Dividend Aristocrats are highly sought after, as there are fewer than 70 on the market, and an even smaller portion of them pay notable dividends. These companies have increased their dividends for 25 or more consecutive years, meaning your investments can snowball exponentially if you buy and reinvest for decades.
However, not all Dividend Aristocrat stocks require you to have a decades-long horizon if you want triple-digit returns. Some of them are sitting at discounts and can double your money within a few years. The current environment is especially suitable for investing in these stocks. Interest rate cuts have just restarted and will begin to tug on Treasury yields while boosting businesses. In turn, this will encourage more investments to flow into dividend stocks with high yields.
Here are three Dividend Aristocrat stocks to look into that are trading at undervalued levels.
Target (TGT)
Target (NYSE:TGT) is one of the most extensive retail chains in the U.S. and is a household name. It has done quite well in low-interest-rate environments, delivering explosive gains in late 2020 and early 2021 before a sudden reversal in early 2022.
The stock has fallen ~65% from its peak and returns have been dwindling, but that won’t be the case forever. Its woes are mostly linked to macro headwinds and earnings normalizing from the sharp increase in 2021 and 2022.
Analysts expect EPS to start rebounding in FY 2027 (starts in February, calendar year 2026). Revenue is also expected to rebound by 2% and progressively improve thereafter.
You’re paying just above 10 times earnings today, whereas the historical median has been over 15 times. Net income in FY 2019 was $2.94 billion with revenue of $75.36 billion. In FY 2025, Target reported $106.57 billion in revenue, with $4.1 billion in net income and $8.65 billion in EBITDA. TGT stock is down almost 30% from December 2019 prices.
You get a 5% dividend yield as you wait for it to recover. Target also routinely does buybacks, so the shareholder yield skews to nearly 7%. Dividends have been increased for 54 years consecutively.
FactSet Research Systems (FDS)
FactSet Research Systems (NYSE:FDS) has been quite perilous in the past six months, down 31.3%. It has taken a nosedive in the past week after reporting Q4 FY 2025 earnings.
The main culprit has been margin compression and disappointing guidance for FY 2026. The company reported solid revenue growth, but the adjusted operating margin decreased to 33.8% in Q4 2025 from 35.8% in the year-ago quarter. FactSet guided for an adjusted operating margin of 34% to 35.5% for FY 2026, down from 36.3% in the current year.
The selloff seems too steep for a momentary slowdown in earnings. Analysts still expect EPS to grow 4.2% in FY 2026 and accelerate to 7.9% in FY 2027, potentially reaching double-digit FY 2028 onwards. Revenue growth remains strong and is expected to be 5.1% in FY 2026.
The margin pressure is due to bonus costs normalizing to higher levels in 2025. Year-over-year comparisons will look better in the coming years.
If FactSet solves the margin issue, it can rebound in earnest. It has long been a mainstay of Wall Street, and the stock itself has delivered exceptionally consistent gains throughout its history. I see the recent decline as a once-in-a-decade buying opportunity.
Realty Income (O)
Realty Income (NYSE:O) is the go-to monthly dividend stock for many people and is named “The Monthly Dividend Company” for a reason. It has hiked its dividends for over 30 consecutive years and has paid 663 consecutive monthly dividends.
Realty Income is a real estate investment trust (REIT) but comes with all the pros and very few cons. For starters, the portfolio is mostly built around retail properties with customers who themselves have recession-resistant properties. This has allowed the company to maintain occupancy at nearly 100%. It has never seen its year-end occupancy rate go below 96%, including in 2008. The current occupancy rate is 98.6%.
O stock faced pressures and declined in late 2022 and 2023 due to high interest rates, but has turned a corner. It bottomed out and is up 13% year-to-date.
Interest rate cuts will not only attract investors due to the dividends, but they will also boost REIT businesses. The company posted $1 billion in net interest losses in FY 2024. It’s impressive that the company’s forward funds from operations of $4.27 still comfortably cover the forward $3.23 dividend rate.
O stock has a 5.47% forward dividend yield.
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