*This article was written by Bob Ciura for Sure Dividend
It is an opportune time for investors to reassess their portfolios for 2025. The S&P 500 Index wrapped up another strong year in 2024, registering a return of more than 23%.
The good news is that there are still undervalued stocks with strong dividends to choose from, despite the market’s strong performance last year.
The following 3 Dividend Aristocrats stocks have dividend yields well above the S&P 500 average. They are also undervalued, leading to annual expected returns above 10%, making them among our top picks for 2025.
PPG Industries (PPG)
PPG Industries is the world’s largest paints and coatings company. Its only competitors of similar size are Sherwin Williams and Dutch paint company Akzo Nobel. PPG Industries was founded in 1883 as a manufacturer and distributor of glass (its name stands for Pittsburgh Plate Glass) and today has approximately 3,500 technical employees located in more than 70 countries at 100 locations.
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With more than five decades of consecutive dividend increases, PPG Industries is a member of the Dividend Kings. The company generates annual revenues of nearly $16 billion.
On January 31st, 2025, PPG Industries announced fourth quarter and full year results for the period ending December 31st, 2024. For the quarter, revenue declined 4.6% to $3.73 billion and missed estimates by $241 million. Adjusted net income of $375 million, or $1.61 per share, compared favorably to adjusted net income of $372 million, or $1.56 per share, in the prior year. Adjusted earnings-per-share was $0.02 below expectations.
For the year, revenue from continuing operations decreased 2% to $15.8 billion while adjusted earnings-per-share totaled $7.87. Continuing a trend from prior periods, aerospace demand remains high. Protective and marine coatings were also up for the period.
We expect PPG to grow its earnings by 7% per year going forward. Organic growth will boost EPS, as will share buybacks. PPG Industries repurchased ~$750 million worth of shares during 2024 and has $2.8 billion, or ~10.3% of its current market capitalization, remaining on its share repurchase authorization. The company expects to repurchase ~$400 million worth of shares in Q1 2025.
PPG stock trades for a 2025 P/E of 15, below our fair value estimate of 19. We expect annual returns of 14%-15% per year over the next five years.
Hormel Foods (HRL)
Hormel Foods is a juggernaut in the food products industry with nearly $10 billion in annual revenue. It has a large portfolio of category-leading brands. Just a few of its top brands include include Skippy, SPAM, Applegate, Justin’s, and more than 30 others.
It has also pursued acquisitions to drive growth. For example, in 2021, Hormel acquired the Planters snack nuts business from Kraft-Heinz (KHC) for $3.35 billion, which has boosted Hormel’s growth.
Hormel posted fourth quarter and full-year earnings on December 4th, 2024, and results were in line with expectations. The company posted adjusted earnings-per-share of 42 cents, which met estimates. Revenue was off 2% year-on-year to $3.14 billion, also hitting estimates.
For the year, sales were $11.9 billion, and adjusted operating income was $1.1 billion, or 9.6% of revenue. Adjusted earnings-per-share was $1.58. Operating cash flow hit a record of $1.3 billion. Guidance for 2025 was initiated at $11.9 billion to $12.2 billion in sales, with organic net sales growth of 1% to 3%.
Adjusted operating income is expected to be $1.18 billion to $1.28 billion for 2025, and earnings guidance was set at $1.58 to $1.72 per share on an adjusted basis.
Relatively consistent results have come from a steady stream of acquisitions and a bit of organic growth. This has afforded Hormel the ability to consistently raise its dividend as well. We are forecasting forward earnings growth of 5% annually as Hormel could grow more slowly than it has in the past.
We see sales growth as the primary driver of earnings-per-share expansion moving forward. Hormel will likely continue to buy growth, and the Planters acquisition is yet another example.
Hormel’s main competitive advantage is its ~40 products that are either #1 or #2 in their category. Hormel has brands that are proven, and that leadership position is difficult for competitors to supplant. In addition, Hormel has a global network of distributors that few food companies can rival.
HRL has increased its dividend for 59 years and shares currently yield 4.0%. HRL shares trade for a 2025 P/E of 19, which is below our fair value estimates of 22. Therefore, total returns are expected to reach 15.2% annualized over the next five years.
Eversource Energy (ES)
Eversource Energy is a diversified holding company with subsidiaries that provide regulated electric, gas, and water distribution service in the Northeast U.S. The company’s utilities serve more than 4 million customers after acquiring NStar’s Massachusetts utilities in 2012, Aquarion in 2017, and Columbia Gas in 2020.
On February 11th, 2025, Eversource Energy released its fourth-quarter and full-year 2024 results for the period ending December 31st, 2024. For the quarter, the company reported net earnings of $72.5 million, a significant improvement from a net loss of $(1,288.5) million in the same quarter of last year, which reflected the impact of the company’s exit from offshore wind investments. The company reported earnings per share of $0.20, compared with a loss per share of $(3.68) in the prior year.
For the full year 2024, Eversource reported GAAP earnings of $811.7 million, or $2.27 per share, compared with a full-year 2023 loss of $(442.2) million, or $(1.26) per share. On a non-GAAP recurring basis, the company earned $1,634.0 million, or $4.57 per share, representing a 5.3% increase from $4.34 per share in 2023.
The company’s earnings-per-share growth forecast remains ambitious at 5% to 7% annually through 2029, consistent with its dividend growth expectations. ES has updated its 2025 earnings guidance to a range of $4.67 to $4.82 per share, with a midpoint of $4.75 per share.
The company has a long history of paying dividends and has increased its payout for 27 consecutive years. Over the last five years, the average annual dividend growth rate is 6.0%. Eversource’s target for yearly dividend growth is 5% to 7%.
ES stock trades for a 2025 P/E under 13, compared with its 10-year average multiple of 20. Therefore, shares appear to be significantly undervalued. In addition, ES stock has a high current yield of 4.8%. As a result, total returns could reach 18% per year over the next five years.
Disclosure: No positions in any stocks mentioned
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