5 ‘Dividend Aristocrats’ With Big Upside

  • The jury is still out on whether markets have found a bottom, or are even close to one.
  • The uncertainty creates opportunities to buy great companies with reliable dividend payouts cheaply.
  • A stock market expert names 5 of the most undervalued ‘dividend aristocrats’ in the market.

Even with major indices in bear markets, the jury is still out on whether stocks have found a bottom, or are even close to one. 

With the

Federal Reserve

indicating there will be no let-up in rate hiking any time soon, and inflation stubbornly high, further


looks likely.

All this uncertainty may be daunting for investors, but it creates opportunities to buy great companies with reliable dividend payouts cheaply.

“In times of market turbulence, one of the safest investments is in the so-called dividend aristocrats — companies that have consistently paid and raised dividends for more than 25 consecutive years,” said Maxim Manturov, head of investment advice at online broker Freedom Finance Europe. 

“Although many dividend aristocrats are not high-yield investments, they provide their shareholders with a steady cash flow, even in domestic and global economic crises.” 

Manturov and his team have identified five undervalued dividend aristocrats for investors to consider.


“Polaris specialises in the manufacture and sale of high-capacity off-road vehicles and snowmobiles, motorbikes, and powerboats,” he said. “Unlike most dividend aristocrats, the company has not yet reached its financial maturity; its revenues have grown at an average annual rate of 12.03% over the past five years.” 

“At the same time, management believes that sales will grow by an average of 7% to 9% a year over the next five years, and the customer base could grow by 50% over the next ten years. Notably, the fastest-growing segment of the company’s customer base is millennials.”

Two years ago, Polaris earned its status as a dividend aristocrat, he noted. The company delivers a

dividend yield

of 2.57% with a payout ratio of 31.12%.

“Dividends are not the only tool Polaris uses to reward shareholders. Through buybacks, the company’s management plans to reduce the number of shares by at least 10% over the next five years. Wall Street analysts value the stock at $131, implying a 29.7% upside potential.”

V.F. Corporation 

“The company specializes in manufacturing, marketing, and selling branded clothing, footwear, and related products in North and South America, Europe, and the Asia Pacific,” Manturov said. ‘The company’s portfolio includes well-known brands such as The North Face, Timberland, Vans, and Supreme.” 

“Despite short-term disruptions due to supply chain issues and economic weakness in China, we believe that VFS will grow faster than most competitors and maintain its brand recognition advantage in the longer term. As a result, management forecasts that sales will grow by an average of 7 to 8% in the coming years.”

The average price target from investment banks is $59, implying a growth potential of 27.8%, Manturov added. 


“Walmart has several growth drivers in the long term: the company’s e-commerce segment is still growing and has a low penetration rate. In addition, Flipkart India, in which Walmart has a 75% stake, is planning an IPO in 2022-2023, which could lead to a revaluation of the company’s stock.”

Regardless of market conditions, the share price will be supported by dividends, which the company has been paying out steadily since 1989, Manturov said. The current yield is 1.86%, with a payout ratio of 27.23%. 

He added that the Wall Street consensus for fair market value of Walmart shares is $157, which provides investors with a 31% upside potential. 


“AT&T has recently taken several major steps to reformat its business and reduce its debt burden,” Manturov said. “In particular, the company spun off DirecTV, sold other non-core assets and spun off and merged WarnerMedia with Discovery. AT&T suggests that the upgrade will allow the company to focus on expanding its 5G and


networks to keep pace with its main competitors.”

He added AT&T will continue to perform well. In the first quarter of 2022, the company attracted a record number of new communications subscribers and reported a growing number of 5G customers. More than 691,000 new postpaid subscribers have joined in the first 3 months since the beginning of the year. 

“AT&T is one of the attractive dividend aristocrats, thanks to its solid business and high dividend payout,” Manturov said. ‘The company currently has a dividend yield of 5.56%. In addition, it trades quite cheaply on multiples which could make the stock more resilient during a

bear market



“IBM continues to evolve and carve out niches in promising new trends,” Manturov said. “IBM has been trying to reshape its own business model for the last few years. The company is betting on keeping the demand for cloud solutions high, so it is actively transforming the business in that direction.” 

IBM’s hybrid cloud tools allow customers to integrate their own IT systems with public clouds, he noted, creating a combination of a secure private IT infrastructure along with the ability to rapidly expand IT capacity through the public cloud ecosystems of Microsoft, Amazon and Alphabet.

Manturov added that IBM has been steadily increasing its dividend payout. The last increase was in May this year, bringing the payout to $1.65 per quarter, with an annual dividend yield of 4.79%.  

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