Get Paid While You Wait: 7 Dividend Aristocrats to Buy Now

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The stock market bulls are charging right now. The Federal Reserve appears set to lower interest rates this year, which could stoke equity markets. Meanwhile, the emergence of AI has powered tech stocks higher.

However, some analysts are worried that this rally could come crashing down. Given high valuation multiples on many leading momentum stocks right now, this is a tricky time to put capital to work.

The good news, though, is that there are still plenty of good investment opportunities for long-term investors.

One great hunting ground is in Dividend Aristocrats. These are the companies that have increased their dividend payments for 25 or more years in a row. This record proves that these firms can prosper regardless of broader economic and political conditions. And these seven are at attractive valuations today, making great entry points for these Dividend Aristocrats to buy.

Emerson Electric (EMR)

An office building with an Emerson Electric sign on it.

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Emerson Electric (NYSE:EMR) has historically been an industrial company focused on electrical equipment. The company was among the first to produce industrial fans, sewing machines, and power tools among others.

In recent years, Emerson has evolved its business. Seeing the possibilities in the factories of tomorrow, Emerson has leaned heavily into the industrial automation space. It is now a leader in engineering and software solutions to make factories operate in a leaner and more efficient manner.

Emerson increasingly looks like the future of industrial automation. Despite being in a highly valued fast-growing market, however, EMR stock is going for just 20 times forward earnings. That plus its steadily increasing dividend makes this a great blue-chip pick for long-term investors.

Exxon Mobil (XOM)

Exxon Mobil logo outside of a corporate building

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In Warren Buffett’s latest annual letter, he highlighted carbon capture as a significant investment opportunity. He was specifically mentioning his firm’s investment in Occidental Petroleum (NYSE:OXY) in that discussion. However, Occidental ran itself into trouble by overly leveraging its business and thus required Buffett’s funds to turn things around.

For investors that want a more stable way to play the next generation of energy technology — including carbon capture — there’s Exxon Mobil (NYSE:XOM). Exxon has been a stalwart blue chip over the decades, being one of the only companies to maintain a triple-A credit rating while investing in all sorts of new opportunities and fields within the energy space.

Those new opportunities include carbon capture. Exxon acquired Denbury Resources last year. In doing so, it gets access to Denbury’s massive network of carbon sequestration assets. Exxon is now the country’s largest owner of CO2 pipelines and it is now positioned to be able to reduce said CO2 emissions by up to 100 million metric tons per year.

International Business Machines (IBM)

Photo of IBM (IBM) building as seen through the canopy of a tree. IBM logo is in large letters on side of building.

Source: shutterstock.com/LCV

International Business Machines (NYSE:IBM) was long the king in hardware solutions for the information technology sector. Its mainframe computers were the backbone of many Fortune 500 enterprises for decades.

However, IBM largely missed the evolution to more modern tech solutions. IBM failed to make a dent in modern operating systems, PCs, smartphones or the like. Many investors dismissed IBM as a dinosaur heading into the 2020s.

But IBM has continued to invest heavily in R&D. It is always among the world’s leading developers of new patents. And some of this new technology is coming in handy. IBM’s long-running investments in AI systems such as Watson now appear to pay off in spades. And IBM’s efforts in the fast-moving quantum computing space are gaining momentum as well.

IBM has definitely missed a lot of opportunities over the years. But its robust balance sheet and research-driven focus has given it plenty of shots on goal. And some of these are now paying off. This shows the power of a blue-chip Dividend Aristocrat; they are generally able to get back on track and return to prosperity even after some strategic missteps.

For IBM, things are looking up once again, and income investors appreciate the firm’s 3.6% dividend yield.

Becton Dickinson (BDX)

The front of a Becton Dickinson (BDX) office in Ontario, Canada.

Source: JHVEPhoto / Shutterstock.com

Becton Dickinson (NYSE:BDX) is a leading health care and medical devices company. The firm is well-known for making basic medical implements such as syringes and catheters.

In recent years, it has made a series of acquisitions which has pushed out into more markets. Some of these other businesses have hit some obstacles.

There was a major recall with its diabetes pumps. Some COVID-19 related revenues have naturally declined from their prior peak levels. And the Chinese medical devices market is in a slump at the moment, which has dinged Becton Dickinson’s results.

But the pessimism is overblown. BDX shares are now at 19 times forward earnings, which is a considerable discount to where this high-quality business has often traded in the past.

Morningstar’s Alex Morozov agrees that BDX stock is at a deep discount right now. Morozov believes the stock has a fair value of $325 per share, whereas shares are currently available for less than $250 each.

3M (MMM)

3M logo on top of a corporate building. MMM stock

Source: JPstock / Shutterstock.com

3M (NYSE:MMM) is an American manufacturing powerhouse. The firm has more than 85,000 employees and produces thousands of unique products across a dizzying area of fields ranging from safety helmets to automotive repair tools, dental equipment, adhesives, and dozens of others.

MMM stock has been in the doghouse over the past five years. It has slumped amid supply chain issues, slow organic growth, and a variety of product liability lawsuits.

None of this is good news, of course. But with shares down by more than half from their all-time highs, MMM stock is at a big discount. The company has not only maintained but continued to grow its dividend in the interim. Shares go for less than ten times forward earnings and offer a 6.5% dividend yield.

NextEra Energy (NEE)

Nextra Energy (NEE) website on a mobile phone screen

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NextEra Energy (NYSE:NEE) is one of the leading developers of renewable power in America.

The company has long taken advantage of Florida’s sunny weather and fast-growing economy to deploy solar power at a rapid clip. This has been a highly profitable operation, and NEE stock has historically outperformed most utility rivals.

However, the utility sector has entered a slump. Higher interest rates have made it more costly to finance new projects. And investors have dumped firms with heavy exposure to renewables given increasing concerns around the economics on some wind and solar projects. But, given NextEra’s strong track record, investors should give it in the benefit of the doubt.

In fact, this is a particularly advantageous point for buying shares of discounted utility companies such as NextEra. Between higher interest rates and the slump in the renewables market, and many utility shares are selling near their lowest valuations in many years. Morningstar’s Andrew Bischof believes fair value for NEE stock is $74/share compared to its current $57 quotation.

Sherwin-Williams (SHW)

A Sherwin-Williams (SHW) sign in Richfield, Minnesota.

Source: Ken Wolter / Shutterstock.com

Sherwin-Williams (NYSE:SHW) is one of America’s leading paint purveyors.

At a glance, paint may not sound like an interesting business. But this is actually a secret weapon for many Dividend Aristocrats.

Because paint is a mature established market, it long ago consolidated to just half a dozen or so key players. Technological disruption is minimal; paint as a product remains the same from year to year. And because it is a built-out industry, there is really much in the way of new competitive threats either.

Long story short, Sherwin-Williams has been able to use its considerable market share and leading presence with professional painters to earn outsized profits. To put a number on it, SHW stock has run up roughly 30,000% since 1984. And it pays an ever-growing dividend on top of that as well.

On the date of publication, Ian Bezek held a long position in IBM, XOM, BDX, MMM, and EMR stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.

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The post Get Paid While You Wait: 7 Dividend Aristocrats to Buy Now appeared first on InvestorPlace.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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