3 Magnificent S&P 500 Dividend Stocks Down 11% to 18% to Buy and Hold Forever

It’s hard to find many people complaining about S&P 500Its strong performance in 2024. Extending the 24% rise it posted in 2023, the index is up about 20% year to date.

But not all index members fared so well. PPG industry (PPG 0.83%), SJW Group (SJW 0.05%)and Archer-Daniels-Midland (ADM -0.20%) they are all down since the beginning of the year. PPG and SJW fell 14% and 11%, respectively, while Archer-Daniels-Midland fell 18%. As a result, all three dividend stocks — the Dividend Kings, in fact — trade at attractive valuations, providing excellent buying opportunities for both value and income investors.

PPG has painted a less pretty picture for 2024, but don’t let that distract you

Supplier of paints, coatings and other specialty materials, PPG frustrated investors in July when it cut its profitability outlook for 2024. During its second-quarter 2024 earnings presentation, PPG offered a less robust earnings outlook for adjusted EPS of $8.15 to $8.30 than the initial adjusted EPS guidance of $8.34 to $8.59. Additionally, prompting investors to click the sell button on PPG, several analysts lowered their price targets in July.

While the summer days have taken a bite out of PPG stock, its appeal to long-term investors is undeniable. First, the company has amassed a streak of 52 consecutive years of dividend increases — no small feat. And it’s not as if the company jeopardized its financial health while boosting its pay. PPG consistently generates strong free cash flow from which to draw its dividends.

PPG Free Cash Flow Per Share (Annual) from YCharts

The company’s five-year average payout ratio of 44% further suggests that management is taking a judicious approach to returning capital to shareholders.

Dip your toes into a water utility investment with SJW

Now, even a little investment experience will probably provide some excitement. Will that excitement come from water utility stocks like SJW Group? Probably not. And that’s just fine for patient investors looking to build reliable passive income streams. There’s nothing glamorous like cutting-edge technology action or thrilling like innovative pharmaceutical treatments with SJW Group, which simply offers water and wastewater treatment. The water company operates primarily in regulated markets, which accounted for approximately 95% of net income in 2023. As such, the company enjoys guaranteed rates of return, providing management with excellent forecasting of future cash flows – forecasting that helps in planning capital expenditures such as acquisitions and dividend increases. SJW Group’s commitment to growth through acquisitions is clear. From 2010 to 2023, SJW Group completed over 25 acquisitions, leading to a 72% increase in customer base.

With 80 consecutive years of dividend payments and 56 consecutive years of dividend increases, it’s undeniable that rewarding shareholders is inherent in the company’s culture, and increases are not nominal. Over the past five years, SJW Group has increased its dividend at a compound annual growth rate of over 6%.

It’s time to feast on Archer-Daniels-Midland stock

It hasn’t been a very good start to the new year for Archer-Daniels-Midland, thanks in part to a change in the management team, but the stock pared some of its losses from a 23% plunge in January. . Unsurprisingly, the turmoil resulting from the ouster of the CFO and the accounting probe has eroded some investor confidence in the company, but hardly indicates that the stock can’t see a return to growth. With a history spanning 122 years, Archer-Daniels-Midland has overcome its share of challenges and emerged as a leading agricultural stock that addresses the nutritional needs of humans and pets alike .

There’s no guarantee the company will continue to thrive based on its long history alone, but it certainly gives investors some confidence that it has the resilience to overcome the challenges it’s encountered recently. Meanwhile, the appointment of a new CFO should also help the company regain investor confidence after the recent accounting investigation.

Projecting 2024 adjusted EPS of $5.25 to $6.25, management is guiding for a decline in year-over-year profitability as the company posted adjusted EPS of $6.98 in 2023. While this may scare short-term investors who are committed to buying and holding the stock for the long-term need not panic.

Should you embrace these darling dividends today?

Currently, PPG, SJW and Archer-Daniels-Midland all present attractive valuations, trading at discounts to their five-year operating cash flow multiples. For more conservative investors, SJW and its 2.8% dividend yield forward shares are an excellent choice given its sizeable operations in regulated markets. Those who can handle some short-term volatility and have an appetite for higher yield will want to look at Archer-Daniels-Midland with its forward dividend yield of 3.4%. While those interested in a specialty materials stock will want to dig into PPG and its 2.1% forward yielding stock.