In her latest blog post, Morningstar investment specialist Susan Dziubinski describes 10 top undervalued stocks with reliable dividends for investors’ consideration.
Analysts screened these stocks, among the top constituents of the Morningstar Dividend Yield Focus Index, for their dividend durability and future reliability rather than for their yield, according to Dan Lefkovitz, a strategist for Morningstar Indexes.
“Looking for the most yield-rich areas of the market can often lead you into troubled areas and dividend traps — companies that have a nice-looking yield that is ultimately unsustainable,” Lefkovitz said.
Companies in the index from which the 10 were selected have wide or narrow moat ratings, meaning that their competitive advantages are likely to last 20 years (wide) or 10 years (narrow).
In addition, they have low, medium or high uncertainty ratings, a measure of the reliability and predictability of their cash flows. Finally, the companies’ management teams are supportive of their dividend strategies.
See the gallery for the 10 best dividend stocks, all of which were trading in the 4- and 5-star range at the start of the year. One-year returns are as of Jan. 8. The stocks are ranked in ascending order of trailing dividend yield.
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