Do you want to know a secret? Many Dividend Aristocrats are overrated by investors.
Sure, it's impressive that these companies have delivered 25 or more consecutive years of dividend increases. However, many of them offer sub-par total returns and dividend yields.
That's not true in every case, though. Here are three Dividend Aristocrats to buy in April that should be winners.
AbbVie (ABBV -0.55%) isn't merely a Dividend Aristocrat; the company is also a Dividend King with 50 years in a row of dividend increases. Its dividend yield of nearly 3.5% blows away most yields of the dividend royalty.
The big pharma company's dividend yield has been even higher throughout most of the past three years. However, AbbVie's share price has grown faster than its dividend has. The stock's performance is especially notable in 2022. While the broader market indices have fallen, AbbVie stock is up close to 20%.
Despite the solid gains, AbbVie's valuation remains attractive. Its shares trade at less than 11.5 times expected earnings. By comparison, the forward earnings multiple of the S&P 500 is 19.3.
The main knock against AbbVie is that sales for its top-selling drug Humira will fall steeply next year with biosimilar rivals entering the U.S. market. However, the company should still deliver solid growth throughout this decade thanks to its strong product lineup.
2. Air Products & Chemicals
Unlike AbbVie, Air Products & Chemicals (APD 0.97%) has lagged behind the S&P 500 so far this year and over the past three years. However, investors at least have received a solid dividend that currently yields nearly 2.6%.
But Wall Street analysts think that Air Products could soar over the next 12 months. The consensus price target for the stock reflects an upside potential of around 23%.
Air Products expects to increase its adjusted earnings per share by 13% to 15% in 2022. That's better than many Dividend Aristocrats will manage to deliver. And it's higher than the average 11% earnings growth that the company has achieved since 2014.
However, the best thing about this stock is its long-term growth prospects. Air Products continues to leverage its top position in the industrial gases market to expand into high-growth areas including carbon capture and clean hydrogen. I think it's likely that this underperformer in the past will transition from laggard to leader in the future.
Walmart (WMT -0.63%) has increased its dividend for 49 consecutive years, putting the giant retailer only one dividend hike away from becoming a Dividend King. Although its dividend yield of 1.5% isn't overly impressive, there are other reasons for investors to like Walmart.
Perhaps the best argument for the stock is that it could hold up quite well if a recession is on the way. And that could be the case, with the two-year U.S. Treasury bond yield rising above the 10-year yield last week. This inverted yield curve has often been a predictor of recessions in the past.
Even if a recession isn't right around the corner, high inflation seems likely to cause consumers to shop for bargains. That works to Walmart's favor as the biggest discount retailer in the world.
Over the long term, Walmart's investments in technology should help keep it at the top of the retail world. While there could be times when the stock doesn't beat the market, Walmart is without question built to survive and thrive.