Amid recent market volatility, the opportunity to buy blue chip dividend stocks at more-than-reasonable prices has opened up. Typically, these stocks trade at premium valuations, reflecting their quality and earnings consistency.
However, in some cases, even top dividend stocks have come under pressure amid fears about the disruptive effects of artificial intelligence across numerous sectors. In other situations, top dividend stocks have pulled back due to the market's initial negative reaction to corporate changes that could pay off in the long term.
Alongside this, there are dividend stocks that, while continuing to climb, remain undervalued as prospects improve. The following three stocks are prime examples for each category: Automatic Data Processing (ADP 2.62%), Genuine Parts (GPC 2.00%), and Altria Group (MO +1.95%). Each one is a Dividend King, or a stock that has raised dividends annually for more than 50 consecutive years.
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Investors have thrown Automatic Data Processing out with the bathwater
Automatic Data Processing, better known as ADP, has pulled back not just on AI fears but also on concerns about the sluggish state of the U.S. employment market. Anticipating worse-than-expected results, investors have bailed on ADP, sending it to multi-year lows.
NASDAQ: ADP
Key Data Points
However, in the case of this payroll processing and managed HR services company's shares, the market has thrown the baby out with the bathwater. Following the pullback, ADP's forward yield has climbed to over 3%.
Meanwhile, the company has not only continued to raise dividends by double digits but also raised guidance. This year, management expects revenue and earnings growth of 6% and 11%, respectively. If guidance proves accurate, the stock, trading for 21 times earnings, could move to its historic valuation of around 25 times earnings.
Take advantage of Genuine Parts' post-earnings plunge
Following Genuine Parts' release of fourth-quarter 2025 earnings on Feb. 17, shares in the automotive and industrial parts distributor fell by nearly 15%. The stock has continued to decline. Even a more bullish development came alongside weak results and guidance.
NYSE: GPC
Key Data Points
That is, the company plans to split its automotive and industrial businesses into two separate companies early next year. Weak demand within the automotive segment could keep weighing on shares ahead of the split.
However, long-term, the split could unlock tremendous value, based on how Wall Street values industrial parts distributors like Fastenal and W.W. Grainger. In the meantime, investors holding Genuine Parts can collect its 3.6% dividend. The company has 71 consecutive years of dividend growth. The latest increase, announced alongside the earnings report, was 3.2%.
Altria Group has room to run
Altria Group, parent company of Philip Morris USA, has been running hot year to date. This comes despite Altria's relative lack of progress in adapting to ongoing changes in tobacco and nicotine consumption habits.
NYSE: MO
Key Data Points
Altria remains largely a cigarette manufacturer, while peers such as Philip Morris International generate an increasing share of their total revenue from non-cigarette tobacco products. Still, 6%-yielding Altria, one of the high-yield dividend stocks, could keep climbing.
As cigarette prices increase, enabling modest earnings growth, concerns about the sustainability of dividend growth keep dissipating. Despite past failures, such as its investment in Juul or the acquisition of NJOY, any further effort to tap into the "smoke-free" market could elicit a bullish response from investors.
