3 Dividend Aristocrats Now Cheaper Than During the 2008 Financial Crisis

  • These three Dividend Aristocrats offer rare opportunities with historically attractive valuations.
  • Genuine Parts (GPC): The company boasts a nearly unmatched dividend growth streak while consistently posting record-breaking revenues and earnings.
  • Johnson & Johnson (JNJ): The healthcare giant maintains a market-leading position and has a track record of dividend increases exceeding six decades.
  • Archer-Daniels-Midland (ADM): The company’s vital farming products ensure strong cash flows that have supported over five decades of dividend growth.
Undervalued Dividend Aristocrats - 3 Dividend Aristocrats Now Cheaper Than During the 2008 Financial Crisis

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When it comes to investing, few assets hold the appeal of undervalued Dividend Aristocrats—companies honored for their consistent dividend payments and resilient business models. This elite group of stocks comprises companies within the S&P 500 index with a distinguished track record of consistently increasing their dividends for at least 25 consecutive years. Such an impressive track record reflects both their ability to thrive over multiple financial cycles and market downturns and their commitment to returning capital to shareholders.

Given their overall qualities, having the opportunity to buy Dividend Aristocrats trading at historically attractive valuations is particularly compelling—especially given that Dividend Aristocrats rarely go on sale. While this is a rare occurrence, a few companies in this select group of stocks are currently trading at cheap valuations—cheaper, in fact, than those seen in the Great Financial Crisis of 2007-2008. In this article, I have gathered three undervalued Dividend Aristocrats trading this cheaply despite the broader market’s recent highs.

Genuine Parts (GPC)

Hands holding a smartphone with the Genuine Parts (GPC) logo displayed.
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The first of the undervalued Dividend Aristocrats on my list has to be Genuine Parts (NYSE:GPC). It’s not just any Dividend Aristocrat, but one that has built an extraordinary reputation over the years among income-oriented investors. This is due to its impressive dividend growth history, which few companies can match.

Specifically, Genuine Parts stands out with an unparalleled streak of 68 consecutive years of dividend hikes, matched only by Dover Corporation (NYSE:DOV) among Dividend Aristocrats, which features an equally strong track record. This remarkable track record underscores Genuine Parts’ consistent revenue and earnings growth over the years. The company has successfully navigated through multiple recessions and economic downturns spanning seven decades, which is utterly remarkable.

Genuine Parts’ shares have lagged recently despite the company achieving record sales of $23.1 billion last year. Its adjusted earnings-per-share (EPS) grew by 11.9% to $9.33 over the same period, also hitting a new record. The recent share price decline against growing financials has led to Genuine Parts stock currently trading at a forward price-to-earnings (P/E) ratio of just 13.7. This multiple is below some of the levels the stock was trading at in 2008 despite its growth prospects clearly remaining robust.

Johnson & Johnson (JNJ)

jnj healthcare stocks
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Johnson & Johnson (NYSE:JNJ) is another Dividend Aristocrat trading at dirt-cheap levels. The company continues to have dominant positions in the healthcare and consumer goods sectors through its diverse portfolio of essential pharmaceuticals, medical devices, and consumer health products. Yet, the market has been selling off shares of Johnson & Johnson, implying challenges that do not accurately reflect its actual situation.

Indeed, consensus estimates anticipate that FY2024 will mark another exceptional year for the company, projecting revenue and EPS growth of 4.2% and 6.3% to reach $88.8 billion and $10.54, respectively—both setting new records. Despite these robust financial projections, the parting between performance and stock price has resulted in JNJ shares currently trading at a forward P/E ratio of only 13.9 times. Interestingly, this valuation is lower than certain multiples observed in 2008 during the Great Financial Crisis.

In the meantime, Johnson & Johnson’s dividend growth track record remains exceptional. The company has raised its dividend for 61 consecutive years, one of the most impressive streaks among Dividend Aristocrats. The pace of dividend increases remains highly compelling as well, with its 10-year dividend CAGR standing at a solid 5.3%.

Archer-Daniels-Midland (ADM)

a photo of vast farmland

The last Dividend Aristocrat on my list trading at a rather depressed valuation is Archer-Daniels-Midland (NYSE:ADM). At $60.45 today, ADM stock trades are significantly lower than its 2022 peak of roughly $97 and are nearing the levels it maintained in spring 2021. However, as one of the world’s largest agricultural processors and food ingredient providers, the company has consistently delivered solid quarterly results over this period.

I am quite surprised that the market has turned its back on Archer-Daniels lately, as the company’s farm products, such as vegetable oils, sweeteners, and plant-based and animal-based proteins, remain critical for meeting our nutritional requirements. For this reason, the company enjoys a recession-proof business, which explains why you will rarely see ADM stock trading going on sale. To illustrate this quality, the company has increased its dividend for 51 years in a row—a testament to its enduring commitment to shareholders.

Valuation-wise, in light of its recent decline, ADM stock is presently trading at a forward P/E ratio of only 11.2 times. This figure is lower than certain valuation points observed during the Great Financial Crisis, which is rather puzzling given the company’s overall resilience. Coupled with Archer Daniels offering a respectable yield of 3.3%, potential for continued dividend growth at a decent pace, and the prospect of its valuation potentially expanding from current levels, this Dividend Aristocrat presents a compelling opportunity today.

On the date of publication, Nikolaos Sismanis did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Nikolaos Sismanis is a professional research analyst with five years of experience in the field of equity research and financial modeling. Nikolaos has authored over 1,000 stock-related articles that focus on uncovering deep value opportunities, identifying growth stocks at reasonable valuations, and shining a spotlight on overlooked international equities.


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