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Are you still struggling with building your retirement portfolio? Well, you are not alone. Almost every American has heard of the concept of investing for retirement. Yet, one of the most difficult parts is finding where to start. It can be hard to figure things out if you don’t have a background in finance. The great thing is that the stock market has some tried-and-true routes that anyone can take at any time, regardless of prior knowledge. For example, let’s look at Dividend Aristocrats.
Dividend Aristocrats are stocks listed on the S&P 500 that have consistently increased their dividends for the past 25 years. They are often trusted household names, beloved by income investors for the strength of the business, resilience during economic downturns, and predictable dividends. They can easily fit into any portfolio and provide reliable income streams.
This article will look at three undervalued dividend Aristocrats you can check out.
International Business Machines Corporation (IBM)
International Business Machines Corporation is a tech company making IT-related products and services. Actually, it's one of the biggest players in the current tech race. The company is known for its resiliency and ability to reinvent itself in different technology eras. These days, IBM is focused on mainstream development and application of AI, quantum computing, and cloud computing. One of its latest announcements detailed the release of “Quantum Heron,” which offers a five-fold error reduction improvement from its predecessor. Today, the company is currently offering a 4.11% dividend yield.
IBM’s financial performance is also on a roll, with its earnings continuously beating analyst estimates for the third consecutive quarter. Reported revenue also showed a 4.6% YoY increase due to the performance of its consulting and software segments, which grew 6% and 8%, respectively. The company has been increasing its foothold on AI and hybrid cloud capabilities through acquisitions and strategic investments in research and development. Its participation in AI and cloud computing makes IBM an excellent prospect for long-term investors looking to invest in their later years.
Analyst Ratings
Analysts rate IBM as a “Hold” based on 2 Strong Buy, 1 Moderate Buy, 6 Holds, and 1 Strong Sell. Its mean target price is $144.22, and its high target price is $179.00, an upside of 11.68%.
Realty Income Corporation (O)
The second stock in our list is Realty Income Corporation, a real estate investment trust. The company specializes in acquiring and managing commercial properties for long-term net lease agreements. Realty Income Corp leases properties spanning 84 industries in the U.S., U.K., Italy, and Puerto Rico. O has a long history of providing shareholder value, and it's dividends currently pay a 5.56% yield. The company’s recent increase marks its 104th consecutive quarterly dividend increase.
O’s 3rd quarter gave us a glimpse of its strong financials. The company reported a rent recapture rate of 106.9% for its re-leased properties, $4.5 billion in liquidity, and an occupancy rate of 98.8%. Reported EPS also beat analyst earnings estimates by 2%. Furthermore, the pending merger agreement with Spirit Realty Capital Inc., expected to close in the first quarter of 2024, will help boost the company’s growth. Its strong focus on investing in high-quality real estate, ample liquidity, and growth plans make O an excellent choice for long-term investors.
Analyst Ratings
O is currently rated as a “Moderate Buy” by analysts based on 4 Strong Buys, 1 Moderate Buy, and 8 Hold recommendations. The mean target for O is $60.73, and the high target price is $74.00, an upside of 35.26%.
3M Company (MMM)
3M Company is a consumer goods conglomerate that manufactures various products for industries like health care, consumer services, transportation, electronics, safety, and industrials. Americans would know it for its post-it notes, adhesives, stationeries, bandages, and respirators. The company has been in a strong down-trend this year due to the and has been slowly regaining its lost price performance following the news about its earplug settlement. Today, 3M currently offers investors a very attractive 5.9% dividend yield.
MMM’s latest quarterly results showed how big names are resilient even in uncertain market conditions. The company beat analyst earnings estimates by 14.53% despite the impact of the settlement. 3M is firmly focused on driving its operational performance with strategic initiatives and the strength of its operational segments. Based on its year-to-date performance, the company has raised its outlook for full-year adjusted EPS, cash flow, and free cash flow. Its strong management and predictable income make it one of the must-have stocks in a long-term portfolio.
Analyst Ratings
The last Dividend Aristocrat on our list is also rated as a “Hold” by analysts based on 1 Strong Buy, 11 Holds, and 2 Strong Sell recommendations. Its mean target price is $109.00, and the high target price is $159.00, an upside of 54.68%.
Final Thoughts
Investing long-term is one of the best strategies for investors looking for a secure retirement. While there are no fool-proof ways to get rich, the strategy helps to mitigate long-term risk by looking at companies with a proven track record of predictable income streams and resiliency during economic downturns.
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.
