Dividend aristocrats are popular with investors. After all, what dividend investor wouldn’t want to own the stocks of companies with a history of growing their dividends consistently over time?

What is a dividend aristocrat?

Dividend aristocrats are defined as companies that’ve increased their dividends every year for 25 years or longer. There are currently more than 60 dividend aristocrats among the companies included in the S&P 500 index.

Investors often buy dividend aristocrats because they expect companies with a history of dividend growth to be able to continue to grow their dividends in the future. In addition, dividend aristocrats are mature companies with sufficient earnings to continue to increase their dividends and are run by management teams that prioritize dividends in the capital structure.

That being said, dividend aristocrats aren’t immune to dividend cuts. Early in 2024, for instance, onetime dividend aristocrat Walgreens Boots Alliance (NAS:WBA) cut its dividend nearly in half.

How can investors avoid those dividend aristocrats that may be more likely to cut their dividends?

“Companies with wide economic moats have been less likely to cut dividends than companies with narrow moats,” explains Morningstar Indexes strategist Dan Lefkovitz. “No-moat businesses are most likely to cut.”

To come up with our list of the best dividend aristocrats to buy, we screened on the following:

  • Dividend stocks included in the US listed ETF ProShares S&P 500 Dividend Aristocrats ETF NOBL
  • Dividend aristocrats with Morningstar Economic Moat Ratings of narrow or wide

These are the dividend aristocrats from the screen that are trading at the largest discounts to Morningstar’s fair value estimates. Data is as of April 18, 2025.

The 10 best dividend aristocrats to buy now

These undervalued stocks have wide or narrow economic moats and have grown their dividends for at least 25 consecutive years.

  1. Albemarle ALB
  2. Becton Dickinson BDX
  3. Brown-Forman BF.B
  4. West Pharmaceutical Services WST
  5. T. Rowe Price TROW
  6. Caterpillar CAT
  7. Nordson NDSN
  8. Medtronic MDT
  9. Air Products and Chemicals APD
  10. Clorox CLX

Here’s a little bit from the Morningstar analyst who covers each company, along with some key metrics for each dividend stock. All data is as of April 18, 2025.

Albemarle

  • Morningstar Price/Fair Value: 0.24
  • Morningstar Uncertainty Rating: Very High
  • Morningstar Economic Moat Rating: Narrow
  • Trailing Dividend Yield: 3.05%
  • Sector: Basic Materials

Albemarle tops our list of the best dividend aristocrats: The stock trades at a whopping 76% below Morningstar’s fair value estimate of $225. We assign the world’s largest lithium producer a Very High Uncertainty Rating, thanks to the volatility of lithium prices. Morningstar strategist Seth Goldstein notes that he expects the company to continue to prioritize a growing dividend in its capital allocation but also observes: “Should lithium prices remain lower for longer, the company may be forced to cut its dividend as a way to direct more cash flow toward debt repayment.”

Albemarle is one of the world’s largest lithium producers, which generates the majority of total profits. It produces lithium through its own salt brine assets in Chile and the United States and two joint venture interests in Australian mines, Talison (Greenbushes) and Wodgina. The Chilean operation is among the world’s lowest-cost sources of lithium. Talison is one of the best spodumene resources in the world, which allows Albemarle to be one of the lowest-cost lithium hydroxide producers, as spodumene can be converted directly into hydroxide. Wodgina is another high-quality spodumene asset that provides Albemarle with a third large resource, though it has a higher cost versus Talison. Albemarle also owns resources in the US and Argentina that are still in the early development phase, which should allow it to boost its lithium volumes through the development of new projects in the coming decades.

As electric vehicle adoption increases, we expect double-digit annual growth in global lithium demand. However, global lithium supply is also growing rapidly in response. Albemarle is growing its lithium volumes through the buildout of new lithium refining plants but has largely paused new expansion plans in light of cyclically low lithium prices. As prices recover, we expect Albemarle will increase its lithium-refining capacity largely through brownfield expansions at existing operations.

Albemarle is the world’s second-largest producer of bromine, a chemical used primarily in flame retardants for electronics. Bromine demand should grow over the long term as increased demand for use in servers and automobile electronics is partially offset by a decline in demand from TVs, desktops, and laptops. Over the long term, we expect Albemarle to generate healthy bromine profits due to its low-cost position in the Dead Sea.

Albemarle is also a top producer of catalysts used in oil refining and petrochemical production. These chemicals are highly tailored to specific refineries. However, this business has been structured to run separately from the rest of the company and may be divested in the future.

Becton Dickinson

  • Morningstar Price/Fair Value: 0.61
  • Morningstar Uncertainty Rating: Narrow
  • Morningstar Economic Moat Rating: Medium
  • Trailing Dividend Yield: 2.00%
  • Sector: Healthcare

Becton Dickinson is the first of several healthcare stocks on our list of dividend aristocrats to buy. We think the world’s largest manufacturer and distributor of medical surgical products has carved out a narrow economic moat. Morningstar director Alex Morozov calls the company’s cash flow “fairly predictable” and its longevity of strong returns on capital “particularly remarkable.” The stock looks attractive, trading 39% below our fair value estimate of $325.

After a tumultuous few years, Becton Dickinson is undergoing a course correction. The covid revenue windfall has been reinvested, which should lift the firm’s core business growth in the coming years as testing revenue has faded. With Alaris returned to the market, the last remaining uncertainty has been resolved, although it is still to be seen whether the damage experienced by the franchise will be long-lasting or whether the infusion system can rapidly regain its market-leading share. The initial trajectory is encouraging.

Historically, BD was considered a virtually recession-resistant business. The essential nature of many of BD’s medical products had typically shielded the firm from any capital spending-related volatility, and this business continued to fare fine during the covid-induced hospital admission deceleration. However, many of the businesses acquired with Bard have exposed BD to revenue volatility. Combined with the setbacks and revenue deceleration in the peripheral segment, the Bard acquisition has not been a smashing success. We’re not quite ready to call that deal capital-destructive, but the steep price paid has given BD very little margin for error.

The Alaris recall also represented a significant blemish on the company’s previously very clean execution record. The magnitude of the damage to the pump franchise is still not certain, but based on early momentum, we think BD should retain many of its installations. The company needs almost flawless execution in the upcoming years to reverse investors’ skepticism regarding its performance.

Brown-Forman

  • Morningstar Price/Fair Value: 0.65
  • Morningstar Uncertainty Rating: Medium
  • Morningstar Economic Moat Rating: Wide
  • Trailing Dividend Yield: 2.63%
  • Sector: Consumer Defensive

The first wide moat stock on our list of undervalued dividend aristocrats, Brown-Forman trades 35% below our fair value estimate. The manufacturer of premium distilled spirits, including Jack Daniels, earns that wide economic moat rating because of its strong brand loyalty and tight client relationships, explains Morningstar analyst Dan Su. We expect dividend payments to grow alongside earnings. We think shares are worth $52.

We award a wide economic moat rating to Brown-Forman, based on strong brand intangible assets and cost advantages associated with the spirits-maker’s premium American whiskey portfolio that makes up close to 70% of sales.

With over 150 years of distilling experience specializing in Tennessee whiskey and Kentucky bourbon, Brown-Forman has earned accolades and loyalty from drinkers for distinct flavors and consistent quality, building strong brand equity for its core Jack Daniel’s trademark in the US and globally. We are constructive on the growth prospects of the premium spirits-maker, as its high-end positioning in the structurally attractive whiskey category (where a lengthy maturation process creates significant entry barriers) aligns well with the industry’s premiumization trend. Beyond this, we surmise the firm is poised for volume expansion, thanks to a strong innovation pipeline promising new releases not only in whiskeys and tequilas, but also in the attractive, fast-growing ready-to-drink category. In particular, close collaboration with wide-moat Coca-Cola for the global launch of the Jack and Coke premix cocktail should allow the distiller to capitalize on demand tailwinds and benefit from Coke’s distribution clout. Additionally, recent entry into new categories of gin and rum via acquisitions of super-premium brands should broaden the appeal of Brown-Forman’s overall alcohol portfolio and add a new avenue of growth, though the revenue contribution will likely remain small in the near future.

Brown-Forman’s growth outlook is not without risks, though. The distiller and its spirits peers face growing excise tax and regulatory headwinds in developed countries. Growth in craft distillers has slowed, but these nimble players could still chip away at Brown Forman’s loyal customer base by offering a refreshing alternative. The possible return of retaliatory tariffs on US whiskeys in Europe could also pose a near-term threat. That said, we expect the distiller will continue to thrive, thanks to its advantaged competitive position and the Brown family’s long-term focus.

West Pharmaceutical

  • Morningstar Price/Fair Value: 0.65
  • Morningstar Uncertainty Rating: Medium
  • Morningstar Economic Moat Rating: Wide
  • Trailing Dividend Yield: 0.41%
  • Sector: Healthcare

West Pharmaceutical is the lowest-yielding stock on our list of top dividend aristocrats to buy. The company is in a strong financial position and consistently generates healthy levels of cash flow, says Morningstar senior analyst Jay Lee. West has historically paid out dividends in a 20%-30% payout range, adds Lee, and he expects the company to maintain a payout ratio of 13% over the next five years. West Pharmaceutical stock is 35% undervalued relative to our $310 fair value estimate.

West Pharmaceutical Services is the global market leader in primary packaging and delivery components for injectable therapeutics. Primary packaging has direct contact with the drug product and must be manufactured to ensure stability, purity, and sterility of the drug product in accordance with strict regulatory standards. Because of the mission-critical nature of these components, it is important for customers to trust the quality of manufacturing and design. Key product lines include elastomer components such as stoppers, seals, and plungers, Daikyo Crystal Zenith vials made out of polymer instead of glass, and auto-injectors. Injectables include not only older modalities like small-molecule drugs, insulin, and vaccines but also biologics and GLP-1 obesity drugs.

West has roughly 70% market share of elastomer components for injectable drugs, with the remaining 30% split between Switzerland’s Datwyler and narrow-moat AptarGroup. Additionally, its polymer vials are important containment solutions for biologics, a significant part of the injectables market, because protein therapeutics are incompatible with glass.

West’s strong market share is backed by its reputation for quality and supply-chain expertise and reinforced by the high cost of failure for injectable drug packaging, especially biologics. The firm’s scale and diversified supply chain are unparalleled. We believe West will be able to maintain a strong market share in the injectables components market.

The main driver of the company’s long-term revenue outlook is the growth of the injectables market, which enjoys secular growth trends due to increasing use of biologics. GLP-1 drugs are also a potential source of upside. Additionally, we think the company will continue to benefit from stricter regulations requiring higher-quality, lower particulate packaging, which is an incentive for customers to upgrade from standard primary components to West’s high-value products, or HVP. We think this mix shift toward higher-margin products will gradually improve the firm’s profit margins, although high customer concentration adds uncertainty to our outlook.

T. Rowe Price

  • Morningstar Price/Fair Value: 0.69
  • Morningstar Uncertainty Rating: High
  • Morningstar Economic Moat Rating: Narrow
  • Trailing Dividend Yield: 5.79%
  • Sector: Financial Services

With a yield approaching 6%, T. Rowe Price is the highest-yielding stock on our list of top dividend aristocrats to buy. While the company’s dividend payout now rests near the upper end of its typical 45%-55% range, management remains committed to using the firm’s strong financial position to grow the dividend, says Morningstar strategist Greggory Warren. We think T. Rowe Price stock is worth $125.

In an environment where active fund managers are under assault for poor relative performance and high fees, we believe narrow-moat T. Rowe Price is one of the better-positioned US-based traditional asset managers we cover on the active side of the business. Its biggest differentiators are the size and scale of its operations, the strength of its brands, its ability to generate above-average active fund outperformance, and reasonable fees. T. Rowe Price also has a stickier set of clients than its peers, with two-thirds of its assets under management derived from retirement-based accounts.

The firm has been facing more headwinds of late, with continued baby-boomer rollovers and increased competition from low-cost passive target-date funds affecting organic AUM growth. T. Rowe Price has also posted uncharacteristically poor investment returns over the past several years, with both its equity and fixed-income platforms generating performance well outside the upper quartile. While this will likely improve over time, it is one more headache the firm does not need, as it has done nothing to abate the outflows.

While T. Rowe Price will face headwinds in the near to medium term as baby-boomer rollovers continue to affect organic AUM growth, we think that it and defined-contribution plans in general have a compelling cost and service argument to make to pending retirees, which should mitigate some of the impact. We also believe T. Rowe Price is uniquely positioned among the firms we cover (as well as the broader universe of active asset managers) to pick up business in the retail-advised channel, given the historical performance of its funds and reasonableness of its fees.

That said, the company is not immune to the pressures caused by the growth of low-cost passively managed products. With total and average AUM expected to increase at a low- to mid-single-digit rate on average annually during 2024-28, and management fees pressured by ongoing industry dynamics, we envision T. Rowe Price generating a 3.3% CAGR for revenue, with adjusted operating margins of 36%-38% over our five-year projection period.

Caterpillar

  • Morningstar Price/Fair Value: 0.70
  • Morningstar Uncertainty Rating: Medium
  • Morningstar Economic Moat Rating: Wide
  • Trailing Dividend Yield: 1.88%
  • Sector: Industrials

The first of two industrials stocks on our list of the best dividend aristocrats, Caterpillar stock trades 30% below our $422 fair value estimate. The heavy-construction machinery giant has carved out a wide economic moat based on its significant intellectual property and high customer switching costs, says Morningstar analyst George Maglares. Maglares points out that as a result of prudent capital allocation, the company remains profitable and cash-generative through the cycle, which has allowed it to consistently increase its dividend.

Industrial bellwether Caterpillar is one of the world’s leading providers of heavy-construction machinery and a major player in industrial engines and transportation products. While clearly a cyclical company, management has worked intensely to reduce earnings volatility and structurally improve profitability and cash flow. Leadership established targets in 2017 to boost margins 300-600 basis points through the cycle, generate $4 billion-$8 billion in annual free cash flow, and return substantially all industrial free cash to shareholders via repurchases and a progressive dividend. Management has executed very well and tackled costs via capacity rationalization and expense controls. Caterpillar established a goal to reach $28 billion in annual services sales by 2026 (2 times over 10 years). Having reached $23 billion last year, the company is well on its way to achieving this target, which improves margins and reduces cyclicality. The services strategy includes increasing digitization of machines to enhance predictive maintenance and increase the attach rate of customer value agreements.

The key US construction market has benefited from infrastructure spending (with quite a long runway from unspent fiscal stimulus) and stable residential housing demand. However, industrial production metrics have been more moderate. Europe has struggled amid economic uncertainty, and China has been weak. Caterpillar’s key mining end market has also struggled with anemic demand, remaining approximately 40% below prior peak in 2012. Across the construction and resource segments, the average age of Caterpillar’s installed base is somewhat elevated. While this doesn’t imply a refresh cycle is imminent, it suggests the company is not operating at peak cycle. We agree with management about substantial tailwinds to its end markets as the global economy transitions to sustainable energy, allowing for GDP-plus growth for an extended period. As a result, the company is likely able to deliver mid- to high-single-digit growth over the next five-year period while remaining comfortably within its targeted 18%-22% margin window, which may hold upside from greater services penetration.

Nordson

  • Morningstar Price/Fair Value: 0.73
  • Morningstar Uncertainty Rating: Medium
  • Morningstar Economic Moat Rating: Wide
  • Trailing Dividend Yield: 1.67%
  • Sector: Industrials

The second of two industrials stocks on our list of the best dividend aristocrats, Nordson stock trades 27% below our fair value estimate of $246. This manufacturer’s equipment, which is used to dispense adhesives, sealants, and other materials, boasts high switching costs that underpin its wide economic moat rating, explains Morningstar analyst Krzysztof Smalec. We expect the company to continue to prioritize growing the dividend, raising it roughly in line with earnings growth.

Nordson is a leading manufacturer of equipment used for dispensing adhesives, coatings, sealants, and other materials. The company enjoys a strong market share across its business lines, and its products are often used in niche applications where competition is limited. Nordson differentiates itself by offering highly engineered and customizable solutions that perform a mission-critical role in a customer’s manufacturing process.

Nordson thrives in times of change, as innovation in its end markets drives demand for new and improved solutions. In the long run, we think Nordson is poised to capitalize on favorable secular trends such as increasing adoption of 5G and autonomous vehicles, which we expect to create new opportunities for its dispensing business. For example, as 5G adoption accelerates, more antennas and other components will be placed in smartphones. Likewise, autonomous vehicles feature more cameras, sensors, and other electronic equipment. We believe that innovation in Nordson’s end markets will create demand for new dispensing equipment, featuring faster speeds and increased precision.

Nordson has regularly used acquisitions as an engine for growth. In recent years, it has focused on expanding its medical business through M&A, and it should benefit from favorable secular trends in healthcare, including an aging baby-boomer population and growing demand for minimally invasive medical devices. Additionally, recent acquisitions of medical companies have boosted Nordson’s recurring revenue from sales of syringes, cartridges, and other medical device components. Nordson generates healthy cash flows that allow it to compound cash by reinvesting capital in organic growth, driven by introductions of new or refreshed products, as well as tuck-in and bolt-on acquisitions that fit its strategy of selling goods that have a low cost but create added value for customers. Nordson also has a long history of returning cash to shareholders via dividends, having increased its dividend for 61 consecutive years.

Medtronic

  • Morningstar Price/Fair Value: 0.74
  • Morningstar Uncertainty Rating: Medium
  • Morningstar Economic Moat Rating: Narrow
  • Trailing Dividend Yield: 3.39%
  • Sector: Healthcare

Medtronic stock looks 26% undervalued relative to our $112 fair value estimate. One of the world’s largest medical-device companies, Medtronic aims to return a minimum of 50% of its annual free cash flow to shareholders but has been in the 60% to 70% range in recent years, observes Morningstar senior equity analyst Debbie Wang. We think distributions have been appropriate.

Medtronic’s standing as the largest pure-play medical-device maker remains a force to be reckoned with in the med-tech landscape. Medtronic’s diversified product portfolio aimed at a wide range of chronic diseases spans therapeutic areas, including cardiac, diabetes, and chronic pain, as well as various products for acute care. This has put Medtronic in a strong position as a major vendor to hospital customers.

All along, the firm has largely remained true to its fundamental strategy of innovation, which has often resulted in differentiated technology. It is often first to market with new products and has invested heavily in internal research and development efforts, as well as acquiring emerging technologies. However, in the postreform healthcare world where there are higher hurdles for securing reimbursement for next-generation technology, Medtronic has had to move in the direction of introducing meaningful innovation that can demonstrate measurable safety or efficacy improvements. The firm has also begun to partner more closely with its hospital clients by offering a greater breadth of products and services to help hospitals operate more efficiently.

While some technology platforms, such as cardiac rhythm management, have reached maturity, Medtronic has established a significant footprint in new therapies, including transcatheter aortic valves and stent retrievers for ischemic stroke. The firm is also early out of the gate for emerging technologies like renal denervation for uncontrolled hypertension and pulsed field ablation for atrial fibrillation.

As with many device-makers, Medtronic has augmented its internal innovation with acquisitions of technology platforms, running the risk of overpaying. The large acquisition of Covidien depressed returns for far longer than typically seen among device-makers when engaging in mergers and acquisitions. We remain wary that Medtronic, by virtue of its size and cash flows, remains one of the few medical device competitors that could entertain another truly large acquisition.

Air Products and Chemicals

  • Morningstar Price/Fair Value: 0.79
  • Morningstar Uncertainty Rating: Medium
  • Morningstar Economic Moat Rating: Wide
  • Trailing Dividend Yield: 2.70%
  • Sector: Basic Materials

Air Products and Chemicals is the fifth wide-moat stock on our list of best dividend aristocrats to buy. One of the leading industrial gas suppliers globally, the company earns that wide moat because of its high switching costs, says Morningstar’s Smalec. Smalec expects the company to be able to continue to grow its dividend: It raised its quarterly dividend in January 2025 by 1%, extending its dividend growth streak to 43 consecutive years.

Air Products benefits from operating in an industry with a very favorable structure. Despite selling industrial gases, which are essentially commodities, public industrial gas companies have consistently delivered lucrative returns because of their economic moats. Industrial gases typically account for a relatively small fraction of customers’ costs but are a vital input to ensure uninterrupted production. As such, customers are often willing to pay a premium and sign long-term contracts to ensure their businesses run smoothly. Long-term contracts and high switching costs contribute to industrial gas producers’ moats, helping them generate a predictable cash flow stream and lucrative returns.

Demand for industrial gases is strongly correlated to industrial production. As such, organic revenue growth will largely depend on global economic conditions. That said, we think Air Products can fuel additional revenue growth through investment in new projects or asset buybacks.

Air Products is poised for rapid growth over the next few years because of its investments in blue and green hydrogen megaprojects. We are bullish on Air Products’ long-term prospects and think that the firm’s ambitious capital-allocation plan will fuel tremendous growth for many years to come, driven by investments in traditional industrial gas projects as well as new opportunities, including green hydrogen and carbon capture.

Following a successful activist campaign, Eduardo Menezes was appointed CEO, succeeding Seifi Ghasemi. We believe Air Products is in capable hands, given Menezes’s solid track record at Praxair and Linde. We expect the new management team to focus on implementing a more rigorous risk-management framework and derisking the existing blue and green hydrogen backlog. Furthermore, we expect Air Products to strive toward improving its margins by eliminating excess costs associated with noncore activities.

Clorox

  • Morningstar Price/Fair Value: 0.79
  • Morningstar Uncertainty Rating: Medium
  • Morningstar Economic Moat Rating: Wide
  • Trailing Dividend Yield: 3.48%
  • Sector: Consumer Defensive

Clorox rounds out our list of best dividend aristocrats to buy. Morningstar director Erin Lash expects mid-single-digit dividend growth over the next 10 years, resulting in a payout ratio near 60% long term. Clorox stock trades at a 21% discount to our $177 fair value estimate.

With its entrenched retail standing and unwavering focus on investing behind its leading brand mix, Clorox has withstood the onslaught from covid, supply chain pressures, rampant inflation, and an August 2023 cybersecurity attack. More recently, it has acknowledged a step-up in promotional spending, particularly in litter, bags, and wrap. Still, we don’t believe this suggests an irrational competitive landscape or that the firm is pursuing a volume-over-value strategy. Rather, we think Clorox remains resolute in investing to support the long-term health of the business and ensure its competitive edge holds.

As e-commerce adoption has taken hold since the onset of the pandemic, Clorox has earmarked more than $500 million to bolster its digital capabilities and to look for additional productivity advancements, which we view as a prudent way to boost investments. We’re encouraged that Clorox’s strategy remains bringing consumer-valued innovation to market and touting its fare in front of consumers, which we view as particularly critical against the current backdrop of weakening consumer spending and intense competition. Clorox goes to bat against lower-priced private-label fare in most categories, but we think investments in innovation and marketing should help its products win at the shelf and stifle trade-down. This underpins our forecast for Clorox to direct nearly 13% of sales annually—just north of $1 billion—toward research, development, and marketing.

Even with these investments, we believe Clorox is on the path back to the 44% gross margin that has historically characterized the business (up from the low 30s trough in the second quarter of fiscal 2022, when cost inflation took a toll) by the end of fiscal 2025. We expect Clorox will continue employing multiple tactics, including keeping a close eye on its cost structure while surgically raising prices to the extent that the inflationary backdrop warrants (particularly around agricultural products, diesel, and labor) as it builds back profits.

Should you buy dividend aristocrats?

Dividend aristocrats can be compelling investments, but they have their caveats.

For starters, dividend aristocrats can, in fact, cut their dividends if business conditions warrant. “A streak of annual dividend increases of any length provides no guarantee that a company’s dividend is secure,” argues Morningstar’s David Harrell. He points to VF VFC and AT&T T as recent examples of onetime dividend aristocrats that’ve cut their dividends during the past few years.

Moreover, dividend aristocrats aren’t necessarily high-dividend stocks. Harrell estimates that about 40% of the dividend aristocrats yield less than 2%. “Twenty-five years of consecutive dividend growth doesn’t necessarily result in a high-yielding stock,” he notes.

And lastly, dividend aristocrats aren’t attractive unless they’re underpriced—at least not in our book. Overpaying for a stock simply because it has a solid history of dividend growth only increases the price risk in your portfolio.

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Terms used in this article

Star Rating: Our one- to five-star ratings are guideposts to a broad audience and individuals must consider their own specific investment goals, risk tolerance, and several other factors. A five-star rating means our analysts think the current market price likely represents an excessively pessimistic outlook and that beyond fair risk-adjusted returns are likely over a long timeframe. A one-star rating means our analysts think the market is pricing in an excessively optimistic outlook, limiting upside potential and leaving the investor exposed to capital loss.

Fair Value: Morningstar’s Fair Value estimate results from a detailed projection of a company’s future cash flows, resulting from our analysts’ independent primary research. Price To Fair Value measures the current market price against estimated Fair Value. If a company’s stock trades at $100 and our analysts believe it is worth $200, the price to fair value ratio would be 0.5. A Price to Fair Value over 1 suggests the share is overvalued.

Moat Rating: An economic moat is a structural feature that allows a firm to sustain excess profits over a long period. Companies with a narrow moat are those we believe are more likely than not to sustain excess returns for at least a decade. For wide-moat companies, we have high confidence that excess returns will persist for 10 years and are likely to persist at least 20 years. To learn about finding different sources of moat, read this article by Mark LaMonica.

Uncertainty Rating: Morningstar’s Uncertainty Rating is designed to capture the range of potential outcomes for a company. An investor can think of this as the underlying risk of the business. For higher risk businesses with wider ranges of potential outcomes an investor should consider a larger margin of safety or difference between the estimate of what a share is worth and how much an investor pays. This rating is used to assign the margin of safety required before investing, which in turn explicitly drives our stock star rating system. The Uncertainty Rating is aimed at identifying the confidence we should have in assigning a fair value estimate for a stock. Read more about business risk and margin of safety here.