3 Magnificent Dividend Stocks the Sell-Off Has Put on Sale. Buy Them Now and Hold Forever.

Key Points

Becton, Dickinson has become oversold following a spinoff, but analysts call for a growth rebound starting next year.

PepsiCo is another oversold Dividend King, trading at multiyear lows, with a historically high forward dividend yield.

Procter & Gamble remains a strong choice for investors seeking to build long-term wealth via dividend stocks.

• 10 stocks we like better than Becton ›

The broad market may be recovering from its recent sell-off, but plenty of bargains remain, especially among blue chip dividend stocks. This may be frustrating in the near term, but for long-term investors, it is a great opportunity.

That said, it's not as if you can buy the dip with each and every name in this category. That's true even among high-quality dividend stocks, including Dividend Kings -- stocks with 50 or more consecutive years of dividend growth.

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For some venerable names, trends change along with the businesses' qualities, calling into question their ability to match past performance. These "cheap for a reason" stocks are at high risk of turning into value traps.

However, screening for qualitative factors, such as whether there is a competitive moat -- alongside quantitative metrics like dividend growth records, forward dividend yield, and valuation -- reveals plenty of bona fide bargains. That's the case with the following Dividend Kings: Becton, Dickinson (NYSE: BDX), PepsiCo (NASDAQ: PEP), and Procter & Gamble (NYSE: PG).

Becton, Dickinson is low-priced, but for questionable reasons

As mentioned earlier, even some companies considered high quality can be cheap for a reason, due to sweeping macroeconomic or company-specific reasons. However, when it comes to Becton, Dickinson, one of the key medical device stocks, the factors driving its latest sell-off may not last for long.

Currently, shares trade at around 12 times forward earnings, a substantial discount to peers trading at around 15 times forward earnings, such as Medtronic. Yes, following the recent spin-off of its Biosciences and Diagnostic Solutions business (which was then acquired by Waters Corp.), analysts anticipate earnings will dip this year.

However, forecasts also call for a rebound starting in 2027. Furthermore, with Becton, Dickinson receiving $4 billion in cash from the aforementioned spin-off/reverse merger, the company could use this capital to buy back stock or make accretive acquisitions, or both.

With a more than 54-year track record of annual dividend growth, it may not take much for the company to experience a rebound in investor sentiment. This could in turn lead to shares climbing back to a higher valuation. Currently, Becton, Dickinson has a forward dividend yield of 2.7%. Dividend growth has averaged around 5.5% annually for the past five years.

Despite many concerns, PepsiCo is too cheap to ignore

PepsiCo is another Dividend King, beaten down more by fears of possible headwinds than by the impact of those headwinds themselves. To be clear, though, there are various reasons to be concerned about the food and beverage company's growth.

These include the potential for mass adoption of GLP-1 weight-loss drugs to reduce demand for snack foods and soda, concerns about the impact of tariffs on production costs, and the ongoing effects of elevated inflation on demand for branded packaged food and beverage products.

Yet while PepsiCo investors, like shareholders of other consumer staples businesses, may be contending with these challenges, these headwinds have become too baked into the company's share price. At present levels, the Pepsi and Frito-Lay parent trades for just 18 times forward earnings. Compare that to key competitor Coca-Cola, which trades for around 23.5 times forward earnings.

At its current low share price, you can buy in and potentially experience strong returns, even if shares partly return to historic valuation levels. At the same time, you can collect a 3.65% dividend yield.

PepsiCo's dividend has increased during each of the past 54 years. Over the past five years, payout growth has averaged nearly 7%.

Procter & Gamble remains a solid, slow-and-steady choice for dividend investors

It may sound exciting or glamorous to build wealth through a well-timed wager on speculative growth stocks, but arguably, a more straightforward way to build wealth, albeit time-consuming, is to steadily invest in the cream of the crop among dividend growth stocks.

Namely, Dividend Kings with the longest track records, such as Procter & Gamble. The company joined this exclusive club nearly 20 years ago, and it has sat on 70 years of consecutive dividend growth .

Yes, past performance doesn't guarantee future results. But it's tough to envision this consumer goods giant, maker of products as varied as Tide detergent and Gillette razors, losing its ability to steadily grow earnings and, in turn, steadily grow its dividend.

In good times and bad, consumers continue to use these products. On the surface, you may be skeptical about P&G's ability to become a wealth compounder over time. After all, the stock trades at just under 20 times forward earnings, making it reasonably priced but not cheap.

Procter & Gamble's 3% dividend yield may not sound too exciting, but the company has raised its payout by an average of nearly 6% annually over the past five years. Put it all together, and it's easy to see how this stock can be the perfect vehicle for steady, strong returns over a multidecade time frame.

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Thomas Niel has no position in any of the stocks mentioned. The Motley Fool recommends Medtronic. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.