3 Undervalued Dividend King Stocks With Over 50% Upside Potential

As we enter the second half of 2025, now is the perfect time to invest in dividend stocks — especially those with quality underlying fundamentals that pay high dividend yields. Many such dividend stocks are currently trading at big discounts, and that’s exactly investor may want to start considering adding them to their portfolios.

Goldman Sachs believes that we will see three interest rate cuts this year. One cut is expected to come in September, followed by two more cuts: one in October and one in December. This is because tariffs have not yet caused a notable uptick in inflation. Instead, inflation has come in below expectations in recent months. The labor market is also loosening. If the Federal Reserve does end up cutting interest rates three times, dividend stocks could be among the biggest beneficiaries. This is because interest rate cuts drive down the yield of Treasurys. Currently, certain Treasurys are yielding over 4.8%. These assets are considered “risk-free,” so many investors are choosing to hold them instead of dividend stocks.

But when interest rate cuts come, Wall Street will have to turn to the stock market for such yields. Investors appreciate dividend-paying companies much more when the interest rate is lower, and it’s likely they will pile into their shares in droves once rate cuts do start.

Enter Dividend Kings — stocks that have had their dividend payouts increased for 50 years or more consecutively. This article will dive into three Dividend King stocks that have over 50% upside potential.

Key Points in This Article:

• These dividend stocks pay solid dividend yields and have big upside potential.
• Their dividends have also been increased for 50 consecutive years or more.
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Target (TGT)

Target (NYSE:TGT) was a multibagger during the COVID-19 boom, but it has come back down to more normal levels today. TGT stock is down over 61% from its five-year high of $266.39. A recovery to even $156 would imply a 50% upside from where the stock is at the moment, and that’s highly probable in the coming quarters.

Let’s first look into why TGT stock is down so much in the first place. Target surged during the pandemic era as big retailers were among the only places that remained open. E-commerce saw explosive growth, and Target had an advantage here compared to other retail companies, which led to revenue surging from $78.1 billion in 2020 to $106 billion in 2022.

Investors mistakenly slapped a very high premium on TGT stock for this pandemic-induced growth. Once this growth started tapering off, investors quickly undid the premium. Not only that, the company’s margins started falling, especially as interest rate cuts increased debt servicing costs. Target took on significant debt during the near-zero interest rate regime five years ago. That same debt caused it to post $411 million in net interest losses in FY 2025.

But just like investors mistakenly went too far in 2021, the same thing could be happening in reverse. While revenue growth has slowed down, Target has managed to largely retain those sales. Revenue was at $106.57 billion in FY 2025.

The problem right now is its margins. Interest rate cuts would remedy this by lowering debt servicing costs and increasing customer spending.

TGT also comes with a dividend yield of 4.39%, which would make it look a lot better once rates come down. It has had 55 consecutive years of dividend increases, so it is also a Dividend King.

Genuine Parts (GPC)

Genuine Parts (NYSE:GPC) is an automotive and industrial parts company that seems set to benefit from ongoing tailwinds, regardless of an interest rate cut. The stock is down 33% from its highs, but the trends could reverse due to the growth of its Automotive segment, whereas reindustrialization could help its Industrial segment as well.

Genuine Parts derives 62.9% of its revenue from the Automotive segment, which could see accelerating growth in the coming years as U.S. cars age. The average passenger car was 14 years old last year. But given the current economic environment, many are struggling to afford a new car, and the higher insurance that often comes with it. That’s why car parts companies are set to see continuous demand.

EPS is expected to inflect next year and grow 10.2%, with sales growth accelerating to 3.6%.

GPC stock currently comes with a 3.29% dividend yield. The payout ratio is just 48.1%, and dividends have been increased for 70 years straight.

Beckton Dickinson (BDX)

Becton Dickinson (NYSE:BDX) declined significantly in May after revenue missed forecasts by 1.53%. Earnings exceeded expectations, but the company lowered guidance. The EPS guidance being lowered was mainly due to tariff fears, but the market has recovered from that, except for BDX.

Regardless, growth is slow, though the separation of the Life Sciences division could lead to a lot higher growth. The MedTech segment having a higher weight could cause BDX stock to trade 30% to 40% higher.

Even without that separation, a recovery is likely in the coming years. This is a medical products company, and there are no big long-term threats here. As trade deals get signed and tariff threats ease, this could also lead to the guidance being re-rated higher and pull BDX stock back up. In the meantime, you can sit on its 2.34% dividend yield. Dividends have been raised for 53 consecutive years. The payout ratio of 28.4% also leaves room for dividend growth.

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