Investing in the best-discounted dividend aristocrats is an excellent strategy despite economic headwinds. History has shown that wagering on dividend stocks can prove incredibly rewarding regardless of economic cycles. Moreover, if those investments are in dividend aristocrats, you’re in for an even more lucrative journey ahead.
Dividend Aristocrats are an elite group of companies that have raised dividend payouts for at least 25 consecutive years. Achieving this status is no small feat, though, with these stalwarts passing the test of time with flying colors. These firms represent a testament to enduring profitability and proven financial resilience. With that said, three of the top discounted dividend aristocrats can be scooped for a sizable discount.
Discounted Dividend Aristocrats: Realty Income (O)
Realty Income (NYSE:O) is a blue-chip real estate investment trust (REIT) known for paying monthly dividends. It has also paid a growing dividend in the past 26 years, offering a lucrative 6% yield. Moreover, O stock has dipped more than 12% in the past year, with Wall Street analysts forecasting a strong 14% upside from its current price.
Amidst the market’s ups and downs, O stock’s underlying business remains robust, maintaining a solid 98% occupancy rate. Importantly, 80% of its retail tenants operate in sectors proven resilient during economic downturns, such as grocery, convenience stores, and pharmacies.
Moreover, its operation on a robust triple-net lease model is a key advantage. The model effectively allows for shifting all operational expenses and risks, including maintenance costs, onto its tenants. Moreover, with leases as long as 15 years or even more, the firm enjoys a robust and reliable rental income stream.
PPG Industries (PPG)
PPG Industries (NYSE:PPG) is a leading paint and coatings specialist with revenues north of $18.2 billion. Lately, it has been undergoing a major restructuring to streamline its business effectively and unlock shareholder value.
In doing so, it’s divesting its U.S. and Canadian architectural coatings business, having shed its traffic markings operations in Europe, Australia, and New Zealand. The goal is to focus on the more profitable segments, with a narrower focus to elevate the firm’s market positioning.
Despite the restructuring, PPG remains committed to its shareholders, having announced a massive $2.5 billion share repurchase plan. Additionally, it yields a healthy 2% while paying its shareholders a growing dividend in the past 51 years. Having eclipsed the 50-year mark, it’s now part of a more elusive Dividend King group.
Recent results have been encouraging, with it reporting a sizable bump in profits in the first quarter (Q1). Earnings increased to $264 million during Q1 from the $400 million it generated in the prior-year period. Also, adjusted earnings were $1.86 per share, which aligns with Wall Street’s expectations despite the current market headwinds. Also, it’s trading 15.3% behind its 52-week high price of $153.
Federal Realty Investment Trust (FRT)
Federal Realty Investment Trust (NYSE:FRT) is a beacon of stability amidst the current economic turbulence. It boasts a massive portfolio with over 102 properties, including top-tier retail spaces and versatile mixed-use developments. More importantly, it has been a tremendous income stock, with a 55-year streak of annual dividend increases. Such an impressive track record cements Federal Realty’s reputation as one of the top havens for long-term investors.
Furthermore, FRT’s financial performance has remained remarkably good, which aligns with its historical metrics. In its most recent quarter, its revenues came in at a lofty $291 million, a 6.7% increase in top-line growth from the prior-year period. Moreover, its funds-from-operation (FFO) came in at a stellar $1.64, roughly 48% of its total sales and 17% higher than the sector median.
The consistency in its results is due to its powerful client list, which includes Gap (NYSE:GPS), Albertsons (NYSE:ACI), TJX (NYSE:TJX), and CVS (NYSE:CVS), to name a few.
Investors looking for a reliable stock that offers stability and steady returns in stormy times will find Federal Realty an exemplary choice.
On the date of publication, Muslim Farooque did not have (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.
