5 Undervalued Dividend Aristocrats To Buy Now

1. A. O. Smith Corporation (NYSE:AOS)

P/E Ratio as of January 12: 19.93

A. O. Smith Corporation (NYSE:AOS) manufactures water heaters and boilers for commercial and residential customers in the US. In December, Citigroup lifted its price target on the stock to $61 with a Neutral rating on the shares. The firm mentioned that the company is expected to show better results due to improving supply chains and improving price versus cost trends.

A. O. Smith Corporation (NYSE:AOS) has a price-to-earnings ratio of 19.93, as of January 12. In 2022, the company extended its dividend growth streak to 29 years. It currently pays a quarterly dividend of $0.30 per share for a dividend yield of 1.95%, as recorded on January 12.

At the end of Q3 2022, 29 hedge funds tracked by Insider Monkey reported owning stakes in A. O. Smith Corporation (NYSE:AOS), worth $370.8 million. Impax Asset Management owned the largest stake in the company in Q3, valued at $194.3 million.

LRT Capital Management mentioned A. O. Smith Corporation (NYSE:AOS) in its Q2 2022 investor letter. Here is what the firm has to say:

“A.O. Smith is the largest US manufacturer of residential and commercial water heaters, boilers and water treatment products. The company generates close to $3 billion in annual sales. The majority of the company’s business (73%) is done in North America, with the balance coming from China and India. Approximately 80% of demand is replacing existing heaters and 20% is tied to new construction. The company continues to benefit from a shift towards higher efficiency, but more expensive, tankless heaters.

A.O. Smith generates returns on invested capital in the high teens. The company uses its earnings to consistently grow its dividends and share repurchases. Over the past three years the company’s performance has been hurt by its exposure to China as its business there suffered due to the US-China trade war and poor execution. We believe the China business is back on track and the all-important US business is doing better than ever as housing demand heats up in the US. The company beat earnings estimates over the past several quarters and is currently enjoying very good performance as the hot U.S housing market continues to be strong.¹⁹ A.O. Smith also recently increased its share repurchase authorization.”

You can also take a look at 13 Best Undervalued Stocks To Buy and 10 Undervalued Insurance Stocks To Buy

Follow Insider Monkey on Twitter