Morningstar's list of undervalued dividend-growth stocks

Dividend stocks can provide a safe haven during times of market volatility, often offering regular payouts and the potential for capital gains.

Companies that raise their dividends are attractive for the obvious reason that they give you more money over time and the less obvious reason that a company which is able to increase its dividend is often one with strong finances.

Meanwhile, whenever you’re buying a stock, it helps to buy one that’s undervalued so it’s more likely to appreciate in value while you own it.

With that in mind, Morningstar created a list of stocks that have raised their dividends recently and are undervalued according to its fair value estimates.

It started with the 672 dividend-paying stocks that its analysts cover. Then it filtered for companies that lifted their dividends 2% or more during the period of July 1 through November. Stocks with dividend yields under 2% were excluded from the group.

Morningstar then narrowed that list down to those stocks it views as substantially undervalued. That left four stocks standing. Here they are, listed alphabetically.

Evergy

(EVRG) - Get Free Report, a utility serving Kansas and Missouri

Morningstar moat (durable competitive advantage): narrow. Morningstar fair value estimate: $65. Tuesday closing price: $51.85. Forward dividend yield: 4.99%. Recent dividend increase: 4.9%.

“Evergy is working to improve historically challenging regulation and to invest in clean energy,” wrote Morningstar analyst Travis Miller. “We expect the dividend to grow in line with earnings for the foreseeable future.”

Huntington Ingalls Industries

(HII) - Get Free Report, a military shipbuilder

Morningstar moat: wide. Morningstar fair value estimate: $285. Tuesday closing price: $257.10. Forward dividend yield: 2.04%. Recent dividend increase: 4.8%.

“Huntington Ingalls generates revenue on almost every significant military shipbuilding contract, in some cases as the only supplier, as with aircraft carriers,” wrote Morningstar analyst Nicolas Owens. “Huntington’s top line is less sensitive to changes in the defense budget than peers.”

Regency Centers

(REG) - Get Free Report, a shopping center real estate investment trust (REIT).

Morningstar moat: none. Morningstar fair value estimate: $76. Tuesday closing price: $66.40. Forward dividend yield: 4.02%. Recent dividend increase: 3.1%.

Regency is the largest shopping center REIT in the country, wrote Morningstar analyst Kevin Brown. “Regency's portfolio is filled with high-quality assets located in population-dense, affluent markets,” he said.

Tyson Foods

(TSN) - Get Free Report, a poultry/meat producer

Morningstar moat: none. Morningstar fair value estimate: $82. Tuesday closing price: $51.80. Forward dividend yield: 3.79%. Recent dividend increase: 2.1%.

“Tyson’s financial health deteriorated in fiscal 2023 amid challenging protein markets,” wrote Morningstar analyst Kristoffer Inton. “It will weaken further through the end of fiscal 2024, but we think a return to better health isn’t that far off.”