In this article, we will take a look at some of the best dividend aristocrat stocks.
Dividend-paying stocks are regaining popularity this year as investors look for ways to soften the blow of current market challenges. The S&P Dividend Aristocrats Index, which tracks the performance of companies with at least 25 consecutive years of dividend growth, has fallen by a little over 1.2% since the start of 2025, compared with a 4.1% decline of the broader market. Analysts point out that dividends not only help boost overall returns early on, but there’s also clear evidence that companies with growing dividends tend to deliver stronger performance. These stocks often provide better returns with less risk, stay ahead of inflation, and hold up well whether interest rates are climbing or falling.
According to S&P Indices’ “Research Insights,” dividends have accounted for roughly a third of total returns since 1926. This is largely because, unlike stock prices that can fluctuate, dividends represent a guaranteed gain once paid out. Even in strong bull markets like the 1950s, 1980s, and 1990s, dividends played a meaningful role in enhancing investor returns. However, their true value becomes especially clear in weaker market cycles, when capital gains are modest or even negative, dividends have often made up more than half of the total return. In some cases, they’ve been the deciding factor in keeping returns positive. In essence, dividends tend to matter most when market performance falls short.
A report from Fenimore Asset Management reveals that between 1972 and 2016, companies that either raised or initiated dividends consistently outperformed those that did not. Historically, a dividend hike has often been viewed as a sign that management is confident in the company’s future. This concept is even the basis of the “Dividend Discount Model,” which values a company based on expected dividend growth.
On average, firms that grew or introduced dividends delivered annualized returns of 9.8%, outpacing businesses that didn’t pay dividends. These companies typically enjoy rising sales and earnings, generating more cash than they need for reinvestment, allowing them to reward shareholders regularly. This pattern also reflects a strong commitment by management and the board to return value to investors.
In contrast, companies that cut or eliminate dividends often struggle financially. These underperformers posted annualized returns of -0.6% during the said period, and such reductions usually point to a weakening business, limited growth prospects, or a need to redirect cash toward internal needs rather than shareholder payouts.
The report also highlighted that one of the key advantages of a growing dividend is its ability to preserve purchasing power over time. As inflation gradually pushes up the cost of living, dividend income needs to grow just to keep up. Assuming a long-term inflation rate of 2%, dividends must increase by at least that much to avoid losing value in real terms.
While investors seeking income may be drawn to stocks with high current yields, it’s just as important to consider how fast those dividends are growing. Focusing solely on yield without looking at growth can be short-sighted. In the long run, companies that steadily raise their dividends provide income that keeps pace with or even exceeds inflation, offering greater financial security. 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 S&P Dividend Aristocrats– the stocks that have raised their payouts for 25 years or more– and identified stocks with low forward P/E ratios. From there, we picked 11 dividend aristocrats with forward P/E ratios below 20, as of May 7, and ranked them accordingly.
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11. Dover Corporation (NYSE:DOV)
Forward P/E Ratio as of May 7: 18.52
Dover Corporation (NYSE:DOV) is an American manufacturing company that produces a wide array of industrial equipment and components. The company provides cutting-edge equipment and components, consumable supplies, aftermarket parts, software, digital solutions, and support services across five key segments: Engineered Products, Clean Energy & Fueling, Imaging & Identification, Pumps & Process Solutions, and Climate & Sustainability Technologies.
In the first quarter of 2025, Dover Corporation (NYSE:DOV) reported revenue of $1.9 billion, down 1% from the same period last year. The company’s adjusted earnings from continuing operations came in at $$283 million, up 18% from the prior-year period. During the quarter, the company experienced strong and widespread demand and order activity, with notable momentum in markets tied to long-term growth trends such as single-use biopharma components, thermal connectors, and CO2 systems. A significant portion of revenue for the second quarter has already been secured in the backlog. The company also delivered outstanding margin performance, supported by a favorable mix from its high-margin, fast-growing platforms, along with effective cost control and productivity initiatives.
Dover Corporation (NYSE:DOV)’s cash position remained strong. The company generated $157.4 million in operating cash flow, and its free cash flow came in at over $109 million. On May 2, the company declared a quarterly dividend of $0.515 per share, which was in line with its previous dividend. Overall, it has been growing its dividends for the past 68 years, which makes it one of the best dividend aristocrat stocks on our list. The stock has a dividend yield of 1.2%, as of May 7.
10. General Dynamics Corporation (NYSE:GD)
Forward P/E Ratio as of May 7: 18.35
General Dynamics Corporation (NYSE:GD) is a Virginia-based aerospace and defence corporation. The company provides a wide range of products and services across several sectors, including business aviation, shipbuilding and maintenance, land-based combat vehicles, weapons and ammunition, as well as technology solutions and services. The stock has surged by over 3% since the start of 2025.
In the first quarter of 2025, General Dynamics Corporation (NYSE:GD) reported revenue of $12.22 billion, up nearly 14% from the same period last year. The revenue also surpassed analysts’ estimates by $279.2 million. The EPS of $3.66 also beat consensus by $0.18. All four segments reported year-over-year growth in both revenue and operating earnings, with particularly strong performance in the Aerospace segment. Aerospace revenue rose by 45.2%, operating earnings jumped 69.4%, and profit margins improved by 210 basis points, reaching 14.3%.
General Dynamics Corporation (NYSE:GD) also demonstrated a solid cash position in the most recent quarter. The company ended the quarter with $1.2 billion available in cash and cash equivalents. Moreover, it returned $383 million to shareholders through dividends. The company offers a quarterly dividend of $1.50 per share, having raised it by 5.6% in March. This was the company’s 28th consecutive year of dividend growth, which makes GD one of the best dividend aristocrat stocks. The stock has a dividend yield of 2.23%, as of May 7.
9. Emerson Electric Co. (NYSE:EMR)
Forward P/E Ratio as of May 7: 18.21
Emerson Electric Co. (NYSE:EMR) is an American manufacturing company that offers products and services related to commercial, industrial, and consumer markets. In its latest quarterly results, the company reported that Emerson achieved solid underlying orders in the second quarter, with margin expansion and adjusted earnings surpassing expectations. The quarter also marked another record in gross profit and adjusted segment EBITA margins, reflecting the effectiveness of the Emerson Management System and the strong value customers place on the company’s advanced technologies. Building on a strong first-half performance and successful navigation of the tariff landscape, Emerson expressed confidence in revising its 2025 outlook upward.
In fiscal Q2 2025, Emerson Electric Co. (NYSE:EMR) reported an EPS of $1.48 and revenue of $4.43 billion, both exceeding analysts’ estimates by $0.07 and $48.5 million, respectively. The revenue also showed a 1.28% growth from the same period last year. The company also announced the completion of Emerson’s portfolio transformation, marked by the finalized buy-in of AspenTech on March 12. The fiscal year 2025 guidance framework now incorporates full ownership of AspenTech. Net sales guidance has been raised to approximately 4%, reflecting a neutral impact from foreign exchange, while underlying sales remain positioned at the midpoint of the forecast range.
Emerson Electric Co. (NYSE:EMR) is a strong dividend payer with a robust balance sheet. In the most recent quarter, the company generated $825 million in operating cash flow, and its free cash flow amounted to $738 million. On May 7, it declared a quarterly dividend of $0.5275 per share, which was in line with its previous dividend. Overall, the company has raised its payouts for 67 years in a row. With a dividend yield of 1.88%, as of May 7, EMR is one of the best dividend aristocrat stocks to buy.
8. NextEra Energy, Inc. (NYSE:NEE)
Forward P/E Ratio as of May 7: 18.02
Headquartered in Florida, NextEra Energy, Inc. (NYSE:NEE) is a major player in the renewable energy sector. It operates one of the largest electric utilities in the United States, Florida Power & Light (FPL), and manages a globally significant renewable energy business through NextEra Energy Resources. These operations generate steady cash flow, which the company uses to fund dividends and reinvest in growth initiatives.
In the first quarter of 2025, NextEra Energy, Inc. (NYSE:NEE) reported solid financial results. Revenue reached $6.25 billion, reflecting a 9% increase compared to the same quarter last year. Adjusted earnings per share also rose by nearly 9% year-over-year—a notable achievement for a utility firm. This growth was driven by strong contributions from both FPL and the company’s renewable energy segment. FPL alone delivered $1.3 billion in adjusted net income, or $0.64 per share, representing an increase of more than 12% from the prior year. The company continues to prioritize strategic capital investments to meet Florida’s rising energy demands while maintaining affordable electricity rates.
NextEra Energy, Inc. (NYSE:NEE) also ended the quarter with a solid financial position, holding more than $2.4 billion in cash and cash equivalents. Its operating cash flow totaled $2.77 billion, further supporting its status as a reliable dividend-paying company. It currently pays a quarterly dividend of $0.5665 per share for a dividend yield of 3.32%, as of May 7. It is one of the best dividend aristocrat stocks on our list, as the company has been rewarding shareholders with growing dividends for the past 29 years.
7. Caterpillar Inc. (NYSE:CAT)
Forward P/E Ratio as of May 7: 16.56
Caterpillar Inc. (NYSE:CAT) ranks seventh on our list of the best dividend aristocrat stocks. The Texas-based manufacturing company is known for producing construction and mining equipment, along with off-highway diesel and natural gas engines and gas turbines. The company operates across all continents through its extensive global dealer network. Over time, it has broadened its range of offerings. It has licensed its brand for a line of apparel and footwear, and it also offers financial services through its subsidiary, Cat Financial.
Caterpillar Inc. (NYSE:CAT) reported mixed earnings in the first quarter of 2025, with revenue of $14.2 billion, which fell by nearly 10% from the same period last year. The decline was mainly attributed to a $1.1 billion drop in sales volume and a negative pricing impact of $250 million. The lower sales volume was largely influenced by shifts in dealer inventory levels. Operating profit margin stood at 18.1% in the first quarter of 2025, down from 22.3% in the same period of 2024.
Though Caterpillar Inc. (NYSE:CAT) suffered losses on various fronts, the company’s cash position still remained stable. Its enterprise cash flow for the quarter came in at $1.3 billion, and its enterprise cash amounted to $3.6 billion. The company remained committed to its shareholder obligation, returning $3.7 billion to investors through dividends and share repurchases. It currently pays a quarterly dividend of $1.41 per share and has a dividend yield of 1.74%, as of May 7. The company’s dividend growth streak spans 30 years.
6. Nucor Corporation (NYSE:NUE)
Forward P/E Ratio as of May 7: 15.65
Nucor Corporation (NYSE:NUE) is a North Carolina-based company that specializes in steel and related products. What sets Nucor apart from many of its competitors in the steel industry is its unique business model. Unlike traditional producers, the company uses electric arc mini mills that rely heavily on scrap steel. These mills are more adaptable than blast furnaces, which produce primary steel from iron ore and metallurgical coal. This flexibility enables Nucor to adjust production based on market demand, helping the company maintain healthy profit margins throughout the ups and downs of the steel cycle. The stock has surged by nearly 1% since the start of 2025.
In the first quarter of 2025, Nucor Corporation (NYSE:NUE) reported revenue of $7.8 billion, which showed a 4% growth from the same period last year. The revenue and EPS of $0.77 beat analysts’ estimates by $550.8 million and $0.10, respectively. The average sales price per ton dropped by 2% compared to the fourth quarter of 2024 and was down 12% year-over-year. Despite the decline in pricing, total shipments to external customers reached 6,830,000 tons, reflecting a 13% increase from the previous quarter and a 10% rise compared to the same period in 2024.
Nucor Corporation (NYSE:NUE) generated $364 million in operating cash flow in the most recent quarter. The company ended the quarter with $3.1 billion available in cash and cash equivalents. It offers a quarterly dividend of $0.55 per share for a dividend yield of 1.90%, as of May 7. The company is a Dividend King with 52 consecutive years of dividend growth under its belt.
5. Chevron Corporation (NYSE:CVX)
Forward P/E Ratio as of May 7: 14.86
Chevron Corporation (NYSE:CVX) is an American leading oil and gas company that produces and markets a variety of high-grade refined products such as gasoline, diesel, marine and jet fuels, premium base oils, finished lubricants, and fuel oil additives. It operates five fuel refineries across the US and maintains an extensive network of Chevron and Texaco-branded service stations.
Chevron Corporation (NYSE:CVX) experienced a decline in financial performance during Q1 2025, largely due to falling global oil prices. The company reported adjusted earnings of $3.8 billion, or $2.18 per share, which was a decrease from $2.93 per share in the same quarter last year. Despite the decline, the results surpassed Wall Street’s expectations by $0.03. However, revenue for the quarter totaled $47.61 billion, falling short of estimates by nearly $783.4 million. Chevron’s global production remained steady at 3.35 million barrels of oil equivalent per day (boe/d), unchanged from the previous year, but earnings from oil and gas operations dropped by over 28% compared to the same period last year.
Chevron Corporation (NYSE:CVX)’s cash position came in strong with an operating cash flow of $7.6 billion and $3.7 billion in free cash flow in the first quarter of 2025. Moreover, it returned $6.9 billion to shareholders through dividends and share repurchases. The company’s quarterly dividend comes in at $1.71 per share for a dividend yield of 4.99%, as of May 7. It is one of the best dividend aristocrat stocks on our list as the company has raised its payouts for 38 consecutive years.
4. Exxon Mobil Corporation (NYSE:XOM)
Forward P/E Ratio as of May 7: 13.44
Exxon Mobil Corporation (NYSE:XOM) ranks fourth on our list of the best undervalued dividend aristocrat stocks. The American multinational oil and gas company oversees a top-tier portfolio of resources and stands as one of the largest global players in integrated fuels, lubricants, and chemicals. It runs facilities and markets its products worldwide, while also engaging in oil and natural gas exploration across six continents.
In the first quarter of 2025, Exxon Mobil Corporation (NYSE:XOM) reported revenue of $83.1 billion, up modestly by 0.06% from the same period last year. The revenue missed analysts’ estimates by $3 million. However, its EPS of $1.76 exceeded consensus by $0.02. Since 2019, the company has made strategic decisions to cut costs, increase high-value volumes, and optimize its operations, boosting its quarterly earnings by approximately $4 billion based on current prices and margins. This year, the company is launching 10 advantageous projects, which are expected to generate over $3 billion in earnings by 2026, assuming constant prices and margins.
Exxon Mobil Corporation (NYSE:XOM) reported operating cash flow of $13.0 billion and free cash flow of $8.8 billion. It distributed $9.1 billion to shareholders, comprising $4.3 billion in dividends and $4.8 billion in share repurchases, in line with its previously announced plans. The company’s quarterly dividend is $0.99 per share and offers a dividend yield of 3.73%, as of May 7. It is one of the best dividend aristocrat stocks, having raised its payouts for 41 consecutive years.
3. Chubb Limited (NYSE:CB)
Forward P/E Ratio as of May 7: 13.28
Chubb Limited (NYSE:CB) is an insurance company that specializes in property and casualty, life insurance, and reinsurance. The company stands out due to its disciplined approach to underwriting and robust cash flows. For the past 20 years, the company has demonstrated exceptional underwriting skills, a critical factor in the highly competitive insurance sector. By effectively balancing risk and pricing policies, Chubb has consistently outperformed its competitors, resulting in steady positive cash flow.
In the first quarter of 2025, Chubb Limited (NYSE:CB)’s property and casualty net premiums written reached $10.93 billion, marking a 3.2% increase, or 5.0% growth when adjusted for currency fluctuations. In North America, premiums rose by 3.4%, though growth was affected by two non-recurring factors: reinstatement premiums tied to California wildfire claims in personal insurance, and unusually large structured deals written in commercial insurance the previous year. When excluding these items, North America saw a 6.4% increase overall, with personal insurance growing by 10.1% and commercial insurance rising by 5.3%. Within these segments, P&C lines increased by 6.4%, while financial lines declined by 1.3%.
Chubb Limited (NYSE:CB) generated an adjusted operating cash flow of $2 billion. Remaining committed to returning value to shareholders, the company distributed $366 million in dividends during the quarter. Currently, it offers a quarterly dividend of $0.91 per share for a dividend yield of 1.26%, as of May 7. The company has been rewarding shareholders with growing dividends for the past 31 consecutive years.
2. Archer-Daniels-Midland Company (NYSE:ADM)
Forward P/E Ratio as of May 7: 11.21
Archer-Daniels-Midland Company (NYSE:ADM) is an American company that is involved in food processing and commodity trading. The company is carrying out a strategic initiative to enhance profitability and aims to generate $200–$300 million in cost savings over the coming years by streamlining operations and reducing its workforce. These efforts are intended to improve margins and reinforce financial stability in the face of ongoing economic challenges. In addition, ADM is leveraging technologies such as AI, data analytics, and SAP S/4HANA to boost supply chain efficiency, enhance demand forecasting, and sharpen pricing strategies—moves that are expected to support its competitive edge.
Archer-Daniels-Midland Company (NYSE:ADM) reported mixed earnings in the first quarter of 2025. The company posted revenue of $20.1 billion, which not only fell by 7.6% on a YoY basis but also missed analysts’ estimates by $1.8 billion. However, the EPS of $0.70 beat consensus by $0.03. Total segment operating profit amounted to $747 million, reflecting a 38% decline compared to the same quarter last year. This figure excludes $49 million in specified items, which were mainly related to restructuring expenses.
Archer-Daniels-Midland Company (NYSE:ADM) ended the quarter with $864 million available in cash and cash equivalents. On May 7, the company declared a quarterly dividend of $0.51 per share, which fell in line with its previous dividend. Overall, it holds a 52-year streak of dividend growth, which makes ADM one of the best dividend aristocrat stocks to consider. The stock supports a dividend yield of 4.28%, as of May 7.
1. Target Corporation (NYSE:TGT)
Forward P/E Ratio as of May 7: 10.36
Target Corporation (NYSE:TGT) is an American retailer known for its chain of discount stores and hypermarkets. The company has positioned itself uniquely by combining affordability with a more refined shopping experience. This approach, supported by its exclusive and private-label products, has earned the company a dedicated customer base. While this strategy has historically driven success, Target is currently facing challenges amid a tougher economic environment and changing consumer preferences, which have put pressure on its sales. Since the beginning of 2025, the stock has dropped more than 29%.
As consumers become more cost-conscious and reduce spending on non-essential, higher-priced goods, Target Corporation (NYSE:TGT) has seen an impact on its revenue. This shift contributed to the company’s weaker financial performance in 2024. For the fiscal year ending February 1, net sales slipped by 0.8% compared to the previous year, and adjusted earnings per share declined by 1% to $8.86.
Despite these headwinds, Target Corporation (NYSE:TGT)’s solid cash flow supports its status as a dependable dividend payer. In FY24, the company generated $7.3 billion in operating cash flow and returned $513 million to shareholders through dividends in the fourth quarter, slightly above the $508 million distributed in the same quarter the year before. In addition, the company has a 53-year track record of dividend growth under its belt. Its quarterly dividend comes in at $1.12 per share and has a dividend yield of 4.62%, as of May 7.
Overall, Target Corporation (NYSE:TGT) ranks first on our list of the best undervalued dividend aristocrats to buy now. While we acknowledge the potential of TGT as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued dividend stock that is more promising than TGT but that trades at 10 times its earnings and grows its earnings at double digit rates annually, check out our report about the dirt cheap dividend stock.
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