Amid volatility in global financial markets, dividend-paying stocks have proven more buoyant in the opening months of 2025 than the overall stock market. However, after a long stretch of underperformance, there remain many undervalued stocks with attractive dividends.
Dividend investing comes in various forms. Investors can look for stocks with the highest yields, those with a history of stable dividend payouts and strong finances, or those raising dividends. We screened US stocks covered by Morningstar that have increased their quarterly dividends, which can signal a company’s confidence in its future finances.
Here are seven undervalued companies covered by Morningstar analysts that increased their dividends in April:
- Sysco SYY
- Portland General Electric POR
- Johnson & Johnson JNJ
- Qualcomm QCOM
- Phillips 66 PSX
- Sonoco Products SON
- Energy Transfer ET
Screening for Undervalued Stocks That Raised Dividends
We started with the full list of US-based companies covered by Morningstar analysts, then looked for those that pay a quarterly dividend and declared a dividend payment in April. We tracked changes from previous dividend payouts and filtered for companies that saw a dividend increase of 2% or more to capture the most substantial changes. Stocks with dividend yields under 2% were excluded. Lastly, we picked companies rated 4 or 5 stars by Morningstar analysts, meaning they are considered undervalued. These stocks offer investors the potential to benefit from increased dividend yields and the possibility that their investment values will grow. Seven companies made it through the screen. A full list of stocks covered by Morningstar that raised dividends in April is at the bottom of this article.
Sysco
- Morningstar Rating: 4 stars
- Fair Value Estimate: $80.00
- Fair Value Uncertainty: Medium
- Economic Moat: Wide
“We think Sysco’s shareholder distributions have been appropriate. The company has paid a growing dividend for more than 50 years, and we forecast it could handily increase its dividend 5% per year over the next five years. It also regularly repurchases shares, pausing in 2021 amid pandemic restrictions weighing on its business. Over the next five years, we think the company could buy back roughly $6.75 billion in shares if it chose to do so. Additionally, we don’t think the company has overpaid for shares terribly, which could lead to value destruction if it did so. We expect that discipline to continue.”
—Kristoffer Inton, strategist
Portland General Electric
- Morningstar Rating: 4 stars
- Fair Value Estimate: $53.00
- Fair Value Uncertainty: Low
- Economic Moat: Narrow
“In April 2020, management cut guidance by 9% and the board paused dividend increases for the first time since PGE’s former parent, Enron, declared bankruptcy. The board three months later raised the dividend 6%, in line with our estimate and management’s guidance, but the off-cycle decision was a brief concern.”
—Travis Miller, strategist
Johnson & Johnson
- Morningstar Rating: 4 stars
- Fair Value Estimate: $164.00
- Fair Value Uncertainty: Low
- Economic Moat: Wide
“We view J&J’s dividends and share repurchases as about right. J&J has a very long history of consistently raising its dividend, giving investors high confidence in the business. Further, the firm is able to fund strong internal investments while supporting the dividend and some moderate and largely well-timed share repurchases over the past several years.”
—Karen Andersen, director
Qualcomm
- Morningstar Rating: 4 stars
- Fair Value Estimate: $170.00
- Fair Value Uncertainty: High
- Economic Moat: Narrow
“We believe the firm has exhibited a sound strategy for returning cash to shareholders, as it intends to distribute much of its free cash flow. The company has consistently bought back shares in recent years. Qualcomm also pays out a solid quarterly dividend of $0.85 per share.”
—Brian Colello, strategist
Phillips 66
- Morningstar Rating: 4 stars
- Fair Value Estimate: $128.00
- Fair Value Uncertainty: High
- Economic Moat: Narrow
“We see Phillips 66’s shareholder distribution policy as appropriate, given the volatility of the refining business. Its most recent policy that applies through 2027 is to return at least 50% of cash flow to shareholders. The policy sets clear expectations for investors while retaining flexibility to reduce payouts in difficult times. Although excess cash is typically available when market conditions are favorable and stock prices likely high, historically, repurchases have occurred below or near our fair value at the time, meaning they have not been value-destructive. About 70% of total share repurchases over the past 10 years occurred at a price/fair value of 1.0 or less.”
—Allen Good, director
Sonoco Products
- Morningstar Rating: 4 stars
- Fair Value Estimate: $53.00
- Fair Value Uncertainty: Medium
- Economic Moat: None
“We think distributions are appropriate. Sonoco has remained committed to returning cash to shareholders, which it has done through a consistent dividend and periodic share repurchases. We expect this strategy to continue as additional share repurchases will occur during times of strong demand. However, this strategy doesn’t tend to take share price into account, so some repurchases are made at high valuations. We expect the company to maintain its dividend as Sonoco continues to generate solid free cash flow.”
—Spencer Liberman, equity analyst
Energy Transfer
- Morningstar Rating: 4 stars
- Fair Value Estimate: $21.00
- Fair Value Uncertainty: Medium
- Economic Moat: None
“Energy Transfer has resisted converting to a C-Corporation like many of its midstream energy peers. This conversion would eliminate tax complexity for investors, allow a qualified dividend, and potentially close Energy Transfer’s long-standing EBITDA multiple discount versus peers.”
—Travis Miller, strategist
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.
