Who doesn’t like a good discount? If the 167 million people who vistied physical and online stores last year are any indication, then I’d say a significant part of the population loves a great bargain.
The latest U.S. elections have generally pushed the market up. However, not all companies were buoyed by the results, and this has finally brought some expensive, quality companies back to being fairly valued again. And, let me tell you, nothing says top-notch dividend stocks than the Dividend Aristocrats, S&P 500 listed companies that have paid 25 years of increasing dividends and have passed several stringent requirements set by the index.
So, in the spirit of the upcoming Black Friday sale, let’s look at some oversold Dividend Aristocrats that are finally trading at great bargain levels.
How I Came Up With The Following Stocks
To get this list, I screened for the following criteria:
- 14-day Relative Strength Index: 30% and below. Tech analysis enthusiasts will be familiar with RSI. For the uninitiated, though, the RSI, or relative strength index, identifies whether a stock is oversold or overbought based on its recent trading prices. The technical analysis tool plots scores on a 0-100 scale, with 70 as the overbought level marker and 30 for oversold.
- Annual Dividend Yield: Left blank.
- Current Analyst Rating: 3.5 (Moderate Buy) to 5 (Strong Buy). I want companies that still retain Wall Street’s buy ratings despite their latest selloffs. That way, investors can expect capital appreciation growth in the future.
- Watchlist: Aristocrats. This filter allows me to access my watchlists, which I can then select from to screen. Today, though, we’re sticking with Dividend Aristocrats.
With these filters, I got exactly three matches:
I arranged them from lowest to highest 14-day RSI ratings, and now we’ll discuss each of them, starting with the lowest one:
Coca-Cola Company (KO)
14-day RSI: 20.22%
The Coca-Cola Company is no stranger to many top dividend stock lists, and it’s no wonder. With 62 years of consistent dividend increases (ranking it as an Aristocrat and King) and 104 years of unbroken dividend payments (earning it the Dividend Zombie title), KO ranks as one of the best and most recognizable dividend stocks for income investors.
Known for its namesake drink, the company has since expanded its offerings to water, sports drinks, teas, and coffee brands. Some well-known brands under its umbrella are Sprite, Fanta, Dasani, Minute Maid, and Powerade.
KO stock is down 11.07% this month alone, which might scare some investors away. However, given its 3.07% yield (based on its $1.94 annual dividend), other investors might see this price drop as an excellent opportunity to grab this dividend powerhouse for cheap. It helps that analysts are still optimistic about the stock’s prospects, giving it a strong buy rating with a 4.48 average score out of five.
AbbVie Inc (ABBV)
14-day RSI: 25.12%
AbbVie Inc. is a global biopharmaceutical company known for researching, developing, and commercializing advanced therapies for various diseases. The company developed Humira, one of the best-selling medications for autoimmune diseases like rheumatoid arthritis, psoriasis, and Crohn’s.
A few days ago, ABBV was trading around $200, but its price has dropped by more than 12% in the last month, primarily due to emraclidine’s disappointing clinical trial results. The drug, which aims to reduce the psychotic symptoms of schizophrenia, failed to show statistically significant symptom reduction for trial candidates.
For most newly minted biotech companies, a failure of this magnitude is often a death sentence. However, AbbVie is one of the biggest pharmaceutical companies in the world. It has more than 90+ compounds and devices in its development pipeline, not to mention its existing portfolio of drugs like Humira, Botox, Imbruvica, and Skyrizi. It’s safe to say that while emraclidine’s clinical trial failure was a heavy blow, it’s by no means enough to sink AbbVie’s ship.
For those willing to buy ABBV stock at its current level, the company offers a $6.20 annual dividend, which translates to a 3.66% yield. Analysts also rate the stock a moderate buy with an average score of 4.31.
Johnson & Johnson (JNJ)
14-day RSI: 25.55
J&J is one of the most diversified healthcare companies in the world. It is known for its commitment to improving health and well-being through a wide array of products and services. The company operates in three main sectors: Pharmaceuticals, Medical Devices, and Consumer Health Products.
JNJ stock pays $1.24 quarterly, translating to $4.96 annually and a 3.27% yield. Like the other two companies on this list, the stock is trending down, though a reversal appears to be in the works. That said, it has the lowest analyst score on this list at 3.70, so it may be best to watch for a directional reversal before buying the stock.
Final Thoughts
Bargains are hard to come by when it comes to mature companies—and now, these Dividend Aristocrats offer a rare opportunity for income investors to buy quality stocks at discounted prices. So, while you hunt for Black Friday deals, consider adding these dividend gems to your portfolio. They might just be the best bargain you get this season.
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