This has been another great year for the broader stock market, with the S&P 500 and Nasdaq Composite both up over 20% year to date. And with just one quarter left in 2024, the broader indexes could go nowhere or even fall slightly, and it would still be an excellent result seeing as the long-term average annual return in the S&P 500 is around 10%.

New all-time highs are great if you already have a good amount of money invested in the market, but it’s challenging if you’re looking to put new capital to work without overpaying. The good news is that there are plenty of dividend-paying stocks and exchange-traded funds (ETFs) that are still a good value.

PepsiCo (NASDAQ: PEP) and American States Water (NYSE: AWR) are two Dividend Kings that have paid and raised their dividends for over 50 consecutive years, while the Global X SuperDividend ETF (NYSEMKT: SDIV) has international exposure to a variety of high-yield names. Here’s why these three fool.com contributors think they are worth a closer look.

A buy even though its results have failed to impress

Daniel Foelber (PepsiCo): The price-to-earnings (P/E) ratio of the S&P 500 is 29.9, suggesting the market is expensive compared to historical averages. As stock prices have outpaced dividend growth, the yield of the S&P 500 has tumbled to just 1.3%.

Investors looking for value and passive income can often rely on safe and stodgy sectors like consumer staples, healthcare, and utilities. But even those sectors are hitting all-time highs, which has pushed up their valuations and lowered their yields.

PepsiCo is a rare blend of reliability, high yield, and value. It has 52 consecutive years of dividend increases, currently yields 3.2%, and has a P/E of 24.7. By comparison, a consumer staples sector ETF has a yield of 2.6% and a P/E of 28.3.

When a well-known blue chip stock is noticeably undervalued relative to its peers, chances are it’s not a fluke. Although PepsiCo has done a good job navigating inflation and cost-conscious consumers, its sales and earnings growth have been fairly disappointing. As you can see in the following chart, PepsiCo’s dividend has more than doubled over the past decade, but sales and earnings growth have been relatively poor.

The stock price has gone essentially nowhere for three years compared to solid gains in the consumer staples sector. So, some investors might be waiting for a noticeable improvement in the underlying business before buying the stock.

This fiscal year, PepsiCo is targeting earnings-per-share growth of at least 8% on a constant-currency basis, which would be a step in the right direction. But the company likely still has a long way to go before it can begin exceeding investor expectations.

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PepsiCo might be off its game right now, but the company’s supply chain, marketing, and distribution give it a major advantage in growing existing brands and innovating or acquiring new brands.

Now is an excellent time for patient investors to buy PepsiCo if they are confident in the company’s international portfolio of food and beverage products, which includes Frito-Lay and Quaker Oats.

This utility’s reign as a dividend king is unlikely to end anytime soon

Scott Levine (American States Water): Companies that have earned the title of Dividend King count themselves among an elite group that has demonstrated impressive commitments to shareholders. Among this group, American States Water is a utility that reigns supreme, having amassed the longest streak of consecutive annual dividend raises: 70 years.

Those looking to generate a reliable stream of passive income for decades will certainly want to consider dipping their toes in American States Water and soaking up its 2.3% forward-yielding dividend.

A key reason the utility is so alluring for its dividend potential is its business model. Operating primarily in regulated markets, it is guaranteed certain rates of return on its investments. It provides water and wastewater services under 50-year contracts to 12 U.S. military bases — another encouraging sign for the company’s prosperity. And since many military bases aren’t privatized, management recognizes ample opportunity to achieve growth with this sort of business.

Examining its recent performance, investors will find allure in the reliable nature of the utility’s business. Over the past five years, its adjusted earnings per share had a 9.8% compound annual growth rate (CAGR), from $1.72 in 2018 to $2.75 in 2023.

And management’s focus on hiking the payout at the same rate demonstrates a financially responsible approach to rewarding shareholders. During the same five-year period, American States Water boosted its dividend at an 8.8% CAGR, a period during which it averaged a 56.5% payout ratio.

American States Water deserves serious attention for those eager to find a conservative approach to generating a lifetime stream of passive income.

A dividend ETF yielding 6.1%

Lee Samaha (Global X SuperDividend ETF): Picking winners in the high-yield equities sector is never easy. After all, there’s often a reason why the market assigns an equity a high yield, and it usually reflects a concern that the dividend isn’t sustainable. As such, it makes sense to diversify the stock-specific risk by holding multiple equities.

While that might prove costly in practice, buying into a high-yield exchange-traded fund (ETF) like the Global X SuperDividend ETF is always possible.

The fund’s strategy is to buy 50 of the highest-yielding U.S. equities and pay a monthly distribution to investors. Currently yielding 6.1% and with a reasonable 0.45% expense ratio, the fund offers a good way to get exposure to high-yield stocks.

As always, any mechanical-based strategy tends to result in an unintentional style or sector bias. In this case, following a high-yield strategy results in almost 67% of the ETF’s holdings being in utilities, real estate, energy, and consumer staples.

In contrast, just 2% is in information technology and 1.7% in consumer discretionary. Still, if you want high-yield stocks, monthly income, and exposure to interest-rate sensitive stocks, then the Global X SuperDividend ETF is a good option and capable of generating solid returns over the long term.

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Daniel Foelber has no position in any of the stocks mentioned. Lee Samaha has no position in any of the stocks mentioned. Scott Levine has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

A Lifetime of Passive Income Is Hiding in Plain Sight With This ETF and These 2 No-Brainer Dividend Kings was originally published by The Motley Fool