5 Coiled Spring Dividend Aristocrat Deals Potentially Set To Soar

This article was published on Dividend Kings on Monday, February 6th, 2023.

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What a start to the year!

After a horrible 2022, stocks are off to the races, posting their 8th-best January in history.

Everything had a great January, including bonds, long-bonds, and international stocks.

The market is celebrating a soft landing that no longer looks impossible, but of course, when tech stocks are up double-digits in a month, things have likely gone too far.

While a soft landing scenario is still possible, recession is still the most likely outcome in 2023.

The consensus is that a very mild recession has already begun.

And a brand new survey of 1,200 global CEOs from Ernst & Young finds that 98% of chief executives expect a recession this year.

Most CEOs say they are preparing for a moderate or even severe recession, though 54% say they still plan to pursue M&A deals and hiring plans remain robust.

S&P Blue-Chip Consensus Bear Market Bottom Scenarios

Earnings Decline In 2023	2023 S&P Earnings	X 25-Year Average PE Of 16.8	Decline From Current Level
0%	$217.03	$3,652.61	11.7%
5%	$206.18	$3,469.98	16.1%
10%	$195.33	$3,287.35	20.5%
13% (average, median since WWII)	$188.82	$3,177.77	23.2%
15%	$184.48	$3,104.72	24.9%
20%	$173.62	$2,922.09	29.4%

Click to enlarge

(Sources: DK S&P 500 Valuation Tool, Bloomberg)

However, even if we get a mild recession and earnings are flat in 2023, which is the blue-chip best-case scenario, stocks will likely have to give back a lot of these gains and then some before the new bull market can truly get underway.

So what’s a smart long-term income investor like you to do when the market is acting as if the recession that’s likely just begun is already over?

How about buying the most undervalued dividend aristocrats on Wall Street? Why not combine supreme quality with sky-high margins of safety? That way, you can rest assured that you’re getting a great deal and taking advantage of some of the best bargains in the best companies in years or even decades.

How To Find The Best Aristocrat Bargains In 1 Minute

Let me show you how to screen the Dividend Kings Zen Research Terminal, which runs off the DK 500 Master List, to find the highest-yielding blue-chips on Wall Street easily.

The Dividend Kings 500 Master List includes some of the world’s best companies, including:

• every dividend champion (25+ year dividend growth streaks, including foreign aristocrats)
• every dividend aristocrat
• every dividend king (50+ year dividend growth streaks)
• every Ultra SWAN (as close to perfect quality companies as exist)
• the 20% highest quality REITs according to iREIT
• 40 of the world’s best growth blue-chips

Step	Screening Criteria	Companies Remaining
1	Dividend Champions List	134
2	10+% long-term return potential (A Good Return For Defensive Blue-Chips)	73
3	Sort By Valuation	16
4	5 Most Undervalued Dividend Champions	5
Total Time	1 Minute

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(Source: Dividend Kings Research Terminal)

A simple one-minute screen to go from 500 of the world’s best companies to the five best aristocrat bargains on Wall Street.

The 10 Best Dividend Aristocrat Deals You Can Buy Right Now

Let me share with you the basic fundamentals, along with articles providing further research, on the five best aristocrat bargains you can buy today.

The Most Undervalued Aristocrat: V.F. Corp. (VFC)

Further Reading

V.F. Corp: A 4.4% Yielding Dividend Aristocrat Bargain You Don’t Want To Miss

• Dividend Growth Streak: 51 years
• Price: $30.62
• Fair Value: $54.58
• Historical Discount: 44%
• Quality Rating: 95% medium risk 11/13 speculative blue-chip dividend king
• DK Rating: Potential speculative very strong buy
• Yield: 6.7%
• Growth Consensus: 12.8%
• Long-Term Return Potential: 20.5%

2025 Consensus Total Return Potential

The 2nd Most Undervalued Aristocrat Carlisle Companies (CSL)

Further Reading

2 Outrageously Cheap Buffett-Style Aristocrat Bargains For 2023

• Dividend Growth Streak: 46 years
• Price: $250.48
• Fair Value: $406.60
• Historical Discount: 38%
• Quality Rating: 91% medium risk 13/13 Ultra SWAN dividend champion
• DK Rating: Potential Ultra Value Buy
• Yield: 1.2%
• Growth Consensus: 16.0%
• Long-Term Return Potential: 17.2%

2025 Consensus Total Return Potential

The 3rd Most Undervalued Aristocrat 3M (MMM)

Further Reading

3M Is Struggling, So Buy These 7+% Yielding Dividend Aristocrats Instead

• The number Of Hedge Funds That Own It: 49
• Price: $117.49
• Fair Value: $182.16
• Historical Discount: 36%
• Quality Rating: 97% very low risk 12/13 Super SWAN dividend king
• DK Rating: Potential very strong buy
• Yield: 5.1%
• Growth Consensus: 6.6%
• Long-Term Return Potential: 11.7%

2025 Consensus Total Return Potential

The 4th Most Undervalued Aristocrat: First Of Long Island Corp. (FLIC)

Further Reading

5%-Yielding Dividend Aristocrat Hidden-Gem Bargains

• Dividend Growth Streak: 29 years
• Price: $17.67
• Fair Value: $26.82
• Historical Discount: 34%
• Quality Rating: 77% high risk 11/13 blue-chip dividend champion
• DK Rating: Potential very strong buy
• Yield: 4.8%
• Growth Consensus: 7.0%
• Long-Term Return Potential: 11.8%

2025 Consensus Total Return Potential

The 5th Most Undervalued Aristocrat: Altria (MO)

Further Reading

Altria: Buy This 8% Yielding Dividend Aristocrat Before The Yield Goes To 10.5%

• The number Of Hedge Funds That Own It: 47
• Price: $46.91
• Fair Value: $69.59
• Historical Discount: 33%
• Quality Rating: 98% medium-risk 13/13 Ultra SWAN dividend king
• DK Rating: Potential very strong buy
• Yield: 8.0%
• Growth Consensus: 5.5%
• Long-Term Return Potential: 13.5%

2025 Consensus Total Return Potential

Bottom Line: Even In A Red Hot Market, Amazing Aristocrat Bargains Are Always Available

Let me be clear: I’m NOT calling the bottom in any of these companies (I’m not a market-timer).

Blue-chip quality and even Ultra SWAN quality do NOT mean “can’t fall hard and fast in a bear market.”

Fundamentals are all that determine safety and quality, and my recommendations.

• over 30+ years, 97% of stock returns are a function of pure fundamentals, not luck
• in the short term; luck is 25X as powerful as fundamentals
• in the long term, fundamentals are 33X as powerful as luck

While I can’t predict the market in the short term, here’s what I can tell you about these five dividend aristocrat bargains.

None of these aristocrats are broken value traps; at worst they are speculative turnarounds but still possess strong brands, good balance sheets, and capable management.

All are expected to grow at solid 5.5+% growth rates and are trading at 34% to 44% historical discounts. Yes, even three have enjoyed strong rallies to start the year.

When you combine the quality of a dividend aristocrat with sky-high margin of safety, you are set to potentially benefit no matter what happens with the economy in 2023.

If we get a soft landing? Then earnings growth for these companies should beat earnings expectations, and valuations would completely justify the rallies they experience for the rest of the year.

If we get a recession? As 98% of CEOs expect? Then they are likely to suffer far smaller declines, and your dividend reinvestment will further compound your long-term income growth.

With companies this high quality, with management teams this talented, and risk management this good, the downside is limited and the upside is incredible.

As we’ve seen with their fast graphs, over the next three years all five of these outrageously undervalued aristocrats offer 18% to 27% annual return potential.

That’s not just good; that’s literally Buffett-like return potential from aristocrat bargains hiding in plain sight.