Dividend investing, a strategy cherished by long-term investors, can provide a steady income stream and help to build real wealth over time. When it comes to income plays, the cream of the crop are the “dividend aristocrats” - namely, stocks with a remarkable track record of increasing dividends for at least 25 consecutive years. You can get even more details on these upper-tier dividend stocks right here.

Despite their ability to provide steady income, dividend aristocrats can't always escape the roller coaster of market volatility. In 2023, we're navigating some stormy economic seas, marked by sticky inflation, geopolitical tensions, ongoing supply chain hiccups, and environmental concerns. 

Plus, the market's heady first-half gains were heavily skewed toward growth stocks - a category that generally doesn't overlap too heavily with the dividend aristocrats. As a result, some of these reliable yield names have taken a hit on the charts in recent months.

However, this rough patch means there's a chance for value-minded investors to snag these top-quality income stocks at a discount. So, which dividend aristocrats are currently on sale, and why should you consider adding them to your portfolio? 

Here, we've got a close look at two dividend aristocrats that have taken a technical dip in the past three months. The exciting part? Analysts are shouting "buy," and these stocks have room to run before testing their mean price targets - suggesting plenty of upside ahead to complement the steady income stream. Keep reading to uncover these hidden gems that could be your next investment win.

McDonald’s: A Tasty Treat for Dividend Investors

So, you've probably heard of McDonald's (MCD), right? It's not just a burger joint; it's an absolute global icon. They serve up their famous eats to a whopping 69 million people every single day, across more than 100 countries. 

And guess what? They're also a rock-solid dividend pick, having hiked their payout for more than 40 consecutive years. Currently, MCD's dividend yield is a cool 2.19%, surpassing the sector median of 2%.

But hey, let's not sugarcoat it - McDonald's stock hasn't been all rainbows and sunshine lately. It's taken a bit of a hit lately, and is now up just 7.7% for the year to underperform the S&P 500 Index ($SPX). 

Blame it on the global economic slowdown, persistent inflation, and higher prices at the pump, which are all weighing on the chain's core customer. Plus, they're thinking of removing the option for in-store refills, which hints at margin pressures.

However, this dip could be a golden opportunity for income investors. McDonald's still maintains a strong financial position - and in addition to dishing out dividends, they're also buying back their own stock. In the first half of 2023 alone, they scooped up a cool $4.5 billion worth of shares, reducing their share count by 3%. They're also cooking up plans to keep growing globally, amp up their digital game, and whip up some tasty new menu items.

Earnings are looking pretty appetizing, too. In the second quarter of 2023, they smashed consensus expectations with earnings per share (EPS) of $3.17. That's a juicy 24.31% jump from the previous year, and a whopping 14.44% better than what the experts predicted. 

For the full year, McDonald's expects mid-teens growth in systemwide sales and high-30s operating margin. 

Analysts are anticipating solid earnings growth, too, with an average EPS estimate of $11.52 for 2023 and $12.43 for 2024.

Now, let's talk ratings. The overwhelming majority of the 28 analysts keeping an eye on this burger giant are giving it a big thumbs-up. A whopping 18 are shouting "strong buy," 3 are saying "moderate buy," and 7 suggest "hold." Not a single one is shouting "sell" from the rooftops. So, the smart money says McDonald's is a tasty investment at its current price.

Speaking of price, experts are seeing a rebound in MCD's future. The average price target is $330.63, which is more than 18% above the stock's current levels. This suggests analysts think the shares have some room to run higher from here. 

In short, McDonald’s looks like a tasty treat for dividend investors who are looking for a reliable and growing income stream and capital appreciation. 

Public Storage: A Safe Haven for Dividend Seekers?

Public Storage (PSA) is one of the big shots in the self-storage world, with over 2,600 facilities spread across the U.S. and Europe. They're a dividend champ, too, with a remarkable 31 years of increases. PSA offers a 4.07% yield currently.

Now, here's the deal. PSA hasn't exactly been on a winning streak lately, down 0.5% for the year to completely sit out the broad-market rally. Along with the risk-on attitude that sent investors flocking toward growth stocks, blame it on some tough competition, as Public Storage very publicly lost a bid to acquire Life Storage earlier this year.

But this pullback could be your golden ticket to pick up the stock at a relative discount. PSA's got some solid competitive advantages, like a loyal customer base, steady cash flow, and sky-high occupancy rates. They're not shy about growth either, with a sturdy bank balance and cash to back it up. 

Plus, from a longer-term perspective, PSA has outperformed shares of the Vanguard Real Estate ETF (VNQ). PSA is up 40% over the last three years, compared to VNQ's 13.2% return.

In Q2 2023, Public Storage surprised everyone by reporting EPS of $4.28 - up 7.27% from the previous year, and better than the consensus estimate of $4.20.

The company also upped its full-year guidance. PSA now projects core funds from operations to range between $16.40 and $16.80, compared to the prior range of $16.15 to $16.80, and likewise raised the low end of its same-store revenue growth forecast. 

Analysts are mostly on Team PSA, which has an average rating of “moderate buy.” Out of 11 analysts, there are 7 shouting "strong buy" and 4 going for "hold." Nobody's yelling "sell." With an average price target of $330.17, analysts are anticipating upside of about 22% from current levels.

So, if you're after steady dividends and some investment growth, Public Storage could be your go-to. 

The Bottom Line

Both McDonald's (MCD) and Public Storage (PSA), as dividend aristocrats, present compelling opportunities for investors seeking steady returns. Despite recent price dips, their solid fundamentals, competitive advantages, and positive outlooks make them attractive choices. And with decades of dividend increases under their belts, they offer reliable income streams for the long term. So, if you're in the market for some relatively stable returns, these two dividend aristocrats are definitely ones to consider - especially while they're “on sale" after recent pullbacks.