The stock market is near its all-time high. It’s had a historic run over the last 10 years but not every stock is along for the ride. I’ve tracked down 10 value dividend stocks near their 52-week lows.
These companies operate in different sectors and have survived many market cycles. All the while, they have rewarded shareholders with a growing pile of dividends. This consistency initially put them on my watch list and dropping prices have pushed them towards the top.
Finding Gold in the Coal Mine
It’s hard to find good deals in this lofty market. Many indicators are pointing towards a recession soon. For example, the recent yield curve inversion and the stock market to GDP ratio. Here are six of my favorite stock market crash indicators.
Although, trying to time the stock market is a fools game. The world’s best investors can’t do it consistently. That’s why it’s better to focus on finding individual companies trading at great values. And when looking at company valuations, there’s a lot of dirty coal…
… but there are still a few gold nuggets hiding in the rough.
To sort through thousands of stocks and find value dividend stocks, I start with a programmatic approach. I use stock screeners to filter companies by dividend yield and other valuation metrics. The only technical metric I screen for is percentage off 52-week lows. This helps filter for contrarian opportunities.
From there, I have a more manageable list to do a deeper dive. I look at each company’s history, business model, revenue segments and growth, cash flows, leverage, dividend payout ratios, and many other metrics.
As a result from my search, I’ve found 10 valuable dividend stocks. They’re at the top of my watch list and I hope to add a few of them to my portfolio soon.
Top 10 Value Dividend Stocks on My Watch List
10. Kroger (NYSE: KR)
Kroger is one of the largest grocery retailers in the United States. It operates 2,760 grocery stores and 35 food production or manufacturing facilities. It’s a powerhouse in the organic space and produces steady cash flows.
Kroger’s stock is within 20% of its 52-week low and it supports a 2.6% dividend yield. It’s the lowest yield on this list but its directors recently raised its quarterly dividend by 14%. That’s solid dividend growth and a good vote of confidence from the directors.
9. Emerson Electric (NYSE: EMR)
Emerson Electric is an engineering company with 76,500 employees. It provides a wide range of services for commercial and consumer markets. It’s based out of Missouri and has a history dating back to 1890.
Emerson Electric’s stock is within 10% of its 52-week low and it has a 3.1% dividend yield. The company has raised its dividend for more than 25 years and won’t likely stop anytime soon. It’s one of the elite dividend aristocrats.
8. Wells Fargo (NYSE: WFC)
Wells Fargo is one of the top five banks in the United States. It’s one of Berkshire Hathaway’s largest positions but it’s been a tough stock to hold. The financial sector is lagging the market and on top of that, Wells Fargo had a major accounting scandal a few years ago. This has pushed share price down.
Wells Fargo’s stock is within 10% of its 52-week low and has a 4.3% dividend yield. The company is also buying back stock which is better for investors when share price is lower. In second quarter 2019, Wells Fargo repurchased 104.9 million shares.
7. Exxon Mobil (NYSE: XOM)
Exxon Mobil is a blue-chip energy company with steady cash flows. It’s been one of a few favorite value dividend stocks in many retirement accounts. Although, investors have beaten down Exxon Mobil shares with the drop in oil prices. On top of that, some investors are fearful of renewable energy taking over… but that’s many decades away. Exxon will continue to pump out profits and adapt to the changing markets.
Exxon Mobil’s stock is within 10% of its 52-week low and supports a 4.9% dividend yield. For the last 37 years, Exxon has raised its dividend at an average annual rate of 6.2%.
6. 3M (NYSE: MMM)
3M is a diversified business that has 91,000 employees and operates in more than 70 countries. In 2018, the company brought in over $32 billion in sales and had a net income of over $5 billion. One recent reason shares are down is due to currency translation.
3M’s stock is within 6% of its 52-week low and has a 3.5% dividend yield. The company is also one of the elite dividend aristocrats. It’s raised its dividend every year over the last 25 years.
5. Archer Daniels Midland (NYSE: ADM)
Archer Daniels Midland is one of the world’s largest agricultural processors. It has about 40,000 employees and serves customers in nearly 200 countries. The company has a global supply chain that helps deliver food from the field to your plate. Share price has dropped with commodities in the last few years and this makes it a bargain dividend stock.
Archer Daniels Midland’s stock is within 6% of its 52-week low and supports a 3.6% dividend yield. The company easily makes the dividend aristocrats list with 43 years of dividend raises.
4. Walgreens Boots Alliance (Nasdaq: WBA)
Walgreens is one of the largest drugstores in the United States. About 75% of Americans are within five miles of its stores. It serves eight million customers a day but investors are fearful of potential health care changes with the 2020 elections. Shares are down about 50% from their highs in 2015. This presents a great investing opportunity for investors that can stomach some volatility.
Walgreen’s stock is within 7% of its 52-week low and it has a 3.5% dividend. The company is also a dividend aristocrat with over 40 years of dividend increases.
3. Kraft Heinz (Nasdaq: KHC)
Kraft Heinz is one of the largest global food and beverage companies. It’s also one of Berkshire Hathaway’s largest positions. As shares have dropped more than 70% since 2017, Warren Buffett continues to hold on.
Kraft Heinz’s stock is within 10% of its 52-week low and has a high 5.9% dividend yield. Although, management recently cut its dividend to help pay off debt. This is one of the riskier value dividend stocks on this list but it might pay off handsomely long-term. I’m keeping a close eye on 13f filings to see if Buffett trims his stake.
2. Pfizer (NYSE: PFE)
Pfizer is a $200 billion pharmaceutical company. It has a diversified portfolio of drugs but one reason shares are down is the loss of patent protection on its blockbuster epilepsy drug, Lyrica. It made up almost 10% of total sales last year. This and political sentiment have made it a better buying opportunity. Cash flows and the drug pipeline are still strong.
Pfizer’s stock is within 8% of its 52-week low and supports a 3.9% dividend. The company’s directors cut the dividend in 2009 due to a large acquisition. Although, another cut isn’t likely when looking at cash flow projections.
1. AbbVie (NYSE: ABBV)
AbbVie is another pharmaceutical company. It’s valued at about $100 billion and is less diversified than Pfizer. One reason that shares are down is its major arthritis drug Humira. It makes up a whopping 60% of sales and will be losing patent protection in 2023. Although, management is working on a strong pipeline and M&A to make up for the loss.
AbbVie’s stock is within 8% of its 52-week low and has a high 6.3% dividend yield. It’s another risky opportunity but the yield makes it tempting to buy.
Watch Out for Fools Gold – Risk-to-Reward
Warren Buffett has shown that it’s good to be greedy when others are fearful. Although, it’s important to determine if the fear is overblown or not. That’s the tough part and I believe the stocks above have good risk-to-reward profiles.
Some of the value dividend stocks above will rebound and outperform the S&P 500, others will not. So it’s good to diversify your portfolio. Then you can sit back and collect a growing pile of income, no matter what the market does.
Last time I ran this screen I ended up buying AT&T shares in December of last year. At that time, I locked in over a 7% dividend yield and the shares are already up over 30%. Click on the link above for the original analysis. Hopefully some stocks from this recent list will see similar returns.
Do you have any additions to this list? Or any questions? Please leave a comment down below.