In volatile markets, investors are often reminded of the relative security in dividend stocks. These are considered safe havens that can help you generate strong long-term returns. That's as true today as it’s ever been. 

However, as with any class of stocks, valuation still matters. When you find quality dividend stocks that look significantly undervalued, it’s time to take notice. That’s because when you can pair a high-yield dividend with strong capital appreciation, you add to your total return.  

That’s the case with the dividend stocks you’ll find here. All three are dividend royalties but have been underperforming the broader market. However, each gives investors reasons to believe that 2025 will bring a return to growth.  

FTC Approval Reminds Investors of This Oil Giant’s Value 

The price of oil has remained around $70 a barrel as the dynamics of supply and demand continue to reign supreme in the oil patch. But as we look towards 2025, it’s a good time for investors to look at Chevron Corp. (NYSE: CVX) as an undervalued dividend stock.

There are several reasons to believe that 2025 will be bullish for oil prices and energy stocks. The geopolitical situation in the Middle East continues to escalate. And in the United States, lower interest rates are intended to fuel economic activity which will be bullish for oil prices as well as inflation.  

The Federal Trade Commission (FTC) recently approved Chevron’s merger with Hess Corp. (NYSE: HES). An arbitration hearing over Hess’ Guyana assets will delay final approval until next year, but the FTC approval removes some uncertainty.  

And with that clarity, investors can focus on the company’s rock-solid fundamentals, which remind them why CVX stock is a great stock for growth and income. Those fundamentals include a debt-to-equity ratio of just 0.13 and a dividend that has been growing at an average rate of 5.3% in the last three years, more than twice the current rate of inflation.  

A Recent Acquisition Is Another Tasty Reason to Buy This Dividend King 

In a cycle that’s familiar to many investors, many companies are executing a growth through acquisition strategy. That’s the case with PepsiCo Inc. (NASDAQ: PEP) that recently completed its acquisition of Siete Foods for $1.2 billion. 

The acquisition will expand the company's grain-free and gluten-free options. It also comes at a time when Pepsi is focusing more on snacks with lower sodium, saturated fat, and sugar to combat the popularity of GLP-1 products consumers are using to tackle obesity and general weight loss.  

It's also one reason to believe that this dividend king is about to reward investors who have endured a period of slow growth in the last three years. In its recent earnings reports, Pepsi has commented on how lower-income consumers are feeling stretched. However, as lower interest rates begin to be felt by the consumer in 2025, it will likely help improve growth in the company’s top line in North America. 

This growth won’t happen before the company reports earnings on October 8. And with analysts putting a consensus Hold on PEP stock, the stock may seem fairly valued. However, investors should see any pullback as a buying opportunity on this undervalued stock. 

A Strong Pipeline Will Lead JNJ to Better Days 

Shareholders of Johnson & Johnson (NYSE: JNJ) are finding out that getting to a resolution in its massive talc lawsuit is only half the battle. There is an $8.9 billion settlement in place, but it will still take years for all the suits to be settled.  

And that’s not the only headwind. The Inflation Reduction Act allowed Medicare to renegotiate prices on some of the biopharmaceutical giant’s best-selling drugs. This is causing some erosion in the company’s top line.

But when you dive into the company’s second-quarter earnings report, you’ll see strong sales for two of the company’s oncology drugs, Darzalex and Stelara. That's why the company increased its sales guidance from $89.2 billion to $89.6 billion.  

And when you add in the company’s pipeline, which includes 101 drug candidates, future revenue growth is likely to be steady and strong. The same can be said of the company’s dividend. JNJ is a dividend king that has been increased for 63 consecutive years and has grown by an average of 5.7% in the last three years.