Despite short-term headwinds, GPC maintains strong cash flows, projecting $1.3–$1.5 billion in cash from operations and $800 million–$1 billion in free cash flow for 2024. Genuine Parts Company (NYSE:GPC) has spent $954 million on acquisitions this year, including the purchase of Walker Automotive Supply, which aligns with GPC’s balanced strategy of owning and partnering with independent stores. The company’s pension de-risking strategy also progressed, with plans to transition the US pension plan to a third-party insurer by 2025. This move, which reduces financial volatility, will have no immediate cash impact in 2024.
Insider Monkey’s third-quarter database shows that Genuine Parts Company (NYSE:GPC) was part of 27 hedge fund portfolios, down from 31 in the last quarter. Harris Associates is the largest stakeholder in the company, with 2.3 million shares worth about $325 million.
7. Consolidated Edison, Inc. (NYSE:ED)
Dividend Yield as of December 23: 3.69%
Number of Hedge Fund Holders: 29
P/E Ratio: 16.92
Consolidated Edison, Inc. (NYSE:ED) is an American utility company providing regulated electric, gas, and steam delivery services. Consolidated Edison, Inc. (NYSE:ED) operates extensive infrastructure, including transmission lines, substations, transformers, and distribution networks for both electricity and natural gas. Established in 1823 and headquartered in New York City, the company caters to residential, commercial, industrial, and government clients.
Consolidated Edison, Inc. (NYSE:ED) reported a third-quarter net income for 2024 of $588 million, or $1.70 per share, compared to $526 million, or $1.53 per share, in the same period last year. Adjusted earnings for Q3 2024 were $583 million, or $1.68 per share, up from $561 million, or $1.62 per share, in Q3 2023. These figures exclude the impact related to the sale of Con Edison’s former subsidiary, Con Edison Clean Energy Businesses. For the full year 2024, Con Edison expects adjusted earnings per share to range from $5.30 to $5.40, slightly raised from the previous forecast of $5.20 to $5.40 per share.
Consolidated Edison, Inc. (NYSE:ED) has proudly increased its dividend for 50 straight years, with an impressive annual growth rate of 5.65%. The company aims to pay out 55% to 65% of its adjusted earnings in dividends. This is why the company holds a strong position on our list of the best dividend aristocrat stocks. For 2024, Con Edison plans to issue up to $3.25 billion in long-term debt for its utilities but does not expect to issue common equity, except for what is required under its dividend reinvestment, employee stock purchase, and long-term incentive programs.
According to Insider Monkey’s Q3 2024 database, 29 hedge funds held stakes in Consolidated Edison, Inc. (NYSE:ED) worth nearly $602 million.
6. Aflac Incorporated (NYSE:AFL)
Dividend Yield as of December 23: 2.26%
Number of Hedge Fund Holders: 32
P/E Ratio: 15.26
Aflac Incorporated (NYSE:AFL) offers supplemental health and life insurance products. The company operates in two segments – Aflac Japan and Aflac US. The Aflac Japan segment provides cancer, medical, nursing care, work leave, and various life insurance products, along with saving-type insurance plans. The Aflac US segment offers a range of insurance products, including cancer, accident, disability, critical illness, and long-term care insurance, among others.
Aflac Incorporated (NYSE:AFL) reported a loss of $0.17 per share for Q3 2024, mainly due to the negative impact of foreign exchange losses from the strengthening yen. However, adjusted earnings increased by 17.4% to $2.16 per share. Year-to-date earnings per share were $6.23, with a 13.5% increase in adjusted earnings per share to $5.64.
The company saw solid sales growth in Japan, driven by the launch of Tsumitasu, a product combining asset formation with nursing care, and a 12.3% year-over-year increase in sales. In the US, Aflac achieved a 5.5% increase in sales, with strong growth in Group Life and cancer insurance. Aflac also reported a 20.8% pre-tax profit margin for the quarter. The company repurchased $500 million in shares during the quarter. Despite challenges like remeasurement gains impacting ratios, Aflac’s solid performance and strategic investments ensure its long-term growth trajectory.
On December 2, Aflac Incorporated (NYSE:AFL) announced that its Board has declared a first-quarter dividend of $0.58 per share, payable on March 3, 2025, to shareholders on record as of February 19. This dividend marks a 16% increase from the fourth quarter dividend. Aflac has a 42-year history of consecutive dividend increases, making it one of the best dividend aristocrat stocks to buy.
32 hedge funds tracked by Insider Monkey in the third quarter of 2024 held stakes in Aflac Incorporated (NYSE:AFL), up from 25 funds in the earlier quarter.
5. Archer-Daniels-Midland Company (NYSE:ADM)
Dividend Yield as of December 23: 3.79%
Number of Hedge Fund Holders: 34
P/E Ratio: 14.18
Archer-Daniels-Midland Company (NYSE:ADM) is a global leader in the procurement, transportation, storage, and processing of agricultural commodities, with operations in several countries, including the US, Switzerland, Brazil, and the UK. Archer-Daniels-Midland Company (NYSE:ADM) handles agricultural raw materials like oilseeds, offers a wide range of food and animal feed products, and produces ingredients for different industries, such as food, energy, and chemicals. It also provides specialized products like proteins, natural flavors, and pet food.
Archer-Daniels-Midland Company (NYSE:ADM) reported a challenging third quarter in 2024, with net earnings of $18 million and adjusted net earnings of $530 million. Earnings per share were $0.04, while adjusted earnings per share came in at $1.09, both down from the previous year. A non-cash charge of $461 million related to its Wilmar equity investment impacted GAAP earnings. The company also experienced an 8% drop in revenue, totaling $20 billion for the quarter, missing analyst estimates by $1.57 billion.
Despite these setbacks, ADM’s cash flow remained strong, with operating cash flow reaching $2.5 billion year-to-date, up from $1.9 billion the previous year. ADM also remains committed to its long-standing tradition of dividend growth, with 51 consecutive years of increases and a current quarterly dividend of $0.50 per share.
As per Insider Monkey’s third-quarter database, 34 hedge funds were long Archer-Daniels-Midland Company (NYSE:ADM), compared to 35 funds in the last quarter.
4. Kimberly-Clark Corporation (NYSE:KMB)
Dividend Yield as of December 23: 3.72%
Number of Hedge Fund Holders: 45
P/E Ratio: 17.01
Kimberly-Clark Corporation (NYSE:KMB), founded in 1872 and headquartered in Dallas, Texas, manufactures and markets personal care and consumer tissue products. The company operates through three segments – Personal Care, Consumer Tissue, and K-C Professional. Consumer demand for premium products continues to grow across developed and emerging markets, supported by trends like aging populations driving adult care. This positions KMB as one of the best dividend aristocrat stocks to buy.
Kimberly-Clark Corporation (NYSE:KMB)’s gross margins have consistently improved over the past eight quarters, averaging 37% for the year. The company remains confident in achieving its long-term goal of at least 40% gross margin and operating margins between 18-20% by the end of the decade. Kimberly-Clark Corporation (NYSE:KMB) reported third-quarter sales of $5.0 billion, which was 4% lower than the same period last year. This drop was mainly due to a 3% hit from unfavorable currency exchange rates and a 1% impact from selling off their PPE business in July.
Looking ahead, Kimberly-Clark Corporation (NYSE:KMB) anticipates stronger Q4 performance, with stepped-up investments in advertising and brand support. The company expects top-line growth to improve, driven by a volume mix-led strategy while navigating one-time and external factors. Despite these challenges, Kimberly-Clark is making steady progress on margins and remains committed to long-term growth.
So far this year, Kimberly-Clark Corporation (NYSE:KMB) generated $2.4 billion in cash from operations, up from $2.3 billion last year, mainly due to improved operating performance. The company returned $2.0 billion to shareholders through dividends and stock buybacks. Total debt was reduced to $7.5 billion as of September 30, 2024, from $8.0 billion at the end of 2023. Kimberly-Clark Corporation (NYSE:KMB)’s board of directors announced a quarterly dividend of $1.22 per share, payable on January 3, 2025, to shareholders on record as of December 6, 2024. This marks the company’s 90th consecutive year of paying dividends and the 52nd straight year of increasing them.
Insider Monkey’s Q3 data shows that 45 hedge funds were bullish on Kimberly-Clark Corporation (NYSE:KMB), compared to 43 funds in the prior quarter. D E Shaw is the leading stakeholder of the company, with 1.28 million shares worth $182.35 million.
3. Target Corporation (NYSE:TGT)
Dividend Yield as of December 23: 2.87%
Number of Hedge Fund Holders: 49
P/E Ratio: 13.94
Target Corporation (NYSE:TGT) is an American legacy company that offers a wide range of merchandise, including clothing for all ages, beauty products, home essentials, pet supplies, groceries, electronics, toys, furniture, and seasonal items.
Target Corporation (NYSE:TGT)’s Q3 results reflected a mix of growth and challenges. Comparable sales rose 0.3%, at the low end of expectations, while EPS fell short due to cautious consumer spending on discretionary items and cost pressures. Guest traffic grew by 2.4%, but a 2% drop in average ticket size offset gains, reflecting tighter household budgets. October saw stronger sales, boosted by Target Circle promotions, although discretionary categories remained soft. Digital sales were a highlight, growing 10.8%, with same-day delivery up nearly 20% and Drive-Up and ship-to-home services showing double-digit growth. Target’s Roundel ad business also grew by 11.5%, contributing to revenue and margins. Despite these successes, operating margins fell to 4.6%, down 60 basis points, due to higher supply chain and digital fulfillment costs.
Year-to-date, Target Corporation (NYSE:TGT) invested nearly $2 billion in capital expenditures as per the Q3 earnings call, focusing on new stores, remodels, and tech projects, with 2025 CapEx projected at $4-$5 billion. Dividends increased to $516 million in Q3, and $354 million was allocated to share repurchases. The company paid a $1.12 per share dividend to stakeholders on December 10. In 2024, Target marked the 53rd straight year of raising its annual dividend, making it one of the best dividend aristocrat stocks on our list.
Target Corporation (NYSE:TGT) expects Q4 comparable sales to remain flat due to discretionary softness and fewer holiday shopping days. Full-year EPS guidance was revised to $8.30–$8.90, reflecting these challenges. Despite short-term hurdles, the company remains optimistic about long-term growth, confident in its strategy and ability to deliver solid financial performance over the next decade.
TGT is a hedge fund favorite, with 49 funds holding stakes in the company at the end of Q3 2024. Ric Dillon’s Diamond Hill Capital is the leading stakeholder of Target, with 2.95 million shares worth $460.3 million.
2. Chevron Corporation (NYSE:CVX)
Dividend Yield as of December 23: 4.56%
Number of Hedge Fund Holders: 63
P/E Ratio: 15.70
Chevron Corporation (NYSE:CVX) is a global energy and chemicals company operating through two primary segments – Upstream and Downstream. Chevron Corporation (NYSE:CVX) has signed a 20-year agreement to acquire 2 million metric tons of liquefied natural gas (LNG) annually from Energy Transfer LP’s proposed Lake Charles terminal in Louisiana, a former import facility. The deal adds to Energy Transfer’s existing agreements with companies like EQT Corp. and Shell Plc.
Chevron Corporation (NYSE:CVX) achieved strong financial and operational results, with a 7% increase in global production and record cash returns to shareholders. The company’s major milestones include accelerated turnarounds at TCO and Gorgon, new Gulf of Mexico projects boosting production to 300,000 barrels per day by 2026, and expanded CO2 storage in Australia. The successful PDC Energy merger exceeded synergy targets, adding over $1 billion in free cash flow. Moreover, low-carbon initiatives, such as tankless facilities and grid-powered rigs, are reducing emissions significantly. Upcoming projects remain on schedule, while $8 billion in asset sales from Canada, Alaska, and Congo reinforce Chevron’s portfolio optimization.
Chevron Corporation (NYSE:CVX) reported Q3 earnings of $4.5 billion or $2.48 per share and adjusted earnings of $2.51 per share. Cash flow hit its highest level this year despite lower oil prices, supported by reduced working capital, while share repurchases reached a record $4.7 billion. The company expects dividends to total approximately $1 billion this quarter. For 37 years in a row, CVX has steadily increased its dividend.
Insider Monkey’s Q3 data reveals that CVX appeared in 63 hedge fund portfolios. Warren Buffett’s Berkshire Hathaway was the biggest stakeholder in the company, with a stake worth nearly $17.5 billion.
1. Exxon Mobil Corporation (NYSE:XOM)
Dividend Yield as of December 23: 3.74%
Number of Hedge Fund Holders: 86
P/E Ratio: 13.16
Exxon Mobil Corporation (NYSE:XOM) is a global energy leader involved in exploring and producing crude oil and natural gas. Exxon Mobil Corporation (NYSE:XOM) and Mitsubishi Corporation have recently partnered on a low-carbon hydrogen and ammonia project at ExxonMobil’s Baytown, Texas facility. The project, expected to start in 2029 pending approvals, aims to capture 98% of CO2 emissions, producing up to 1 billion cubic feet of hydrogen and 1 million tons of ammonia annually.
Exxon Mobil Corporation (NYSE:XOM) reported Q3 earnings of $8.6 billion, highlighting the success of its transformation efforts. The Energy Products business has doubled earnings since 2019, driven by cost reductions, strategic investments, and optimized operations. The company has streamlined its refinery portfolio, prioritizing high-value sites, and improved product yields through advanced facilities like the Rotterdam Hydrocracker. XOM’s cost savings have reached $5 billion since 2019.
Despite market fluctuations, diversification in geography and products stabilized earnings, with gains in gas and specialty product margins. Exxon Mobil Corporation (NYSE:XOM) also increased its dividend by 4% to $0.99 per share, marking 42 years of consecutive growth. Upstream production rose 24% to 4.6 million barrels per day, with unit earnings doubling to $10 per barrel. The integration of Pioneer added 770,000 barrels per day, enhancing efficiency and sustainability.
Exxon Mobil Corporation (NYSE:XOM) is a favored energy company among hedge funds, with 86 funds holding long positions in the stock.
Overall, Exxon Mobil Corporation (NYSE:XOM) ranks first on our list of the undervalued dividend aristocrats. While we acknowledge the potential of XOM to grow, our conviction lies in the belief that certain 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 XOM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
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