We recently released a list 11 Undervalued Dividend Noble Buy Now. In this article, we will explore the stance of Archer-Daniels-Midland Corporation (NYSE: ADM) with other undervalued dividend aristocrats.
Stocks of dividend stocks are becoming increasingly popular this year as investors are looking for ways to mitigate the blow to current market challenges. The S&P Dividend Noble Index tracks the performance of companies that have had dividend growth for at least 25 consecutive years, with dividend growth falling by at least 1.2% since the beginning of 2025, while the broad market has declined by 4.1%. Analysts point out that dividends not only help to improve overall returns early, but also clearly demonstrate that companies with growing dividends tend to provide stronger performance. These stocks will generally provide better returns, less risk, maintain inflation, and maintain good interest rates, whether interest rates are climbing or falling.
According to the S&P's "Research Insights", dividends account for about one-third of total earnings since 1926. This is mainly because, unlike stock prices may fluctuate, dividends represent guaranteed gains once paid. Even in strong bull markets such as the 1950s, 1980s and 1990s, dividends played a meaningful role in strengthening investor returns. However, in weaker market cycles, their true value is particularly evident when capital gains are modest or even negative, with dividends usually accounting for more than half of total gains. In some cases, they have been the determinant of keeping a positive return. Essentially, dividends are often the most important when market performance is insufficient.
A Fenimore Asset Management report shows that between 1972 and 2016, companies that raised or initiated dividends were always better than those that did not. Historically, dividend hiking has often been seen as management’s confidence in the company’s future. This concept is even the basis of a “dividend discount model” that values companies based on expected dividend growth.
On average, companies that grow or introduce dividends have annual returns of 9.8%, respectively, exceeding those that have not paid dividends. These companies will often enjoy a rise in sales and earnings, generating more cash than is required for reinvestment, allowing them to reward shareholders regularly. This model also reflects the strong commitment of management and board to return value to investors.
Companies that cut or eliminate dividends often struggle financially. These underperformers have an age of -0.6% for annual returns during the above period, a reduction usually indicates weaker business, limited growth prospects, or the need to redirect cash to internal demand rather than shareholder spending.
The report also highlights that one of the key advantages of increasing dividends is its ability to retain purchasing power over time. As inflation gradually increases the cost of living, dividend income needs to grow to keep up. Assuming a long-term inflation rate of 2%, the dividend must be increased at least so much to avoid actual loss of value.
While earning investors may attract stocks with high yields, it is equally important to consider the rate of growth of these dividends. Production that focuses only on output and not on growth may be short-sighted. In the long run, companies that steadily raise their dividends provide revenue that understands inflation or even exceeds inflation, thus providing greater financial security.
The wheat fields at sunset show the company's commitment to agricultural products.
For this list, we scan the list of S&P dividend aristocrats, stocks that have increased spending for 25 years or more, and identify stocks with lower forward P/E ratios. From there, we picked 11 dividend aristocrats from May 7, well below 20 dividends and therefore ranked them.
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Forward P/E ratio as of May 7
Archer-Daniels-Midland Company (NYSE: ADM) is an American company involved in food processing and commodity trading. The company is launching a strategic plan to increase profitability and aims to save $20 billion to $300 million in the next few years by simplifying operations and reducing its workforce. These efforts are designed to improve profit margins and enhance financial stability in the face of ongoing economic challenges. Additionally, ADM is leveraging technologies like AI, data analytics and SAP S/4HANA to improve supply chain efficiency, improve demand forecasting and improve pricing strategies that are expected to support its competitive advantage.
Archer-Daniels-Midland Company (NYSE: ADM) reported different earnings for the first quarter of 2025. The company's revenue was $20.1 billion, not only down 7.6% from Yoy's base, but also missed analyst estimates, which are estimated at $18 billion. However, earnings per share was $0.70, and the consensus reached $0.03. The segment's total operating profit was US$747 million, down 38% from the same period last year. The figure does not include $49 million in designated projects, which is mainly related to the restructuring costs.
Archer-Daniels-Midland Company (NYSE: ADM) ended the quarter with $864 million in cash and cash equivalents. On May 7, the company announced a quarterly dividend of $0.51 per share, which is in line with previous dividends. Overall, it has 52 years of dividend growth, which makes ADM one of the best dividend aristocratic stocks to consider. As of May 7, the stock's dividend yield was 4.28%.
Overall, ADM Ranked second On the list of the best dividend aristocrats we are going to buy now. While we acknowledge the potential of ADM as an investment, our belief lies in the belief that certain undervalued dividend stocks have greater hope to provide higher returns and do so in a shorter time frame. If you are looking for an undervalued dividend stock that has a more promising dividend than ADM, but the annual earnings are trading at 10 times and grow with double-digit earnings, check out our report Dirt cheap dividend stocks.
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Disclosure: None. This article was originally published in Inside monkey.