Published on 18 Oct 2023 on Insider Monkey via Yahoo Finance
12 Most Undervalued Dividend Stocks To Buy According To Analysts
In this article, we will take a look at the 12 most undervalued dividend stocks to buy according to analysts. To see more such companies, go directly to 5 Most Undervalued Dividend Stocks To Buy According To Analysts.
Many analysts now believe the market volatility and uncertainty that started in 2022 is far from over. The Federal Reserve is still in a wait and see mode when it comes to rate hikes. Investors are continuing to look over their shoulders for incoming data to gauge the state of the consumer in the country and whether inflation is really cooling as many optimistic corners of the market like to suggest. In this environment, dividend stocks remain relevant as history shows dividend equities always perform better during troubled times. Consider this, in just two weeks in February 2023, investors poured a whopping $272 million into U.S. mutual and exchange-traded funds that buy dividend-paying stocks, according to data from Refinitiv Lipper. These funds saw inflows of $48 billion in 2022. However, when 2023 started off with a bang thanks in part to the AI boom and rise of tech stocks, these funds saw an exodus of $835 million. But amid expectations of more rate hikes and recession in 2024, dividend stocks are expected to continue to gain relevance and traction.
While short-term volatility and market uncertainty is fueling dividend stocks’ attraction, the fact remains that having a long-term investment horizon boosts the returns of dividend investing. For example, the S&P 500 Dividend Aristocrats Index, which consists of S&P 500 companies with 25 consecutive years of dividend increases, has outperformed the S&P 500 Index by more than 75% since 1989. A T. Rowe Price report from March 2023 said that when a company is consistently raising its dividends, it’s evident that it’s handling its cash and business properly and its future prospects are bright. However, the report pointed to a pitfall of dividend investing. It’s easier for investors to get lured into high yields. But the report said that if a company has a low but growing dividend, it should be considered for the following reasons: