10 Most Undervalued Dividend Growth Stocks According to Hedge Funds

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

Number of Hedge Fund Holders: 83

Dividend Yield as of October 27: 2.74%

The Procter & Gamble Company is a consumer staples company selling products such as Tide, Pampers, Gillette, Crest, and Head & Shoulders. The company is a solid dividend payer; however, the amount of the next dividend will be at the discretion of the board based on the company’s profitability, cash flow, and financing requirements. P&G has paid a dividend for 136 consecutive years and has increased its dividend for 70 consecutive years.

In April, P&G increased its quarterly dividend by 3% to $1.0885, up from $1.0568, which works out to $4.354 per share annually. At a share price of $159, that’s a yield of about 2.7%. P&G’s dividend growth has slowed down compared to the increases we saw previously. The dividend was up 7% in 2024, 5% in 2025, and 3% in 2026. This is relevant to investors who are counting on dividend growth to provide a hedge against inflation.

P&G has maintained an outstanding record of dividend payouts, but the increases in the most recent years have been smaller than those in prior years. The breadth of the company’s range of everyday household and personal care products provides a constant stream of consumer demand. That said, investors should look at the dividend in the context of its valuation and cash flow rather than just the fact that it’s been paid out for so long. P&G is currently yielding around 2.7% and provides both current income and a very strong track record of increasing the dividend each year.

Also read: Would You Buy P&G at this Valuation?

4. AbbVie Inc. (NYSE:ABBV)

Number of Hedge Fund Holders: 88

Dividend Yield as of October 27: 2.41%

AbbVie Inc. (NYSE:ABBV) is a pharma company that develops and markets medicines in the areas of immunology, neuroscience, oncology, and others. The portfolio includes Skyrizi, Rinvoq, Botox, and Venclexta. It pays a quarterly dividend and has increased its dividend for over 50 years running, including the period when it was part of Abbott Laboratories, prior to becoming an independent company in 2013.

AbbVie’s board declared a quarterly dividend of $1.73 per share in Q3 2026, which is $6.92 per year. At the latest reported yield of circa 2.42% as of Oct 26, that’s a fairly modest income return. The company has increased its dividend by over 330% since it was formed in 2013. The dividend growth is underpinned by the new immunology products, which are helping to make up for the decline in Humira sales as a result of biosimilar competition. Q2 2026 Skyrizi revenue was $5.51 billion, up 24.4% YoY, and Rinvoq revenue was $ 2.53 billion, up 24.5% YoY. Humira revenue was down 35.9% to $756 million in the same period.

Also read: Jim Cramer and Ken Fisher Like This Healthcare Stock

AbbVie reported $16.99 billion in Q2 revenue, up 10.2% YoY, and adjusted diluted earnings of $3.65 per share, up from $2.97 per share a year ago. Management’s July guidance for full-year 2026 adjusted earnings was $13.87 to $14.07 per share. On an annualized dividend of $6.92, that works out to an adjusted earnings payout ratio of around 49%-50 %. This payout ratio allows the company to pay dividends while continuing to invest in its drug pipeline. For the dividend investor, the key question is whether Skyrizi and Rinvoq can continue to grow as Humira continues to lose ground.