5 Dividend Stocks for Steady Growth

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5 Dividend Stocks for Steady Growth

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Finding stocks that not only offer growth but also deliver consistent income through dividends is key. Today, we highlight the potential benefits of five companies that stand out for their dividend-paying reliability and strong market positioning. These stocks are currently undervalued by Morningstar analysts, providing a great opportunity for investors seeking both income and long-term growth potential.

Let’s dive in.

THE MONEY IDEA💡
5 Dividend Stocks for Steady Growth

Exxon Mobil: A Core Holding for Dividend Investors

• Strong Growth Prospects: Exxon Mobil is Morningstar's top pick among integrated oil producers, offering the best growth potential in the sector.

• Narrow Economic Moat: The company’s narrow economic moat indicates it has competitive advantages that protect its profits from competition.

• Attractive Valuation: Trading at 4-star levels today, Exxon Mobil is considered undervalued, making it an appealing investment.

• Solid Dividend Yield: With a yield of over 3%, Exxon provides stable income for dividend-focused investors.

• Core Holding: Recommended as a core holding, Exxon Mobil combines stability with growth, making it a reliable choice for long-term investors.

Verizon: High Yield and Consistent Cash Flow

• Reliable Cash Flow: Verizon is expected to generate solid cash flow in 2024, supporting its ability to maintain and grow its dividend.

• High Dividend Yield: With a yield well above 6%, Verizon stands out as a top choice for income-focused investors.

• Narrow Economic Moat: The company’s narrow moat indicates that Verizon can sustain its competitive position and profitability over the long term.

• Undervalued Stock: Trading at 4-star levels, Verizon is currently undervalued, making it an appealing buy for dividend seekers.

• Stability in Telecom: As one of the leading telecom providers, Verizon offers a combination of stability and income potential, making it a solid addition to any dividend-focused portfolio.

Starbucks: A Global Brand with Dividend Growth Potential

• Recognizable Global Brand: Starbucks is one of the most recognizable restaurant brands worldwide, with a wide economic moat that supports its long-term profitability.

• Strong Financials: The company generates strong free cash flow and targets a 50% dividend payout ratio over the long term, indicating its commitment to returning value to shareholders.

• Moderate Dividend Yield: Starbucks offers a dividend yield of 3.03%, providing a solid income stream for investors.

• Long-Term Growth Prospects: While fiscal third-quarter results were soft, Morningstar expects a broader recovery in consumer spending by 2025, which should benefit Starbucks significantly.

• Undervalued Stock: Trading 22% below Morningstar’s fair value estimate of $95 per share, Starbucks presents an attractive opportunity for investors seeking both growth and income.

Dow: Positioned for Economic Resilience

• Global Leader in Chemicals: Dow is one of the largest chemical producers globally, well-positioned to benefit from economic cycles.

• Resilience in Economic Soft Landings: Dow’s strategic positioning allows it to thrive even during economic slowdowns, with potential for growth as the economy recovers.

• Narrow Economic Moat: The company’s narrow moat highlights its ability to sustain competitive advantages in a challenging market.

• High Dividend Yield: Offering a yield topping 5%, Dow is an attractive option for those seeking higher dividend income.

• Undervalued Opportunity: Currently trading at a 4-star rating, Dow is undervalued, providing a compelling entry point for investors.

Altria Group: A High-Yielding Dividend Stock

• Leading Tobacco Maker: Altria is the leading tobacco manufacturer in the United States, and it’s pursuing a multipronged approach to cigarette substitutes.

• Wide Economic Moat: The company’s wide moat ensures that it can continue to generate strong revenue, earnings, and dividends despite challenges in the industry.

• High Dividend Yield: With a trailing yield of 7.94%, Altria offers the highest yield among the stocks discussed here, making it particularly attractive to income-seeking investors.

• Growth Despite Challenges: Altria’s ability to consistently price above its rate of cigarette volume declines should allow it to continue increasing its revenue, earnings, and dividends, although the company did experience elevated cigarette declines in the second quarter.

• Undervalued Stock: Trading 15% below Morningstar’s fair value estimate of $58 per share, Altria is a compelling option for those looking for high yield at a discount.

The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.

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