Dividend shares are income streams. They provide an opportunity to receive cash flow. They are primarily blue-chip stocks. Such assets are usually contrasted with growth stocks and companies that use profit margins to develop.
A security whose market value is less than its fair value is an exposure to dividend shares that are underrated. The share trades on the market are more on news than on fundamentals.
The article contains a list of 7 best bonus stocks to buy right now from the perspective of the BeatMarket experts. It will be useful for those looking for stocks to add to a well-balanced portfolio covering a variety of sectors.
Table of Contents
Best undervalued Dividend Stocks to Buy Now
The best premium stocks that are underrated in the U.S. are listed in the table below.
| Dividend Payout ratio, % | Years of Dividend Increase | Yield, % | |
| Verizon Communications | 99.6 | 19 | 6.45 |
| Exxon Mobil | 45.5 | 41 | 3.26 |
| Medtronic | 93 | 48 | 3.17 |
| General Mills | 54.6 | 5 | 3.36 |
| Starbucks | 63.7 | 14 | 2.4 |
| Comcast | 31.8 | 17 | 3.06 |
| WEC Energy Group | 75.9 | 22 | 3.58 |
Information as of August 30.
Verizon Communications Inc. (VZ)
According to dividend.com, Verizon Communications has increased shareholder compensation for 19 years. VZ is considered a high-dividend stock. The current dividend yield as of August 30 is 6.45%.
The disburse ratio is 99.6%. This is a negative factor. It is caused by a decline in net income starting in q4 2023. Often, a business remains on a disburse growth trajectory for the sake of reputation rather than as a result of growth in profits, net operating income or other indicators.
Verizon Communications Inc. regularly pays quarterly rewards. The next ex-reward date is October 10. The amount will be $0.665 per share. This works out to an annual dividend of $2.66.
VZ’s current P/E ratio is 15.51. This is below the average P/E ratio for the S&P 500. It is 29.22 (according to multpl.com).
Exxon Mobil Corp (XOM)
This is one of the best undervalued dividend stocks to buy. Exxon Mobil Corp (XOM) has been called a dividend aristocrat. This oil and gas company has raised its reward every year for 41 years. However, its current yield is lower than the energy sector as a whole. It’s at 3.26%.
Another strength of Exxon Mobil Corp is its relatively low expend ratio. It is 45.5%. This figure is within the range considered optimal for dividend-paying stocks (40%-70%). This means that there is potential for the earnings growth.
The next dividend payment is scheduled for September 10. Shareholders will receive $0.95 per share. The next ex-dividend date is November 14. The amount will be announced on October 25, the date of publication of the company’s earnings release. The last reward paid to date was declared in April 2024.
PE ratio – 14.19. It is 2 times lower than the average of the companies in the S&P 500 index. Therefore, they’re underrated.
Medtronic PLC (MDT)
Medtronic has raised its reward for 48 consecutive years. This company may soon claim the title of dividend king. But it’s unattractive from an expend ratio standpoint. It has a disburse ratio of 93%.
MDT is considered to be an undervalued stock. Its current dividend yield is higher than the sector (3.17% vs. 1.58%). The annual payment to shareholders is $2.80.
The next dividend payment is scheduled for October 11. The amount will be $0.7 per stock. The ex-div date is earlier. This should be taken into account when trading.
The discounted cash flow (DCF) analyses are another opinion expressed that Medtronic PLC is ignored. According to it, the stock should be valued at $95.67. The price on August 30, 2024 is $88.15.
General Mills Inc (GIS)
General Mills has recently become an attractive dividend story. This issuer has increased its disburse for just 5 years in a row. The payout ratio is 54.6%.
The company has an above-average dividend yield. As of the end of August 2024, this indicator is 3.36%. The sector average is 1.89%. The absolute value is $0.6 per stock, paid once per quarter. To get paid, you must own the stock by October 10, 2024.
The P/E ratio for GIS is 16.48. This is significantly lower than the S&P 500 and the Consumer Staples sector. A DCF analysis of GIS shows that the stock is underrated by 14%.
Starbucks Corporation (SBUX)
Unlike the stocks discussed above, this stock is traded on the NASDAQ. According to investing.com, Starbucks has increased its reward for 14 consecutive years. As of 08/30/2024, the annualized contribution yield is 2.4%. Over the last 12 months, the company has paid out $2.28.
The next payment to shareholders is expected on November 22, 2024. It amounts to $0.57, resulting in a disburse ratio of 63.7%.
The P/E ratio is 26.41. This is well below the industry average (43.33).
Comcast Corp (CMCSA)
Comcast has a 17-year history of reward growth. Its current yield is 3.06%. The absolute value is $1.24 per year. Once a quarter in 2024, shareholders will receive $0.31.
The next Ex date is October 02.
Company measures are as follows:
- The payout ratio is only 31.8%;
- The P/E ratio is 10.4;
- P. Lynch’s formula price is $96.15.
CMCSA is one of the top 3 most undervalued dividend stocks. CMCSA stock has a fair value potential for growth of 143.7%. According to the DCF method, the current price is 44.9% below the estimated valuation.
The reason is falling prices in the q1 of 2024. The YTD decline was over 9%. This happened despite revenue growth. This is due to market share losses in cable and broadband access.
WEC Energy Group Inc (WEC)
It is one of the cheapest dividend shares in this review. Its market value is less than $40. WEC Energy Group has increased its contribution for 22 years. The current yield is 3.58%. This is slightly lower than the average for the utilities sector (3.75%).
The absolute value of the latest distribution is $0.835. Distributions to shareholders are paid quarterly. The next distribution will be paid on 09/01. The next distribution will be paid on 11/29.
WEC has an excessive disburse ratio. This ratio is 75.9%.
It was among the most undervalued stocks in the first quarter of 2024. Over the past 2 months, the stock has gained more than $10. However, the P/E multiple is still below average for the US market. As of 08/30, this multiple is 21.49.
Conclusion
Dividend investing is an alternative to real estate investment for rental properties. A good way to increase your free cash flow is to buy the securities mentioned in this article. These stocks are issued by companies with large market caps and low volatility.
Most of them do not pay high dividends. Buying such companies is a long-term investment. This allows the shareholder to benefit from a steadily increasing return.
With this type of income investing comes the risk that the value of the reward stock will decline and the company will stop paying. Lists of the best reward stocks are not intended to provide a high current yield. They are designed to help you build a portfolio that will provide a stable income for at least the next five years.
When income investors are looking for undervalued stocks, they can use BeatMarket’s screener and scoring system. Our services provide a full list of securities with growth opportunities. They will also help you to start following stocks with attractive dividends.
It’s easy to track your dividend income with a portfolio tracker. Start browsing stocks with BeatMarket’s service and ensure future growth of your capital.
H2 FAQ
How do the recommended dividend stocks’ yields compare to historical averages?
When it comes to the historical dividend yield of the S&P 500, the average is 2.895%. All of the stocks on our Dividend Shares list are higher today. At the same time, the historical high is 6.659%. Only select companies can maintain this level on a consistent basis.
50 years of increased dividends?
Companies that have raised their dividends for more than 50 years-to-date are called Dividend Kings. This year there will be about 53 companies on this watchlist. The track record is 71 years.
What is a Dividend?
Dividends are a way of distributing a company’s profits to all shareholders. Contributions are usually paid in cash and are paid quarterly. They can be received not only on individual stocks, but also on investments in mutual funds and exchange-traded funds.
What should investors be looking for when it comes to choosing the best dividend stocks?
When choosing a dividend stock to buy, the DIV CAGR over 5 or 10 years is important. You should also consider how many years in a row the company has increased its reward. The third key indicator is the spend ratio. We should not forget the multiples that are used when trading stocks. For example, leverage, profitability.
