5 Undervalued Dividend Aristocrats To Buy Now

In this article, we discuss 5 undervalued dividend aristocrats to buy now. If you want to read our detailed analysis of dividend and value investing, go directly to read 11 Undervalued Dividend Aristocrats to Buy Now.

5. Archer-Daniels-Midland Company (NYSE:ADM)

P/E Ratio as of January 12: 12.38

Archer-Daniels-Midland Company (NYSE:ADM) is a Chicago-based food processing company that produces a wide range of food products. In Q3 2022, the company reported revenue of $24.6 billion, which showed a 21.3% growth from the same period last year. At the end of September, it had over $1 billion in cash and cash equivalents. The company is among the undervalued dividend aristocrats with a P/E ratio of 12.38.

In January, Stifel raised its price target on Archer-Daniels-Midland Company (NYSE:ADM) to $116 with a Buy rating on the shares ahead of the company’s Q4 earnings.

Archer-Daniels-Midland Company (NYSE:ADM) currently pays a quarterly dividend of $0.40 per share and has a dividend yield of 1.83%, as of January 12. The company has been raising its dividends consistently for the past 49 years.

As of the close of Q3 2022, 37 hedge funds tracked by Insider Monkey reported owning stakes in Archer-Daniels-Midland Company (NYSE:ADM), compared with 42 in the previous quarter. These stakes are valued collectively at nearly $600 million.

Diamond Hill Capital mentioned Archer-Daniels-Midland Company (NYSE:ADM) in its Q1 2022 investor letter. Here is what the firm has to say:

“ADM is a leading agricultural processor that also operates a global nutrition business focused on the development of ingredients and flavors for food and beverages, supplements and more. The company’s recent operating results have benefited (unfortunately) from the war in Ukraine as grain prices and agricultural markets globally experienced strong price increases. ADM is positioned well to benefit from the volatility due to its stable North American agricultural base.”

4. T. Rowe Price Group, Inc. (NASDAQ:TROW)

P/E Ratio as of January 12: 13.79

T. Rowe Price Group, Inc. (NASDAQ:TROW) is a Maryland-based investment management company that offers different related services. The company currently pays a quarterly dividend of $1.20 per share for a dividend yield of 4.02%, as of January 12. It maintains a 36-year track record of consistent dividend growth.

T. Rowe Price Group, Inc. (NASDAQ:TROW), one of the undervalued dividend aristocrats on the list, is trading at a PE multiple of 13x. At the end of Q3 2022, the company had $2.8 billion available in cash and generated $1.6 billion in revenues. It paid $832.4 million in dividends to shareholders during the first nine months of 2022.

In December, Wells Fargo initiated its coverage of T. Rowe Price Group, Inc. (NASDAQ:TROW) with an Equal Weight rating and a $125 price target, presenting a strong stance on the company’s performance.

At the end of Q3 2022, 30 hedge funds tracked by Insider Monkey owned stakes in T. Rowe Price Group, Inc. (NASDAQ:TROW), up from 27 in the previous quarter. The collective value of these stakes is nearly $320 million. Among these hedge funds, Balyasny Asset Management was the company’s leading stakeholder in Q3.

3. Chubb Limited (NYSE:CB)

P/E Ratio as of January 12: 15.65

Chubb Limited (NYSE:CB) is one of America’s largest commercial insurers that has operations in over 54 countries and territories. In January, Piper Sandler raised its price target on the stock to $230 with an Overweight rating on the shares. The firm presented a positive stance on the insurance sector this year.

Chubb Limited (NYSE:CB) has been raising its dividends consistently for the past 29 years, which makes it popular among investors. It currently pays a quarterly dividend of $0.83 per share and has a dividend yield of 1.47%, as recorded on January 12. The stock has a price-to-earnings ratio of 15.65, as of January 12.

As of the close of Q3 2022, 41 hedge funds tracked by Insider Monkey owned stakes in Chubb Limited (NYSE:CB), up from 35 in the previous quarter. These stakes are worth nearly $2 billion collectively. Among these hedge funds, Viking Global was the company’s leading stakeholder in Q3.

Aristotle Capital Management mentioned Chubb Limited (NYSE:CB) in its Q1 2022 investor letter. Here is what the firm has to say:

“Our investment in Chubb began in the fourth quarter of 2015, shortly after ACE Limited announced it would acquire the Chubb Corporation, creating the largest global property and casualty insurance company by underwriting income. During our nearly seven-year holding period, the company’s combination progressed leading to the realization of main catalysts we had identified. These included cost savings, broadened product offerings and an expanded customer base, as well as enhanced distribution capabilities and improved pricing due to scale. In addition, Chubb successfully grew its profitable high-net-worth personal lines. While we still consider Chubb to be a high-quality business, few catalysts remain after what was, in our opinion, a remarkable run of successful business execution. As such, we decided to step aside in favor of what we believe to be a more optimal investment in Blackstone.”

2. Caterpillar Inc. (NYSE:CAT)

P/E Ratio as of January 12: 18.3

Caterpillar Inc. (NYSE:CAT) is a Texas-based construction equipment company that also manufactures mining products. The company has been raising its dividends consistently for the past 28 years and currently offers a quarterly dividend of $1.20 per share. The stock’s dividend yield on January 12 came in at 1.88%.

In the third quarter of 2022, Caterpillar Inc. (NYSE:CAT) returned over $2 billion to shareholders in dividends and share repurchases. As of January 12, the stock is trading at a PE multiple of 18x and is among the undervalued dividend aristocrats on our list.

Stifel raised its price target on Caterpillar Inc. (NYSE:CAT) to $271 in December with a Buy rating on the shares, expecting the price/cost environment to improve in the upcoming quarters.

At the end of Q3 2022, 43 hedge funds tracked by Insider Monkey owned stakes in Caterpillar Inc. (NYSE:CAT), compared with 45 in the previous quarter. These stakes are valued at over $2.8 billion collectively.

Diamond Hill Capital mentioned Caterpillar Inc. (NYSE:CAT) in its Q1 2022 investor letter. Here is what the firm had to say:

“We also initiated a position in Caterpillar (NYSE:CAT), one of the world’s leading manufacturers of construction and mining equipment. It’s a company we know well, as we have owned it in our large cap portfolio for quite some time. Recent share price weakness provided an opportunity for us to add it to our large cap concentrated portfolio at an attractive discount to our estimate of intrinsic value. We believe Caterpillar stands to benefit from increased capital investment supported by a healthier/recovering end market environment, particularly in construction and mining.”

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

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