3 Magnificent S&P 500 Dividend Stocks Down 11% to 18% to Buy and Hold Forever

It's difficult to find many people complaining about the S&P 500's strong performance in 2024. Extending the 24% climb that it recorded in 2023, the index has soared about 20% year to date.

But not every member of the index has fared so well. PPG Industries (NYSE: PPG), SJW Group (NYSE: SJW), and Archer-Daniels-Midland (NYSE: ADM) have all dipped lower since the start of the year. PPG and SJW are down 14% and 11%, respectively, while Archer-Daniels-Midland has sunk 18%. Consequently, all three dividend stocks -- Dividend Kings, in fact -- are trading at attractive valuations, providing great buying opportunities for both value and income investors alike.

PPG painted a less pretty picture for 2024, but don't let that distract you

A provider of paints, coatings, and other specialty materials, PPG frustrated investors in July when it slashed its 2024 profitability outlook. During its second-quarter 2024 earnings presentation, PPG provided a less-robust adjusted earnings-per-share (EPS) outlook of $8.15 to $8.30 than its original adjusted EPS guidance of $8.34 to $8.59. Further motivating investors to click the sell button on PPG, several analysts slashed their price targets in July.

While the dog days of summer took a bite out of PPG stock, its allure for long-term investors is undeniable. For one, the company has amassed a string of 52 consecutive years of dividend increases -- that's no small accomplishment. And it's not as if the company has jeopardized its financial health while boosting its payout. PPG consistently generates strong free cash flow from which it can source its dividend.

PPG Free Cash Flow Per Share (Annual) data by YCharts

The company's five-year average payout ratio of 44% further suggests that management takes a judicious approach to returning capital to shareholders.

Dip your toes in a water utility investment with SJW

Accruing even a little investing experience will likely provide some excitement. Will that excitement come from water utility stocks like SJW Group? Probably not. And that's just fine for patient investors looking to build reliable passive income streams. There's nothing glamorous like leading tech stocks or thrilling like innovative pharmaceutical treatments with SJW Group, which simply provides water and wastewater treatment. The water utility primarily operates in regulated markets, which represented about 95% of net income in 2023. As such, the company enjoys guaranteed rates of returns, providing management with excellent foresight into future cash flows -- foresight which helps to plan for capital expenditures like acquisitions and dividend increases. SJW Group's commitment to growth through acquisitions is clear. From 2010 to 2023, SJW Group completed more than 25 acquisitions, which led to 72% growth in its customer base.

With 80 consecutive years of dividend payments under its belt and 56 consecutive years of dividend increases, it's undeniable that rewarding shareholders is inherent in the company culture, and the increases aren't nominal. Over the past five years, SJW Group has raised its dividend at a compound annual growth rate of more than 6%.

Time to feast on Archer-Daniels-Midland stock

It wasn't a very auspicious start to the new year for Archer-Daniels-Midland thanks, in part, to a shake-up in the C-suite, yet shares have pared back some of their losses from a 23% decline in January. Unsurprisingly, the turmoil resulting from the removal of the CFO and the accounting investigation eroded some investor confidence in the company, but it hardly indicates that the stock cannot see a return to growth. With a history that stretches 122 years, Archer-Daniels-Midland has overcome its share of challenges and emerged as a leading agriculture stock, which addresses the nutrition needs of both people and pets alike.

There's no guarantee the company will continue to prosper solely based on its lengthy history, but it certainly provides investors with some confidence that it has the resilience to surmount the challenges it has recently encountered. Meanwhile, the appointment of a new CFO should also help the company to regain investor confidence after the recent accounting investigation.

Projecting 2024 adjusted EPS of $5.25 to $6.25, management is guiding for a year-over-year decline in profitability since the company booked adjusted EPS of $6.98 in 2023. While this may scare short-term investors away, those committed to buying and holding the stock for the long term shouldn't be frightened.

Should you embrace these dividend darlings today?

Currently, PPG, SJW, and Archer-Daniels-Midland all feature attractive valuations, trading at discounts to their five-year operating-cash-flow multiples. For the most conservative investors, SJW and its 2.8% forward dividend yielding stock is a great choice considering its sizable operations in regulated markets. Those who can stomach some near-term volatility and have an appetite for higher yield will want to look at Archer-Daniels-Midland with its 3.4% forward dividend yield. While those interested in a specialty materials stock will want to dig into PPG and its 2.1% forward yielding stock.

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Scott Levine has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.