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High-Quality Dividend-Payers: What's Cheap, What's Not?

We take a closer look at valuations among stocks in the Morningstar Dividend Yield Focus Index and highlight a few of the most undervalued stocks.

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Dividend stocks have enjoyed a strong run in recent years, especially as investors have sought income in the equity market that they are not getting from bonds or cash. 

If you are concerned that current valuations may cast a shadow over the future returns of equity-income strategies, you're not alone. There's no telling how long dividend stocks' recent run of outperformance will continue. But there are plenty of reasons to think that investing in steady dividend-paying stocks, particularly high-quality stocks that are healthy enough to not only sustain but possibly even increase their dividend, won't go out of style completely. Investors still have need for income, and although interest rates are likely to rise, they are still very low by historical standards and are not expected to shoot up dramatically anytime soon.

Karen Wallace does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.