Published on July 24th, 2025 by Bob Ciura
The S&P 500 Index is trading at valuations not seen since the tech bubble of 1999-2000, according to the Shiller P/E ratio.
The Shiller P/E ratio is based on average inflation-adjusted earnings from the previous 10 years, known as the Cyclically Adjusted PE Ratio.
This smooths out fluctuations in earnings on a year-to-year basis.
The historical mean Shiller P/E ratio is 17.3. It’s currently at 38.8. Therefore, the S&P 500 is ~124% overvalued according to the Shiller P/E ratio.
When the market is overvalued, investors should look to high-quality dividend stocks to reduce portfolio volatility, to provide rising income each year which can help offset declining share prices.
With this in mind, we created a list of over 500 blue chip stocks, which have each raised their dividends for at least 10 consecutive years.
You can download our full blue chip stocks list by clicking on the link below:
There are currently more than 500 securities in our blue chip stocks list.
Buying overvalued stocks can lead to low (or even negative) total returns, even including dividends.
Therefore, investors should be cautious when it comes to overvalued dividend stocks. The following 10 dividend stocks are overvalued compared with the mean Shiller P/E of the stock market.
The list is sorted by the P/E ratio, in ascending order.
Table of Contents
High P/E Stock #10: Cintas Corporation (CTAS)
Cintas Corporation is the U.S. industry leader in uniform design, manufacturing & rental. The company also offers first aid supplies, safety services, and other business-related services. Cintas was founded in 1968 and now generates annual revenues of more than $10 billion.
Cintas posted fourth quarter and full-year earnings on July 17th, 2025, and results were better than expected on both the top and bottom lines. Earnings-per-share for the quarter were $1.09, two cents ahead of estimates. Revenue was up more than 8% from the year-ago period to $2.67 billion, beating estimates by $40 million.
Organic growth in Q4 was 7.2% Uniform Rental and Facility Services, 18.5% in First Aid and Safety, and 12.1% in Fire Protection Services. Gross margins were 49% in Uniform Rental and Facility Services, 56.8% in First Aid and Safety, and 49.3% in Fire Protection Services.
Gross profit for the quarter was up 9.1% year-over-year, and as a percentage of revenue, was up 50 basis points to 49.7% of revenue. For the full-year, operating margins were 22.8% of revenue, up 80 basis points year-over-year. Free cash flow was $1.6 billion, while capex was $409 million and M&A spending was $233 million.
Click here to download our most recent Sure Analysis report on CTAS (preview of page 1 of 3 shown below):
High P/E Stock #9: TransAlta Corporation (TAC)
TransAlta Corporation is an electric energy utility that is based on Calgary, Canada. The company was founded in 1909 and has grown into a diversified provider of electric energy. It operates through the following operating segments: Hydro, Wind and Solar, Gas, Energy Transition, and Energy Marketing.
Through these segments the company provides over 6,000 MW of combined power, with the bulk coming through Gas, and Wind and Solar.
The company provides a range of traditional fossil fuel-based generation options, as well as renewable options. It serves customers primarily in Canada, but also has a small business in the US, as well as Australia.
TransAlta reports results in Canadian dollars but throughout this report, we use US dollars. The current translation rate is $0.72 USD for $1 CAD.
TransAlta posted first quarter earnings on May 7th, 2025, and results were mixed. Revenue was off 20% year-over-year to $544 million. Adjusted EBITDA came to $194 million, off from $245 million a year ago. This was impacted by lower Alberta power prices, which was partially offset by hedging strategies.
Operating availability was 94.9%, up from 92.3% a year ago. Free cash flow was $100 million, which reflected higher sustaining capital expenditures and higher interest expense.
Click here to download our most recent Sure Analysis report on TAC (preview of page 1 of 3 shown below):
High P/E Stock #8: Ferrari N.V. (RACE)
Ferrari was founded in 1947 and is headquartered in Italy. The company began trading as a public company in 2015, following a spinoff from Fiat Chrysler. Today, the company manufactures luxury sports cars under a variety of models.
Its cars are generally high performance, with a number of V-8 and V-12 models among its best sellers. Ferrari’s luxury vehicles cater to the very top of the consumer automotive market. In 2020, shipments fell more than 10% to 9,119 units, with about half of that in Europe, Middle East, and Africa, and a third coming from the Americas.
On February 20th, 2025, Ferrari raised its annual dividend 30.3% to $3.39, which follows the company’s 30.2% and 35.8% increases over the last two years. Ferrari has now raised its dividend four consecutive years in USD.
On May 6th, 2025, Ferrari reported first quarter results for the period ending March 31st, 2025. All figures reported in USD. For the quarter, revenue grew 19.5% to $2.04 billion, which beat estimates by $18 million.
Earnings-per-share of $2.62 compared favorably to earnings-per-share of $2.10 in the prior year, which was $0.08 more than expected.
For the quarter, units shipped totaled 3,593, which represented a 0.9% increase from Q1 2024. Shipments grew 25 units for the Americas and 128 units for the EMEA.
Unit shipments declined 80 for Mainland China, Hong Kong, and Taiwan and were lower by 40 units for the Rest of Asia.
Click here to download our most recent Sure Analysis report on RACE (preview of page 1 of 3 shown below):
High P/E Stock #7: Rollins, Inc. (ROL)
Rollins provides pest control and wildlife protection services. Its products protect rodents, termite damage, and other insects. The company owns several leading brands and provides services and products to over two million residential and commercial customers in over 70 countries.
Rollins operates under one reportable segment and has three business segments: Residential, Commercial, and Termite. The United States is Rollins’s most critical geographic location, as it generates over 90% of its revenue.
On April 23rd, 2025, Rollins announced results for Q1 2025, reporting normalized EPS of $0.22 in-line analysts’ estimates. The company reported revenues of $822.5 million for the quarter, which were up 10.0% year-over-year.
For the first quarter of 2025, the pest control and consumer services giant reported revenues of $823 million, up nearly 10% from last year, with organic revenue climbing 7.4% despite currency headwinds.
Adjusted EBITDA was solid too, up almost 7% at $172 million. Operating cash flow stood out, leaping 15.3% to $147 million, a testament to the company’s focus on healthy margins and disciplined investments.
Click here to download our most recent Sure Analysis report on ROL (preview of page 1 of 3 shown below):
High P/E Stock #6: Costco Wholesale Corp. (COST)
Costco is a diversified warehouse retailer that operates about 900 warehouses that collectively generate about $270+ billion in annual sales.
Costco posted third quarter earnings on May 29th, 2025, and results were better than expected on both the top and bottom lines once again. Earnings came to $4.28 per share, beating estimates by a nickel. Revenue was up 8% year-over-year to $63.2 billion, beating expectations by $100 million.
The management team noted consumers exhibited tariff-related stocking up of household products. Comparable sales were up 5.7% year-on-year, rising 6.6% in the US. E-commerce sales were up 14.8% during the quarter. After backing out fuel and forex translation, comparable sales rose 7.9% in the US and 8.1% overall.
Membership fee revenue was $1.24 billion, up from $1.12 billion a year ago. Net income was $1.9 billion, up from $1.68 billion. the company operated 905 warehouses globally, with 624 in the US.
Click here to download our most recent Sure Analysis report on COST (preview of page 1 of 3 shown below):
High P/E Stock #5: Thomson-Reuters Corp. (TRI)
Thomson Reuters Corporation is a global financial information and data solutions provider for businesses and professionals in the fields of finance, accounting, tax, and media.
Thomson Reuters was created in 2008 when the Thomson Corporation purchased the British company Reuters Group.AI to improve the efficiency of legal professionals.
In January 2025, Thomson acquired cPaperless, LLC (SafeSend) for $600 million cash, for its tax automation capabilities.
In February 2025, Thomson Reuters announced a 10% increase to the dividend to $2.38 per share, which marked the 32nd consecutive annual dividend increase.
Thomson Reuters reported first quarter 2025 results on May 1st, 2025, for the period ending March 31st, 2025. For the quarter, total company revenue grew 2% year-over-year to $1.90 billion, of which the majority (76%) was recurring revenues.
Thomson Reuters produced adjusted EPS of $1.12 per share compared to adjusted EPS of $1.11 in Q1 2024.
Click here to download our most recent Sure Analysis report on TRI (preview of page 1 of 3 shown below):
Overvalued Dividend Stock #4: Microchip Technology (MCHP)
Microchip Technology develops, manufactures, and sells smart, connected and secure embedded control solutions used for a wide variety of applications.
These include disruptive growth trends such as 5G, artificial intelligence, Internet of Things (IoT), and autonomous driving, amongst others, in key end markets such as automotive, aerospace and defense, communications.
Microchip Technology generates around $6 billion in annual revenues and is based in Chandler, Arizona.
On May 8th, 2025, Microchip Technology posted its fiscal Q4 results for the quarter ending March 31st, 2025. For the quarter, net sales were $970.5 million, down 26.8% from the comparable period last year.
Lower revenues continued to reflect weak business conditions in the semiconductor industry, though management believes this quarter marked the bottom of the downcycle. GAAP gross margins declined from 59.6% last year to 51.6%.
This sustained pressure on margins and sales led to a net loss of $156.8 million, or $0.29 per diluted share, compared to net income of $154.7 million, or $0.28 per share, last year. On an adjusted basis, EPS was $0.11 versus $0.57 in Q4-2024.
Click here to download our most recent Sure Analysis report on MCHP (preview of page 1 of 3 shown below):
High P/E Stock #3: Howmet Aerospace (HWM)
Howmet Aerospace (HWM) is a leading provider of advanced engineered solution for the aerospace and transportation industries. Its main products are jet engine components, aerospace fastening systems, air frame structural components, and forged aluminum wheels.
Through its four segments, including Engine Products (which accounted for 50% of 2024 revenue), Fastening Systems (22%), Engineered Structures (14%), and Forged Wheels (14%), Howmet generated $7.4 billion in revenue in 2024.
On January 27th, 2025, Howmet increased its dividend by 25% to $0.10 per share quarterly.
On May 1st, 2025, Howmet Aerospace shared its first quarter earnings report for the period ended March 31st. The company’s revenue rose by 6% over the year-ago period to $1.94 billion in the quarter. Adjusted EPS increased 51% to $0.86 from $0.57 in first quarter 2024.
Howmet also repurchased $125 million of its common stock during the quarter for an average share price of $124.24.
Click here to download our most recent Sure Analysis report on HWM (preview of page 1 of 3 shown below):
High P/E Stock #2: Heico Corp. (HEI)
Heico is an aerospace company which makes a wide variety of replacement parts for airplanes. To date, the company has delivered more than 87 million total parts to its customers.
Heico offers airlines a key service because its parts are typically cheaper than buying those same pieces from the original equipment manufacturer.
Heico estimates that it has more than 50 different customers who save $1 million or more annually thanks to using the company’s replacement parts and repairs instead of other alternatives.
Heico’s Q2 earning report was released on May 27th, 2025. The company reported revenues of $1.10 billion, which were up 15% year-over-year.
Earnings per share of $1.12 cents soared from 88 cents in the same quarter of 2024. This was a strong quarter even by Heico’s robust standards, though we think that some of this was driven by customers stocking up on supplies ahead of potential tariff-related price hikes.
Click here to download our most recent Sure Analysis report on HEI (preview of page 1 of 3 shown below):
Overvalued Dividend Stock #1: Wingstop Inc. (WING)
Wingstop is headquartered in Addison, Texas and franchises and operates restaurants under the Wingstop brand.
On April 30, 2025, Wingstop Inc. reported its financial results for the fiscal first quarter ended March 29, 2025. Thecompany achieved total revenue of $171.1 million, marking a 17.4% increase compared to the same period in 2024.
System-wide sales grew by 15.7% to $1.3 billion, driven by a record 126 net new restaurant openings, representing an 18% net new unit growth. Domestic same-store sales experienced a modest increase of 0.5%, while company-owned domestic same-store sales grew by 1.4%.
Net income surged by 221% to $92.3 million, or $3.24 per diluted share, primarily due to a $97.2 million gain from the sale of Wingstop’s non-controlling interest in its United Kingdom master franchisee, Lemon Pepper Holdings, Ltd.
Adjusted net income stood at $28.3 million, or $0.99 per diluted share, surpassing analyst expectations of $0.87 per share. Adjusted EBITDA increased by 18.4% year-over-year to $59.5 million.
Click here to download our most recent Sure Analysis report on WING (preview of page 1 of 3 shown below):
Final Thoughts
The stock market, as measured by the S&P 500 Index, is significantly overvalued right now using the Shiller P/E ratio.
As a result, investors may be interested in knowing which stocks are overvalued in this market, and could be candidates to sell.
If you are interested in finding high-quality dividend growth stocks and/or other high-yield securities and income securities, the following Sure Dividend resources will be useful:
High-Yield Individual Security Research
Other Sure Dividend Resources
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