In this article, we will be taking a look at 10 cheap dividend aristocrats to buy now. To skip our detailed analysis of dividend investing, you can go directly to see the 5 Cheap Dividend Aristocrats to Buy Now.
Investing in dividend stocks can be unpredictable, like investing in any stock out there, but at least for this category of stocks, there are some indexes one can look at for help. These indexes are namely those of the dividend kings, champions, and aristocrats, which are all constituted of dividend stocks that have proven to be reliable and consistent in terms of payouts and dividend growth, all at the same time. Hence stocks like Target Corporation (NYSE: TGT), AbbVie Inc. (NYSE: ABBV), Mastercard Incorporated (NYSE: MA), and Chevron Corporation (NYSE: CVX) can often be safer and better options for the typical income investor.
What is a Dividend Aristocrat?
A dividend aristocrat is typically any S&P 500 company that has consistently increased its dividend yield for at least the past 25 years. These publicly traded companies are some of the best and most reliable investment options for income investors. At present, about 65 companies are listed on the dividend aristocrats list.
According to S&P Global, the S&P 500 Dividend Aristocrats Index has brought in about 28.30% in price returns in the past year, and about 17.47% year to date. As for the index’s total return, that has been estimated to stand at 31.62% in the past year and 19.32% year to date. Such a positive performance, alongside the attractive yield offered by these stocks, makes them incredible investments. For instance, Reuters reported this July that the S&P Dividend Aristocrats Index was paying a dividend yield of about 2.15% as of July 2021, compared to the 10-year Treasury’s 1.48% yield, making these stocks more attractive for dividend investors.
Investing has become difficult by the day, even for the smart money. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Photo by Joshua Hoehne on Unsplash
Without further ado, let’s take a look at the 10 cheap dividend aristocrats to buy now.
Our Methodology
We have selected dividend aristocrat stocks with yields starting from 2% and going up to over 7%, and with shares prices under $60. Insider Monkey tracks the data of about 873 hedge funds, and we have also used this data to pick dividend stocks that are highly popular among hedge funds today. For each stock we have mentioned its yield, share price, and the number of hedge funds holding a stake in it, ranking them from the lowest to the highest dividend yield. Finally, we have used analysts’ ratings to determine which stocks are favorably placed in analyst and investor circles, picking stocks with mostly positive ratings and strong fundamentals.
Cheap Dividend Aristocrats to Buy Now
10. Hormel Foods Corporation (NYSE: HRL)
Number of Hedge Fund Holders: 24
Dividend Yield: 2.13%
Number of Years of Consistent Dividend Increases: 55
Share Price as of August 26: $45.35
Hormel Foods Corporation (NYSE: HRL) is a food company based in the US and offers meat and food products to retail, foodservice, deli, and commercial customers. The company ranks 10th on our list of cheap dividend aristocrats to buy now.
In the fiscal second quarter of 2021, Hormel Foods Corporation (NYSE: HRL) had an EPS of $0.42, beating estimates by $0.01. The company’s revenue was $2.61 billion, up 7.6% year over year and beating estimates by $199.11 million.
By the end of the second quarter of 2021, 24 hedge funds out of the 873 tracked by Insider Monkey held stakes in Hormel Foods Corporation (NYSE: HRL) worth roughly $562 million. This is compared to 26 hedge funds in the previous quarter with a total stake value of approximately $483 million.
Like Target Corporation (NYSE: TGT), AbbVie Inc. (NYSE: ABBV), Mastercard Incorporated (NYSE: MA), and Chevron Corporation (NYSE: CVX), Hormel Foods Corporation (NYSE: HRL) is a good stock to invest in.
Nelson Capital Management, an investment management firm, mentioned Hormel Foods Corporation (NYSE: HRL) in its fourth-quarter 2020 investor letter. Here’s what they said:
“We had a quiet fourth quarter, making just one swap within our consumer staples sector. We sold our position in Hormel (tkr: HRL). Hormel has seen tailwinds from the pandemic, as the maker of Spam and Skippy peanut butter has experienced higher demand from nervous consumers seeking out products with longer shelf lives. The stock had risen 18% year-to-date and its price-to-earnings (P/E) ratio had expanded from 25x to over 31x. Hormel pays a 2% dividend which is lower than many of its peers in the consumer staples sector. Furthermore, Hormel’s Jennie-O Turkey brand has experienced disruption in recent years as raw material over- or undersupply has caused large swings in revenue that lead to unpredictability. We decided to seek out better opportunities within the sector, particularly looking for a more attractively valued company that pays a higher dividend and sells everyday products that people will buy even in times of economic distress.”
9. The Coca-Cola Company (NYSE: KO)
Number of Hedge Fund Holders: 62
Dividend Yield: 2.97%
Number of Years of Consistent Dividend Increases: 59
Share Price as of August 26: $56.07
The Coca-Cola Company (NYSE: KO) provides non-alcoholic drinks to consumers globally, under the Coca-Cola, Diet Coke, and Fresca brands, among others. It ranks 9th on our list of cheap dividend aristocrats to buy now and is based in Atlanta, Georgia.
This July, Steve Powers, an analyst at Deutsche Bank, raised his price target on shares of The Coca-Cola Company (NYSE: KO) from $58to $60. The analyst also reiterated a Hold rating on the stock at the same time.
In the second quarter of 2021, The Coca-Cola Company (NYSE: KO) had an EPS of $0.68, beating estimates by $0.12. The company’s revenue was $10.13 billion, up 41.61% year over year and beating estimates by $823.11 million. The Coca-Cola Company (NYSE: KO) has gained 14.45% in the past 6 months and 6.27% year to date.
By the end of the second quarter of 2021, 62 hedge funds out of the 873 tracked by Insider Monkey held stakes in The Coca-Cola Company (NYSE: KO) worth roughly $25 billion. This is compared to 61 hedge funds in the previous quarter with a total stake value of approximately $25 billion.
Like Target Corporation (NYSE: TGT), AbbVie Inc. (NYSE: ABBV), Mastercard Incorporated (NYSE: MA), and Chevron Corporation (NYSE: CVX), The Coca-Cola Company (NYSE: KO) is a good stock to invest in.
8. Leggett & Platt, Incorporated (NYSE: LEG)
Number of Hedge Fund Holders: 14
Dividend Yield: 3.4%
Number of Years of Consistent Dividend Increases: 48
Share Price as of August 26: $49.22
Leggett & Platt, Incorporated (NYSE: LEG) is engaged in the home furnishings industry and produces engineered components and products. The company operates through its Bedding Products, Specialized Products, and Furniture, Flooring & Textile Products segments, and ranks 8th on our list of cheap dividend aristocrats to buy now.
Raymond James holds an Outperform rating on shares of Leggett & Platt, Incorporated (NYSE: LEG) alongside a $48 price target, as of this February
In the second quarter of 2021, Leggett & Platt, Incorporated (NYSE: LEG) had an EPS of $0.66, beating estimates by $0.12. The company’s revenue was $1.27 billion, up 50.23% year over year and beating estimates by $41.90 million. Leggett & Platt, Incorporated (NYSE: LEG) has gained 13.75% in the past 6 months and 13.57% year to date.
By the end of the second quarter of 2021, 14 hedge funds out of the 873 tracked by Insider Monkey held stakes in Leggett & Platt, Incorporated (NYSE: LEG) worth roughly $106 million. This is compared to 24 hedge funds in the previous quarter with a total stake value of approximately $83 million.
Like Target Corporation (NYSE: TGT), AbbVie Inc. (NYSE: ABBV), Mastercard Incorporated (NYSE: MA), and Chevron Corporation (NYSE: CVX), Leggett & Platt, Incorporated (NYSE: LEG) is a good stock to invest in.
7. Franklin Resources, Inc. (NYSE: BEN)
Number of Hedge Fund Holders: 30
Dividend Yield: 3.4%
Number of Years of Consistent Dividend Increases: 41
Share Price as of August 26: $32.54
Franklin Resources, Inc. (NYSE: BEN) is a US-based global investment firm and is next on our list of cheap dividend aristocrats to buy now, ranking 7th. The company launches equity, fixed income, balanced, and multi-asset mutual funds through its subsidiaries, and invests in public equity, fixed income, and alternative markets.
As of this May, Brian Bedell from Deutsche Bank has a Hold rating on shares of Franklin Resources, Inc. (NYSE: BEN), alongside a raised price target of $33, compared to the previous $29 target.
In the fiscal third quarter of 2021, Franklin Resources, Inc. (NYSE: BEN) had an EPS of $0.96, beating estimates by $0.18. The company’s revenue was $2.17 billion, up 82.89% year over year and beating estimates by $43.73 million. Franklin Resources, Inc. (NYSE: BEN) has gained 24.34% in the past 6 months and 33.69% year to date.
By the end of the second quarter of 2021, 30 hedge funds out of the 873 tracked by Insider Monkey held stakes in Franklin Resources, Inc. (NYSE: BEN) worth roughly $205 million. This is compared to 31 hedge funds in the previous quarter with a total stake value of approximately $198 million.
Like Target Corporation (NYSE: TGT), AbbVie Inc. (NYSE: ABBV), Mastercard Incorporated (NYSE: MA), and Chevron Corporation (NYSE: CVX), Franklin Resources, Inc. (NYSE: BEN) is a good stock to invest in.
6. Cardinal Health, Inc. (NYSE: CAH)
Number of Hedge Fund Holders: 40
Dividend Yield: 3.7%
Number of Years of Consistent Dividend Increases: 34
Share Price as of August 26: $51.77
Cardinal Health, Inc. (NYSE: CAH) is an integrated healthcare services and products company. It operates mainly in the US, Europe, Asia, Canada, and internationally, from its headquarters in Ohio. The company ranks 6th on our list of cheap dividend aristocrats to buy now.
As of this August, Deutsche Bank has a Hold rating on shares of Cardinal Health, Inc. (NYSE: CAH), alongside a price target of $51.
In the fiscal fourth quarter of 2021, Cardinal Health, Inc. (NYSE: CAH) had an EPS of $0.77, missing estimates by $0.43. The company’s revenue was $42.59 billion, up 16.07% year over year and beating estimates by $2.37 billion. Cardinal Health, Inc. (NYSE: CAH) has also gained 0.49% in the past 6 months and 1.61% in the past year.
By the end of the second quarter of 2021, 40 hedge funds out of the 873 tracked by Insider Monkey held stakes in Cardinal Health, Inc. (NYSE: CAH) worth roughly $897 million. This is compared to 39 hedge funds in the previous quarter with a total stake value of approximately $967 million.
Like Target Corporation (NYSE: TGT), AbbVie Inc. (NYSE: ABBV), Mastercard Incorporated (NYSE: MA), and Chevron Corporation (NYSE: CVX), Cardinal Health, Inc. (NYSE: CAH) is a good stock to invest in.
Click to continue reading and see the 5 Cheap Dividend Aristocrats to Buy Now.
Suggested articles:
- 15 Best Semiconductor Stocks to Buy Now
- 10 Best Aristocrat Dividend Stocks to Buy
- 10 REIT Dividend Stocks with Over 5% Yields
Disclosure: None. 10 Cheap Dividend Aristocrats to Buy Now is originally published on Insider Monkey.
