The 5 Highest-Yielding Dividend Aristocrats Are Exceptional Value Buys Now

Stocks have taken a beating this year, and the Nasdaq and the Russell 2000 are both trading in bear market territory, meaning down over 20% from highs. The bad news for those who were long stocks in either index is they may take a while to fight back. The good news for investors with cash (and cash levels are at the highest since April of 2020) is that some of the top stocks are screaming buys now for patient and long-term growth and income investors.

With yields rising and the increase in the federal funds rate expected to start this week, safe corporate bonds are hardly the best idea now. Often when income investors look for companies paying big dividends, they are drawn to the Dividend Aristocrats, and with good reason. The 66 companies that made the cut for the 2022 S&P 500 Dividend Aristocrats list have increased dividends (not just remained the same) for 25 years straight. But the requirements go even further. The following are also mandatory for membership on the vaunted list:

• Companies must be worth at least $3 billion at the time of each quarterly rebalancing.
• They must have an average daily volume of at least $5 million in transactions for every trailing three-month period at every quarterly rebalancing date.

We screened the Dividend Aristocrats for the stocks that pay the highest dividends and found that the five that do are also potentially screaming buys now. All five are rated Buy at major Wall Street firms, but it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

IBM

This blue-chip giant is still offering investors a very solid entry point. International Business Machines Corp. (NYSE: IBM) is a leading provider of enterprise solutions, offering a broad portfolio of information technology (IT) hardware, business and IT services, and a full suite of software solutions.

The company integrates its hardware products with its software and services offerings in order to provide high-value solutions. Analysts have cited the company’s potential in the public cloud as a reason for their positive outlook going forward.

The company posted a very solid fourth quarter. The cloud proved to be big in the earnings reports, as did Red Hat, the software giant the firm bought in 2019. Red Hat’s open hybrid cloud technologies are now paired with the unmatched scale and depth of IBM’s innovation and industry expertise and sales leadership in more than 175 countries.

IBM stock investors receive a 5.29% dividend. Jefferies has a $165 price target on the shares, which compares with the $143.47 consensus target and Tuesday’s closing print of $125.64.

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