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As the stock market hovers around an all-time high, low-risk investors can look for safer investments that can generate income even in a downturn in the market.

The Dividend Aristocrats, who are members of the S&P 500 who have increased their annual payments for at least 25 consecutive years, tend to be large companies and often heavy. While prone to underperforming a growth-driven market like the one we are in, these companies deliver consistent and reliable performance with a track record you can depend on.

Three of our contributors have NextEra Energy (NYSE: NEE), PPG Industries (NYSE: PPG), and Stanley Black & Decker (NYSE: SWK) as dividend aristocrats worth buying on sale.

Image source: Getty Images.

A balanced way to invest in renewable energies

Daniel Foelber (NextEra Energy): The largest electric utility in the United States has taken Wall Street by storm in recent years. The company has combined its existing regulated utility business with aggressive investments in renewables. The capital-intensive strategy had an impact on short-term results, but the stock has consistently outperformed the utilities industry as a whole. That’s because investors are looking beyond short-term performance – believing the projects will pay off as NextEra maintains its lead as the largest renewable energy producer by capacity in the United States.

NextEra Energy is one of the most balanced ways to invest in renewable energy. Florida Power & Light, the company’s primary cash cow, generates predictable revenue regardless of the market cycle. NextEra’s long-term plan is to combine natural gas, wind and solar power to generate steady increases in profits and dividends. This is an attractive proposition for dividend investors looking to generate income from a revolving investment.

NEE chart

NEE data by YCharts

After a strong 2020, NextEra Energy stock has underperformed the S&P 500 so far this year. Considering the expected growth of renewables in the coming years, NextEra looks like the perfect Dividend aristocrat to buy on sale now.

Paint your portfolio with this passive income powerhouse

Scott Levine (PPG Industries): Kids may be anxious to start their Halloween shopping, but many investors are looking for attractively priced dividend stocks to bolster their holdings. No matter what stage you are at in your investing experience, the luxury of sitting down and getting paid for doing nothing is alluring, whether you are a newbie or a veteran. And PPG Industries, with its lofty dividend aristocrat status, is an option investors can grab at a discount and enjoy a 1.6% return.

With a history stretching back over 135 years, PPG Industries has not only distinguished itself as a company with a respectable history, but also as an impressive dividend payer, increasing its payouts to shareholders for 49 years. It won’t be long, in fact, before the company wins the title of Dividend King.

PPG supplies paints and coatings to a wide variety of industries including aerospace, automotive and marine to name a few. The company is benefiting from the global recovery from COVID-related downturns in the many industries it serves. For example, the industrial coatings segment saw 70% and 458% year-over-year increases in sales and net income, respectively, for the second quarter of 2021. Management also expects adjusted earnings per share for 2021 from $ 7.40 to $ 7.60. If it hits the midpoint of that direction, it will represent a 32% increase from 2020.

Trading at 15.1 times cash flow from operations, PPG’s stock is currently valued at a discount from its five-year average of 17.3. But that’s not the only measure by which the stock looks cheap; stocks are valued at 23.6 times rolling earnings, which is a discount to the five-year average price / earnings (P / E) ratio of 27.5. In addition to its own valuations, PPG looks even more attractive given that it is trading at 2.3 times sales, lower than the S&P 500 price / sales (P / S) multiple of 3.2. Whichever valuation metric you prefer – cash flow, earnings, or sales – PPG sounds like a good deal.

Stanley Black & Decker looks good value for money

Lee samaha (Stanley Black & Decker): Toolmaker inventory has fallen 8.5% in the past three months. It is a decision motivated by the fear that the company’s profits will suffer from the continued inflation of the costs of raw materials. The fears are understandable, as Stanley has suffered from the problem in the recent past.

On the other hand, commodity prices rose until 2021, but management has revised upward its annual profit forecast twice this year. After starting the year predicting earnings per share of $ 9.70 to $ 10.30, it now sits at $ 11.35 to $ 11.65.

In addition, the company’s long-term growth prospects appear excellent. Management will continue to develop its acquisitions of recent years (including Craftsman) and develop its market-leading e-commerce capacity. Additionally, the recent acquisition of gardening and products company MTD Holdings will add growth in a new category, and management estimates $ 1 in EPS by 2025.

All in all, Stanley has good long-term growth prospects even though it faces cost headwinds in the third quarter. As such, it’s understandable that cautious investors are taking a wait-and-see approach. On the other hand, speculating on a quarter’s earnings and planning an entry point into a stock based on that is seldom an easy undertaking. So investors should instead be wondering whether or not this looks like great long-term value right now.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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