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Is Perrigo Company plc (PRGO) the Best Mid-Cap Dividend Aristocrat to Invest in Now?
We recently published a list of the 12 Best Mid-Cap Dividend Aristocrats to Invest in Now. In this article, we are going to take a look at where Perrigo Company plc (NYSE:PRGO) stands against other mid-cap dividend aristocrats.
There’s a common misunderstanding that dividend payouts are mostly limited to large-cap companies, but mid-cap firms are often just as generous—and notably stable—when it comes to dividends. Recently, mid-cap dividend stocks, which had fallen out of favor, are making a comeback and drawing renewed interest from investment strategists. The MidCap Dividend Aristocrats Index, which includes 53 mid-sized companies that have raised their dividends for at least 15 consecutive years, has declined just 1.2% year-to-date through May 5. In comparison, the broader market has dropped 3.7% over the same period. Notably, these mid-cap companies generate about 82% of their revenue from within the US, significantly higher than the roughly 60% average for broader market firms and 53% for those in the Nasdaq Composite, based on data from S&P Dow Jones Indices and FactSet as of April 30.
Alongside investors, analysts are also recommending that income portfolios include mid-cap companies. According to Simeon Hyman, global investment strategist at ProShares, these stocks can help cushion downside risk amid current market volatility. He noted that this is particularly relevant for investors whose portfolios are heavily weighted toward large-cap growth names like the “Magnificent Seven” tech giants. Hyman emphasized the importance of diversifying equity exposure across a wider range of asset classes to help manage risk in today’s environment.
Analysts are leaning toward mid-cap dividend stocks largely because they appear undervalued. As of April 30, the MidCap Dividend Aristocrats Index had a price-to-earnings (P/E) ratio of 17.87, which is significantly lower than the P/E ratios of the broader market and the Nasdaq. Larry Adam, chief investment officer at Raymond James, made the following comment about this:
“Now is the time for bargain-hunting since midcap dividend stocks are trading at historically low valuations relative to large-cap stocks. They could be the sweet spot for investors when you consider they are more insulated from tariff exposure and are expected to outpace the earnings growth of large-caps this year.”
According to analysts, instead of picking individual mid-cap dividend stocks, investors should consider exchange-traded funds (ETFs) as an alternative. These funds offer tax efficiency and diversification across multiple industries and typically come with low expense ratios.
For instance, the WisdomTree U.S. MidCap Dividend ETF (DON), which manages $3.47 billion in assets, posted a year-to-date return of -6.47% through April 30, with a 12-month return of 4.72% and a 12-month yield of 2.54%. Its expense ratio stands at 0.38%. Meanwhile, the ProShares S&P MidCap Dividend Aristocrats ETF (REGL), with $1.69 billion in assets, returned -1.88% so far this year, delivered a 6.96% one-year return, and yields 2.60% over 12 months. Its expense ratio is 0.40%, according to Morningstar Direct.
Though both ETFs are showing negative returns for the year, their dividend payouts help cushion losses. Financial advisers often recommend reinvesting those dividends rather than withdrawing the cash, as this approach can build wealth over time by acquiring more shares while prices remain subdued.
Is Perrigo Company plc (PRGO) the Best Mid-Cap Dividend Aristocrat to Invest in Now?
A doctor and a patient discussing the benefits of OTC health and wellness solutions.
Our Methodology
For this list, we scanned the holdings of MidCap 400 Dividend Aristocrats, which tracks the performance of mid-sized companies within the MidCap 400 index that have maintained a consistent track record of increasing dividends annually for at least 15 years. From the index, we picked 12 dividend stocks that have garnered the most attention from hedge fund investors by the conclusion of Q4 2024, using data from Insider Monkey’s database. The stocks are ranked according to the number of hedge funds having stakes in them.
At Insider Monkey, we are obsessed with hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Perrigo Company plc (NYSE:PRGO) is an Ireland-based company that focuses on providing self-care products and over-the-counter (OTC) health and wellness solutions. The company aims to improve personal well-being by enabling consumers to take an active role in preventing or managing treatable health conditions on their own.
In the fourth quarter of 2024, Perrigo Company plc (NYSE:PRGO) reported revenue of $1.3 billion, which showed a significant growth of 15.4% from the same period last year. However, it still missed analysts’ estimates by $1.83 million. The company reported average daily crude oil production of 171.3 thousand barrels and total average production of 368.4 thousand barrels of oil equivalent. For 2025, the company plans to increase annual production by 8% while maintaining its capital budget at around $2 billion, the same level as in 2024. This improved capital efficiency compared to the previous year is attributed to its disciplined development strategy and a significantly reduced cost structure.
During the quarter, Perrigo Company plc (NYSE:PRGO) generated $872 million in operating cash flow, and its free cash flow amounted to $400 million, which highlights the company’s strong cash position. The company’s 22-year dividend growth streak is attributed to its cash generation, which makes PRGO one of the best dividend stocks on our list. Currently, it pays a quarterly dividend of $0.29 per share and has a dividend yield of 4.6%, as of May 5.
Overall, PRGO ranks 2nd on our list of the best mid-cap dividend aristocrats to buy now. While we acknowledge the potential of PRGO as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued dividend stock that is more promising than PRGO but that trades at 10 times its earnings and grows its earnings at double digit rates annually, check out our report about the dirt cheap dividend stock.
