10 Cheap Dividend Stocks With Fortress-Like Businesses

Hormel Foods stock has fallen about 26% this year. (Justin Sullivan/Getty Images)

Key Points

• Morningstar identified 10 dividend aristocrats with strong competitive advantages whose stocks are currently undervalued by its analysts.
• Dividend aristocrats are companies that have consistently paid and increased shareholder payouts for at least 25 years.
• Several recommended companies, including Clorox and Hormel Foods, have seen their stock prices decline more than 25% this year.

Investors who love high-yield dividend stocks have to cope with a nagging fear: What if the dividend gets cut?

There are no guarantees, but you can get some assurance by looking for companies with strong track records and easy-to-defend business models.

To find some of those names, take a look at researcher Morningstar’s latest list of 10 dividend aristocrats that its stock analysts say are undervalued and whose businesses boast a strong competitive advantage, known as a “moat.”

A dividend aristocrat is a company that has paid and raised shareholder payouts consistently for the past 25 years, such as the 69 stocks in the ProShares S&P 500 Dividend Aristocrats exchange-traded fund. Morningstar defines a moat as a persistent competitive advantage, such as a strong brand or a social network, or scale and cost structure that rivals can’t match.

Morningstar says its research shows that moats not only help companies to grow and maintain earnings, but also to avoid dividend cuts. “No-moat businesses are most likely to cut,” states strategist Dan Lefkovitz in a note Wednesday.

Morningstar’s picks aren’t without their risks, of course. A number of the recommended companies have seen their share prices tumble in 2025—one big reason its analysts might think they are undervalued.

These include consumer names like liquor company Brown-Forman , Hormel Foods , and Clorox , which have all seen their stocks decline more than 25% this year. Also on the list is Kleenex maker Kimberly-Clark , which is down a more modest 7% in 2025.

Perhaps that should come as no surprise. With a government shutdown, lingering inflation, and tepid consumer sentiment, the Consumer Staples Select Sector SPDR is the worst performing of the 11 sector ETFs that make up the S&P 500 . It has delivered a total return of just 0.08%, compared with more than 18% for the broad index.

Morningstar’s picks also include names from other hard-hit sectors such as healthcare (Becton Dickinson and Medtronic) and industrials (Air Products & Chemicals and PPG Industries.) Check out all of Morningstar’s picks below, along with what the firm’s analysts believe are fair stock prices (fair value estimates) for these companies.

Morningstar‘s 10 Underpriced Dividend Stocks

Becton Dickinson / BDX

Dividend yield: 2.3%

Forward price-to-earnings ratio, or P/E: 13

Year-to-date total return: -18%

Stock price: $182

Morningstar fair value estimate: $270

Clorox / CLX

Dividend yield: 4.4%

Forward P/E: 19

YTD total return: -28%

Stock price: $113

Morningstar fair value estimate: $166

Brown-Forman / BF.B

Dividend yield: 3.3%

Forward P/E: 17

YTD total return: -25%

Stock price: $28

Morningstar fair value estimate: $40

Amcor / AMCR

Dividend yield: 6.3%

Forward PE: 10

YTD total return: -11%

Stock price: $8

Morningstar fair value estimate: $11.50

FactSet Research / FDS

Dividend yield: 1.6%

Forward P/E: 16

YTD total return: -42%

Stock price: $276

Morningstar fair value estimate: $385

Air Products & Chemicals / APD

Dividend yield: 2.8%

Forward P/E: 21

YTD total return: -11%

Stock price: $253

Morningstar fair value estimate: $321

Hormel Foods / HRL

Dividend yield: 5.2%

Forward P/E: 15

YTD total return: -26%

Stock price: $22

Morningstar fair value estimate: $29

Medtronic / MDT

Dividend yield: 3.1%

Forward P/E: 16

YTD total return: 18%

Stock price: $92

Morningstar fair value estimate: $112

PPG Industries / PPG

Dividend yield: 2.8%

Forward P/E: 13

YTD total return: -14%

Stock price: $101

Morningstar fair value estimate: $122

Kimberly-Clark / KMB

Dividend yield: 4.3%

Forward P/E: 16

YTD total return: -7%

Stock price: $119

Morningstar fair value estimate: $140

Write to Ian Salisbury at ian.salisbury@barrons.com