You ever see those expectations-versus-reality videos? Well, I think 2021 was an “expectations” year for the stock market.

A lot of new investors came into the market thinking stonks only go up. 2022 is now a “reality” year for the stock market. And stocks – they do go down.

But going down is exactly what you want to see if you’re a long-term investor still accumulating shares in great businesses.

Wishing to pay higher prices for stocks you’re going to buy anyway is like wishing to pay higher prices for gas or groceries. It’s nonsensical.

Fortunately, even many high-quality dividend growth stocks are down 20% or more from recent highs.

And high-quality dividend growth stocks are some of the best stocks in the world.

Because these stocks represent equity ownership in some of the best businesses in the world. Getting equity in a world-class business for a lower price? Yes, please.

Today, I want to tell you about five dividend growth stocks that are down 20% or more from their recent highs. Ready? Let’s dig in.

The first dividend growth stock I have to highlight today is BlackRock (BLK).

BlackRock is a multinational investment management corporation with a market cap of $104 billion.

This is a world-beater. A dominant company. It’s the largest asset manager in the world. We’re talking almost $10 trillion in assets under management. If there’s assets to own or deals to get in on, BlackRock probably has a piece of it. If you were floating in space and thought to yourself that you’d like to own a slice of the entire planet’s economic output, BlackRock would be a pretty good way to do that with a one-stop shop. As you might imagine, there’s a lot of money to be made when you’re the world’s largest asset manager. And that translates to lots of growing dividends.

The asset manager has increased its dividend for 13 consecutive years.

The 10-year DGR is a very strong 11.6%. Better yet, there’s been an acceleration in dividend growth. The most recent dividend increase came in at over 18%. Plus, the stock even yields 2.8%, which is rather appealing in this environment. That’s twice as high as the broader market’s yield. I also like the 51.9% payout ratio, which harmoniously balances retaining earnings for future growth with returning capital to shareholders.

Despite all of that goodness, this stock is down a stunning 29% from its 52-week high.

The 52-week high is $973.16, but the stock is now priced at approximately $688. That’s a 29% drop. Is the business down 29%? No. There’s been no collapse in earnings. But the stock is way down. That disconnect between the business and the stock is something you always want to look for and try to take advantage of. Now, I will say that sometimes a big drop like this can come about when a stock started off too highly overpriced.

A 30% drop isn’t a big deal if a stock was 30% overvalued from the get-go. That’s not the case here, however. We recently put out a full analysis and valuation video on the business, estimating fair value at just a bit over $1,000/share. It looked fairly valued at the 52-week high. Down here, close to the 52-week low, it looks downright cheap.

Next up, let’s talk about Domino’s Pizza (DPZ).

Domino’s is a multinational pizza restaurant chain with a market cap of $14 billion.

Who doesn’t love pizza? Almost nobody, right? Well, what does that mean? A lot of hungry customers all over the world. This is a super simple business model. There’s nothing complicated here. People like pizza. Domino’s gives the people pizza. But making a lot of money needn’t be a complex thing. Domino’s has proven that with their results. And they’ve provided shareholders with tangible proof of it by paying a dividend that’s growing at a very high rate.

The pizza chain has increased its dividend for 10 consecutive years.

Not the longest dividend growth streak in the world. But what separates Domino’s from the rest of the pack is the growth rate – their five-year DGR is 19.9%. Even their most recent dividend increase was a full 17%. Massive dividend growth here, which has been funded by massive business growth. Now, the yield is only 1.1%. This is more of a long-term compounder than an income play. But with a payout ratio of 32.5%, you already know that many more sizable dividend increases are coming.

This stock has been absolutely crushed. It’s now down 32% from its 52-week high.

The 52-week high is $567.57. Shares are now trading hands for less than $388/each. This thing has fallen off a cliff. However, even with that big drop, this is a stock that’s still up nearly 1,000% over the last decade! Like I said, it’s a long-term compounder. Now, unlike BlackRock, this is a case where the stock looked a bit heavy with the valuation at that 52-week high. I think it was overvalued up there. But the pendulum has now swung pretty far to the other side, and the stock now looks undervalued.

In fact, we’ll be putting together a full analysis and valuation video on Domino’s. That video should be out soon. And in that video, you’re going to see a high-growth, simple business model that looks undervalued after a 30%+ drop. Keep an eye out for that video. And keep Domino’s on your radar, if not in your portfolio.

The third dividend growth stock I want to tell you about is Corning (GLW).

Corning is a multinational material sciences company with a market cap of $29 billion.

Corning flies under the radar. But this company is over 170 years old. It’s a world-class business in materials. For example, they manufacture the glass that makes up the screens of many smartphones, including the iPhone. It’s one of those boring, steady-eddy businesses that just slowly but steadily increases revenue and profit over the long run. And that has translated into a steadily increasing dividend.

The specialty material company has increased its dividend for 12 consecutive years.

Their dividend metrics are really solid across the board. You don’t have to really sacrifice anything here. Want growth? The 10-year DGR is 15.6%. Want yield? The stock yields 3.2%. Want a well-covered dividend? Free cash flow covers the dividend twice over. Corning’s dividend isn’t corny.

Want to buy the dip? Well, here’s a dip. This stock is down 28% from its recent high.

That’s right. The stock’s current price is at less than $34. That’s well off of its 52-week high of $46.82. Every basic valuation metric is indicating undervaluation right now. The P/CF ratio of 8.3 is significantly lower than its own five-year average of 11.5. And that 3.2% yield? Yeah, that’s 80 basis points higher than its own five-year average. The dividend isn’t corny. And neither is the discount. Corning is a name to remember.

We now have to have a discussion about JPMorgan Chase & Co. (JPM).

JPMorgan Chase is a multinational financial holding company with a market cap of $371 billion.

JPMorgan Chase may as well be the financial avatar of the United States. It’s a prominent symbol of American financial might. This is a bank with a history that stretches back to 1799. That’s almost as old as the US itself. As the US goes, so goes JPMorgan Chase. It’s grown into a critical part of the American financial infrastructure. As you can imagine, that’s a very profitable position to be in. And that’s benefited shareholders over the years, partly through a growing dividend.

This global financial institution has increased its dividend for 11 consecutive years.

America’s financial system is mighty, but it’s not perfect. And it’s prone to crashes every once in a while. That directly impacts the likes of JPMorgan Chase, which is why this dividend growth track record isn’t as long as you might initially expect. Still, the 10-year DGR is 16.5%. And the stock now offers a market-beating yield of 3.2%, which is pretty juicy. Plus, the payout ratio is a low, low 26.0%. That gives the bank a ton of leeway for future dividend increases.

But it seems like nobody wants to own banks right now. This stock is down 27% from its 52-week high.

A 27% drop for America’s largest bank is a pretty notable event. The stock’s 52-week high of $172.96 is nowhere in sight. In fact, the stock recently just hit a fresh 52-week low of $125.02. We’re barely over that level as I speak. It does seem like nobody wants to own banks. But guess what? That’s exactly when I like to buy them.

I don’t like buying stocks when everyone else is chasing them down and bidding them up. I like to be greedy when others are fearful, getting my equity for deep discounts. Speaking of discounts, we recently put out a full analysis and valuation video on the bank, estimating fair value at $156.56/share. I think this is a stock to bank on right now.

Last but not least, let’s talk about Qualcomm (QCOM).

Qualcomm is a global technology company with a market cap of $154 billion.

Qualcomm is a fantastic tech company that does a lot of things right. There are two things that I really like about it. First, they just keep advancing the business. Revenue has nearly doubled over the last decade. EPS more than doubled over that time frame. Second, they’re not content to sit on their laurels.

Qualcomm is branching out into every possible opportunity they have – IoT, 5G, AI, etc. This combination of already-strong business growth being reinforced by taking advantage of future growth opportunities sets them up for plenty of years of continued dividend growth.

The tech company has increased its dividend for 19 consecutive years.

Their 10-year DGR of 12.5% is great. That said, it’s been a bit inconsistent. It’s come in fits and starts, largely because they were dealing with some litigation for an extended period of time. But much of that is past them, and the runway in front of them is long. Meantime, the stock offers a good yield of 2.2%. And FCF covers the dividend nearly three times over.

I’m shocked at how weak this name has been. It’s down 29% from its 52-week high.

The 52-week high of $193.58 reflected a lot of optimism. The current price of approximately $137 reflects a lot of pessimism. Here’s the thing, though. The time to buy is when pessimism, not optimism, reigns. That’s when you get a better valuation. That’s when you get more shares, and more dividends, for the same amount of money. Qualcomm is a long-term winner.

If you believe that tech has a bright future, you almost have to believe that Qualcomm has a bright future. And being able to invest in that bright future at pricing that’s 30% cheaper? How awesome is that? Long-term dividend growth investors should be taking a close look at Qualcomm right now.

— Jason Fieber

P.S. If you’d like access to my entire six-figure dividend growth stock portfolio, as well as stock trades I make with my own money, I’ve made all of that available exclusively through Patreon.

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