14 Cheap DRIP Stocks to Buy Now

In this article, we will take a look at the 14 Cheap DRIP Stocks to Buy Now. 

One of the most effective ways investors grow their portfolios is through compounding returns. When dividends are reinvested instead of taken as cash, the portfolio begins to build on itself. Over time, that steady reinvestment can lead to faster growth as returns start generating their own returns.

A common way to apply this is through a dividend reinvestment plan, or DRIP. These plans automatically use dividends and capital gains distributions to buy additional shares of the same stock, often without extra cost. Over time, the effect can build gradually. Each reinvestment adds a little more, and that added amount keeps working in the background. It does not require much effort, but the impact can become meaningful as the years pass.

CNBC reported that dividend reinvestment is a strategy used by Thomas Van Spankeren, CFP and chief investment officer at Chicago-based RISE Investments, particularly for younger clients and those with longer time horizons. He said, “We like to reinvest the dividends if there is no near-term cash flow need.”

He also pointed out that enrolling in a DRIP through a brokerage can remove much of the guesswork. The process becomes automatic. These programs work in a way that is similar to dollar-cost averaging, since shares are purchased at different times regardless of price movements. At the same time, maintaining liquidity remains important. In more volatile markets, having cash available can help investors avoid selling at unfavorable times. It also gives them the flexibility to buy when valuations become more attractive.

Given this, we will take a look at some of the best DRIP stocks to own.

Photo by Dan Dennis on Unsplash

Our Methodology:

For this list, we started by using stock screeners to find dividend stocks with P/E ratios below 25, as of March 31. From that list, we picked companies that offer dividend reinvestment plans to shareholders. We limited our final selection to companies that have recently reported noteworthy developments likely to impact investor sentiment.

Why are we interested in 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 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).

14. S&P Global Inc. (NYSE:SPGI)

Forward P/E: 24.6

On March 31, S&P Global Inc. (NYSE:SPGI) announced that Firdaus Bhathena will join the company as Executive Vice President and Chief Technology and Transformation Officer, with the appointment taking effect on April 27, 2026. He is expected to take charge of a unified technology organization across the business. The role centers on pushing the company’s adoption of newer technologies and helping steer its next phase of transformation.

Mr. Bhathena will report directly to Martina Cheung, President and Chief Executive Officer, and will be part of the executive leadership team. He will be based in New York. He joins from FIS Global, where he served as Executive Vice President and Global Chief Technology Officer. In that role, he focused on overhauling the company’s technology infrastructure, while also overseeing software development and its data and AI efforts. He led a global team of more than 24,000 employees.

His background spans financial services, digital health, and enterprise SaaS. Much of his experience comes from working through large-scale transformation efforts and modernizing technology platforms.

S&P Global Inc. (NYSE:SPGI) provides essential intelligence through five businesses: S&P Global Market Intelligence, S&P Global Ratings, S&P Global Commodity Insights, S&P Global Mobility, and S&P Dow Jones Indices.

13. Automatic Data Processing, Inc. (NASDAQ:ADP)

Forward P/E: 24.5

On March 31, TD Cowen lowered its price recommendation on Automatic Data Processing, Inc. (NASDAQ:ADP) to $208 from $255. It reiterated a Hold rating on the stock. The firm said it had updated its model to reflect changes in Fed Funds rate expectations, foreign exchange, and its positioning ahead of Q3 results.

A few days earlier, on March 27, Wells Fargo also reduced its price goal on ADP to $214 from $262 while keeping an Underweight rating. The firm pointed to compression in comparable group multiples as the reason for the adjustment.

During the Q2 2026 earnings call, Chief Financial Officer Peter Hadley said the company was raising its fiscal 2026 consolidated revenue outlook to about 6% growth. He added that the adjusted EBIT margin expansion forecast remained unchanged at 50 to 70 basis points. He also said the company was increasing its adjusted EPS growth outlook to between 9% and 10%, noting that share repurchases would help support that growth.

Hadley noted that the Employer Services segment is now expected to deliver around 6% revenue growth for the full year. For the PEO segment, he said revenue growth is still expected to fall in the 5% to 7% range. Excluding zero-margin pass-throughs, PEO revenue is projected to grow between 3% and 5%. He also said the effective tax rate is expected to be around 23% for the year. Hadley reiterated that the company is maintaining its guidance for new business bookings growth at 4% to 7% for fiscal 2026.

Automatic Data Processing, Inc. (NASDAQ:ADP) provides cloud-based human capital management solutions and operates through two segments: Employer Services and Professional Employer Organization.

12. International Business Machines Corporation (NYSE:IBM)

Forward P/E: 23.9

International Business Machines Corporation (NYSE:IBM) and ETH Zurich said they are entering a 10-year partnership to develop algorithms that combine AI and quantum computing. The move builds on their long relationship and signals a continued push toward the next phase of computing. They said that as quantum computing becomes more relevant, current algorithm frameworks are starting to show their limits. The focus is now on building new approaches that bring together classical computing, machine learning, and quantum systems to tackle more complex business and scientific problems.

As part of the partnership, IBM plans to support new professorships and research efforts at ETH Zurich. The work will center on hybrid computing methods, along with areas such as optimization, differential equations, linear algebra, and complex system modeling. Both sides said that strengthening these mathematical foundations could help make quantum technology more practical and improve how difficult problems are solved across industries.IBM has helped shape several generations of computing, from early algorithmic advances like the Fast Fourier Transform (FFT) to artificial intelligence systems such as Deep Blue and Watson. The company continues to work on expanding what computing systems can do.

ETH Zurich is considered one of the world’s leading scientific institutions. Its history includes 22 Nobel laureates and prominent figures in mathematics, physics, and computer science, including Albert Einstein and Eduard Stiefel. Many of the ideas developed there still form the basis of modern science, including programming languages, numerical methods, and theoretical frameworks.

International Business Machines Corporation (NYSE:IBM) provides hybrid cloud and artificial intelligence solutions, along with consulting services. The company operates through Software, Consulting, Infrastructure, and Financing segments.

11. Caterpillar Inc. (NYSE:CAT)

Forward P/E: 23.2

On March 31, Barclays analyst Adam Seiden raised the firm’s price recommendation on Caterpillar Inc. (NYSE:CAT) to $700 from $625. It reiterated an Equal Weight rating on the shares. The firm updated its targets across machinery and construction names as part of its Q1 preview. It pointed out that rentals, small-cap cyclicals, and agriculture are dealing with higher input costs, added competition, and what it described as “fading recovery narratives.” The analyst said rising input costs stand out as a “bigger negative risk” for agriculture markets. At the same time, there is a growing chance of government-related support, especially with an election year shaping demand across several end markets.

Earlier in March, Reuters reported that Atlas Energy signed an agreement with Caterpillar to secure about $840 million worth of power-generation equipment through 2029. The move is meant to lock in manufacturing capacity as electricity demand in the US continues to rise. Atlas said the deal covers around 1.4 gigawatts of additional natural gas power generation capacity, with deliveries planned between 2027 and 2029. The equipment will include large-load reciprocating generator sets. This involves CG260-16 units for behind-the-meter installations, along with G3520 series units that can support both behind-the-meter and bridge-power applications.

Caterpillar Inc. (NYSE:CAT) manufactures construction and mining equipment, along with off-highway diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. The company operates through Construction Industries, Resource Industries, and Power & Energy segments.

10. Donaldson Company, Inc. (NYSE:DCI)

Forward P/E: 20.62

On March 30, Baird lowered its price recommendation on Donaldson Company, Inc. (NYSE:DCI) to $95 from $104. It reiterated an Outperform rating on the shares. The firm said it remains constructive on the advanced industrial technology group. It pointed out that exposure to the Middle East is limited, while cyclical indicators are still trending toward improvement in 2026 and 2027. In its view, the recent pullback in these stocks presents a buying opportunity.

During the fiscal Q2 2026 earnings call, Chairman, CEO, and President Tod Carpenter said the company delivered record sales in the second quarter. He noted that the team worked to keep pace with strong demand across all three business segments. He also expressed confidence in the updated fiscal 2026 outlook. He indicated that the company expects record sales of around $3.8 billion, with operating margins and adjusted earnings per share reaching all-time highs.

Carpenter pointed to the acquisition of Facet, calling it the largest deal in the company’s history. He said the business is expected to contribute nearly $110 million in sales, with gross and EBITDA margins well above the company’s average. He added that about 70% of Facet’s revenue comes from recurring, regulated replacement part sales.

Donaldson Company, Inc. (NYSE:DCI) focuses on technology-driven filtration products and solutions, serving a range of industries and advanced markets. The company operates through Mobile Solutions, Industrial Solutions, and Life Sciences segments.

9. The Procter & Gamble Company (NYSE:PG)

Forward P/E: 19.72

On March 31, TD Cowen lowered its price recommendation on The Procter & Gamble Company (NYSE:PG) to $142 from $156. It reiterated a Hold rating on the shares. The firm also reduced its estimates across the household and personal care space. It said companies are unlikely to fully offset higher oil-related input costs tied to the Iran war. Even if the conflict ends soon, the analyst noted that price increases “will prove sticky due to infrastructure damage.” TD Cowen also pointed to weaker pricing power compared to past periods, along with fewer opportunities to move consumers toward higher-end products. These factors contributed to the lower target.

Analysts at CNBC observed that earlier in March, investors had been rotating into consumer staples at the start of the year, while pulling back from technology stocks and the Magnificent Seven. The shift was noticeable, with investors favoring steady cash flow businesses that offer consistent dividends. That trend began to reverse after the Iran war started. Consumer staples stocks came under pressure as rising fuel costs raised concerns about tighter household budgets and weaker spending on everyday items.

Even so, the defensive nature of the sector remains intact. Companies like Procter & Gamble are still viewed as relatively stable, since demand for basic products such as laundry and personal care items tends to remain steady across economic cycles.

The Procter & Gamble Company (NYSE:PG) focuses on branded consumer packaged goods sold worldwide. It operates through five segments: Beauty, Grooming, Health Care, Fabric & Home Care, and Baby, Feminine & Family Care. Its products are available in around 180 countries and territories.

8. CSX Corporation (NASDAQ:CSX)

Forward P/E: 18.59

On March 31, Bernstein analyst David Vernon raised the firm’s price recommendation on CSX Corporation (NASDAQ:CSX) to $39 from $36. It maintained a Market Perform rating on the shares. The firm said it is updating its view on the rail sector as competition between transport modes and support from commodity trends continue to improve. At the same time, it noted that railroads are not insulated from broader macro risks tied to the Iran conflict. Even so, Bernstein argued that if a severe recession remains a tail risk rather than a base case, there is a case for increasing exposure to rail stocks.

A few days earlier, on March 26, RBC Capital Markets raised its price goal on CSX to $43 from $39 and maintained an Outperform rating. The update came as part of a broader preview of Q1 results for Class I railroads. The firm said it is assigning higher valuation multiples to the stock, pointing to signs that the freight environment is starting to improve.

CSX Corporation (NASDAQ:CSX) provides transportation services, including rail, intermodal, and rail-to-truck transload solutions. It serves a range of markets such as energy, industrial, construction, agriculture, and consumer products.

7. Sysco Corporation (NYSE:SYY)

Forward P/E: 18.18

On March 31, Citi lowered its price recommendation on Sysco Corporation (NYSE:SYY) to $72 from $88. It reiterated a Neutral rating on the shares. The firm said the stock declined after news of Sysco’s planned acquisition of Jetro Restaurant Depot. The analyst said that while the deal is expected to be accretive, concerns around due diligence and execution risk are valid. Citi also noted that it could take years to disprove the bear case, which may leave an overhang on the stock for some time.

On March 30, Reuters reported that Sysco had agreed to acquire catering supplier Jetro Restaurant Depot in a $29 billion deal. The move is aimed at expanding its reach among price-conscious independent restaurants. The company said it plans to fund the deal with $21 billion in new and hybrid debt, along with $1 billion in cash and equity. Jetro Restaurant Depot operates a wholesale cash-and-carry model, where customers pay upfront for goods such as food, beverages, and takeaway containers. This model complements Sysco’s existing delivery network that serves restaurants, hospitals, and hotels.

The deal would also allow Sysco to enter a higher-margin segment of the market. Restaurant Depot has about 166 warehouse locations across 35 U.S. states. The companies said Restaurant Depot shareholders will receive $21.6 billion in cash and 91.5 million Sysco shares, valued at about $7.5 billion based on Friday’s close. That would give them roughly a 16% stake in the combined company.

Sysco Corporation (NYSE:SYY) sells, markets, and distributes food products to restaurants, healthcare and educational facilities, lodging establishments, and other customers that prepare meals away from home. It also provides a range of non-food items. The company operates through U.S. Foodservice Operations, International Foodservice Operations, SYGMA, and Other segments.

6. Eversource Energy (NYSE:ES)

Forward P/E: 14.16

On March 27, BofA analyst Ross Fowler lowered the firm’s price recommendation on Eversource Energy (NYSE:ES) to $73 from $82. It maintained a Buy rating on the shares. The firm said it revised its FY26–28 EPS estimates to reflect a full 100 basis point base ROE drag in 2026 tied to Opinion No. 594. It noted that the ruling resets the New England Transmission Owners’ base ROE to 9.57% and introduces two refund obligations.

During the Q4 2025 earnings call, the company said it expects 2026 earnings per share to come in between $4.80 and $4.95. It indicated that earnings growth will be more moderate, pointing to the timing of key regulatory decisions, along with pressure related to Aquarion and storm cost recovery. John Moreira, Executive VP, CFO & Treasurer, said the slower growth outlook is largely tied to when those regulatory outcomes are expected to come through.

Looking further out, the company pointed to a stronger pickup in earnings growth in 2027 and 2028. It expects this to be supported by improved regulatory outcomes, recovery of storm-related costs, and adjustments to distribution rates. It also outlined a five-year long-term EPS growth target of 5% to 7%, based on 2025 non-GAAP recurring EPS of $4.76 per share, and said it expects to reach the upper end of that range by 2028. The company highlighted a $26.5 billion capital plan focused on investments in electric and natural gas distribution, transmission, and technology. It added that including Aquarion Water would raise the total by another $1.3 billion.

Eversource Energy (NYSE:ES) operates as a utility holding company, delivering energy through its subsidiaries. Its segments include Electric Distribution, Electric Transmission, Natural Gas Distribution, and Water Distribution.

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