Many blue chip dividend stocks are widely known and commonly covered, but for every well-known dividend stock, there are a few unknown gems. These underappreciated stocks can be just as big a home run as their more famous blue -chip counterparts, and three Motley Fool contributors think you should check out Cal-Maine Foods (NASDAQ:CALM), Aptiv(NYSE:APTV), and S&P Global (NYSE:SPGI).
Not your usual dividend
Jeremy Bowman (Cal-Maine Foods): On first glance, Cal-Maine's dividend doesn't look like anything special at a yield of just 1.4%. However, the egg producer's dividend policy differs from most companies. Rather than pay a steady dividend and raise it modestly every year, the nation's largest egg producer calculates its quarterly dividend as a third of its net income in the previous quarter.
Over the last five years, Cal-Maine's dividend yield has fluctuated from zero to more than 6%, where it spiked in 2016 when egg prices rose due to the avian flu epidemic. However, in the quarters following that, the company did not have a profit or pay a dividend as egg prices crashed.
In the near term, the stock's trajectory will continue to be governed by price volatility in the egg market. But over the longer term, several factors favor the company. First, consumption of higher-priced specialty eggs that are cage-free, organic, or free-range is growing quickly, taking share from conventional eggs. In its most recent quarterly report, Cal-Maine said that revenue from specialty eggs increased to 35% of its total, from 30.2%, a trend that should drive increasing revenue.
