Dividend Aristocrats have a reputation for low returns. To be fair, there’s good reason for that. These companies are mature and established, so they don’t undergo the explosive growth we see in tech startups and biotech companies. That’s not necessarily bad, as less volatile stocks with reliable dividend payouts can greatly add to your portfolio income.
But what if you could get them for cheap? And not just arbitrarily cheap. I mean real cheap, based on both fundamental and technical analysis. That means you enjoy dividend payouts and participate in any positive price movement. It’s like having your cake and eating it, too!
So, today, let’s look at the Cheapest Dividend Aristocrats in the market.
How I Screened For The Following Stocks
To get the list of cheapest Dividend Aristocrats today, I used my pre-prepared Barchart Aristocrat Watchlist and screened it using Barchart’s Stock Screener.
Then, I added the following filters:
- Annual Dividend Yield: I left this blank so the column would appear in my search results.
- P/E Ratio TTM (Trailing Twelve Months): The price-to-earnings ratio is a financial metric used to measure a stock’s “cheapness” relative to its earnings per share and is presented as 1 to 100. For this analysis, I chose Low to Very Low. A lower P/E ratio means the stock is undervalued, although I must compare it to its industry average to get a full picture.
- 14-Day Relative Strength Index (RSI): RSI is a common technical analysis tool that indicates if the stock is oversold or overbought relative to its 14-day trading prices. An RSI of 30 shows that the stock is oversold and may present a buying opportunity. I screened for stocks with 40 RSI for a little headroom in this analysis since most experts agree we’re in a bull market now.
- Current Analyst Ratings: I set this to 3.5 to 5, denoting moderate to strong buy ratings. This improves the chances of getting quality stocks that have a little of Wall Street’s goodwill.
Then, I clicked on See Results, and I got five hits. I arranged the companies from lowest to highest dividend yields and took the top three.
So, without further ado, let’s start with the third cheapest Dividend Aristocrat today:
PPG Industries (PPG)
PPG Industries is a global paints, coatings, and specialty materials supplier. Founded in 1883, it operates in over 70 countries and has more than 50,000 employees worldwide. The company serves various markets, including aerospace, automotive, and construction.
PPG’s P/E ratio is 16.24, which is quite cheap compared to the Materials sector’s current 24.56. It also has an RSI of 33.37, which means it's barely skimming the top of oversold territory. Despite that, it has the highest analyst rating of all the results, at 4.09, or a moderate buy based on 12 analysts.
For FY’23, PPG record sales registered in at $18.2 billion, representing a 3% growth year over year. Net income also grew 24% in the same period. Tim Knavish, CEO and Chairman, said the record performance was a return to form for the company and that increased demand will further improve its numbers.
PPG has 52 years of consecutive dividend increases and also ranks among the elite Dividend Kings. PPG stock pays $2.60 annually, translating to a 2.08% yield.
Genuine Parts Company (GPC)
Genuine Parts Company distributes automotive replacement parts, industrial replacement parts, office products, and electrical/electronic materials. The company is divided into two segments—Automotive Parts and Industrial Parts—and has a global presence with more than 10,000 locations worldwide.
The company’s FY’23 financials had good news for investors. Sales were up 4.5%, while diluted EPS increased 12.3% YOY.
GPC belongs to the Consumer Discretionary sector; its ttm P/E ratio is 14.78, while the overall sector’s is 25.81. If that’s not enough to convince you that it’s cheap, GPC stock’s 14-day RSI is at 35.48, barely above the oversold line. Given that it also has a 3.67 moderate buy rating, you might want to keep an eye on it.
GPC stock pays $4 in annual dividend, which translates to a 2.91% yield.
Medtronic Inc (MDT)
Medtronic is a medical technology company that operates in over 150 countries and specializes in over 70 health conditions, including Parkinson’s, diabetes, cardiac ablation, and more. The company has four segments:
- Cardiovascular Portfolio
- Medical Surgical Portfolio
- Neuroscience Portfolio
- Diabetes
MDT stock’s ttm P/E ratio is 15.43, fully half of the Healthcare sector’s current 33.62 P/E. Additionally, the stock trades at a 39.09 RSI, marking it a significant bargain buy for income investors.
Speaking of income, the company raised its dividends to 70 cents quarterly, or $2.80 annually, translating to a 3.52% yield. The company has 47 years of consecutive dividend increases.
Meanwhile, its latest annual report (FY’24) saw revenue increasing by 3.6%, though earnings decreased by 2%, primarily due to increased expenses. Still, 27 analysts give it a 3.56 average score, which means there are still reasons to buy MDT.
Final Thoughts
It’s hard to find cheap stocks in a bull run. Hard, but not impossible, as my list clearly shows. Besides, if you’re bottom-picking in these market conditions, you might as well pick stocks that will provide you with consistent and reliable dividend yields.
On the date of publication, Rick Orford did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
