Investing

3 Undervalued Dividend Stocks to Buy in June

Lee Jackson

Published: June 24, 2024 10:20 am

24/7 Insights

• Dividend stocks can supply investors with a steady stream of passive income.
• Value stocks are typically companies with prices lower than what their fundamentals suggest they should be.
• Access 2 legendary, high-yield dividend stocks Wall Street loves.

Investors love dividend stocks because they provide dependable income and a great opportunity for solid total return. Total return includes interest, capital gains, dividends, and distributions realized over time. In other words, the total return on an investment or portfolio consists of income and stock appreciation.

At 247 Wall St., we make it a point to underscore the significance of total return to our readers. This investment strategy can significantly enhance your overall investing success. Total return is the aggregate of a stock’s value appreciation and the dividends it yields.

For example, if you buy a stock at $20 that pays a 3% dividend, and it goes up to $22 in a year, your total return is 13%—10% for the increase in stock price and 3% for the dividends paid.

We decided to screen our 24/7 Wall St. dividend value stock research database, looking for companies trading way below what they are worth on an intrinsic basis. Three companies hit our screens, and all should be scooped up now. They likely will return to fair value at some point, and in the meantime, investors can grab some great dividends.

Altria

This tobacco company offers value investors a great entry point. Now trading at a cheap 8.8 times estimated 2025 earnings, it pays a rich 8.46% dividend. Altria Group Inc. (NYSE: MO) manufactures and sells smokable and oral tobacco products in the United States through its subsidiaries.

The company provides cigarettes primarily under the Marlboro brand, as well as:

• Cigars and pipe tobacco, principally under the Black & Mild brand
• Moist smokeless tobacco and snus products under the Copenhagen, Skoal, Red Seal, and Husky brands
• on! Oral nicotine pouches

It sells its tobacco products primarily to wholesalers, including distributors and large retail organizations, such as chain stores.

Altria used to own over 10% of Anheuser-Busch InBev (NYSE: BUD), the world’s largest brewer. The company sold 35 million of its 197 million shares through a global secondary offering. That represents 18% of their holdings but still leaves a hefty 8% of the outstanding shares in their back pocket. They also announced a $2.4 billion stock repurchase plan partially funded by the sale. 

Pfizer

This top pharmaceutical stock was a massive winner in the COVID-19 vaccine sweepstakes but has been crushed as many are not getting boosters. Pfizer Inc. (NYSE: PFE) discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products worldwide and pays a hefty 5.88% dividend, which has risen yearly for the last 14 years.

The company offers medicines and vaccines in various therapeutic areas, including:

• Cardiovascular metabolic and women’s health under the Premarin family and Eliquis brands
• Biologics, small molecules, immunotherapies, and biosimilars under the Ibrance, Xtandi, Sutent, Inlyta, Retacrit, Lorbrena, and Braftovi brands
• Sterile injectable and anti-infective medicines and oral COVID-19 treatment under the Sulperazon, Medrol, Zavicefta, Zithromax, Vfend, Panzyga, and Paxlovid brands.

Pfizer also provides medicines and vaccines in various therapeutic areas, such as:

• Pneumococcal disease, meningococcal disease, tick-borne encephalitis
• COVID-19 under the Comirnaty/BNT162b2, Nimenrix, FSME/IMMUN-TicoVac, Trumenba, and the Prevnar family brands
• Biosimilars for chronic immune and inflammatory diseases under the Xeljanz, Enbrel, Inflectra, Eucrisa/Staquis, and Cibinqo brands
• Amyloidosis, hemophilia, and endocrine diseases under the Vyndaqel/Vyndamax, BeneFIX, and Genotropin brands

Trading at its lowest split-adjusted level in thirteen years, the stock is an incredible bargain at current levels and pays a massive dividend. Despite a stunning 44% decline in profits, the company still posted first-quarter earnings that came in above Wall Street estimates. The company reported $0.55 diluted earnings per share and $14.9 billion in first-quarter sales, trouncing analysts’ $0.51 and $13.87 billion estimates, respectively.

While the pharmaceutical giant reported its fifth straight year of year-over-year revenue and net income declines, the numbers are still skewed somewhat from the enormous revenues posted during the pandemic. Patient investors will get paid one of the highest blue-chip dividends going, and shares trade at a reasonable 10.75 times estimated 2025 earnings.

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Verizon Communications

This top telecommunications company offers tremendous value trading at just 8.7 times estimated 2025 earnings and pays investors a hefty 6.50% dividend. Verizon Communications Inc (NYSE: VZ)  through its subsidiaries, engages in the provision of communications, technology, information, and entertainment products and services to consumers, businesses, and governmental entities worldwide.

It operates in two segments:

• Verizon Consumer Group 
• Verizon Business Group 

The Consumer segment provides wireless services across the wireless networks in the United States under the Verizon and TracFone brands and through wholesale and other arrangements; and fixed wireless access (FWA) broadband through its wireless networks, as well as related equipment and devices, such as smartphones, tablets, smartwatches, and other wireless-enabled connected devices.

The segment also offers wireline services in the Mid-Atlantic and Northeastern United States and Washington D.C. through its fiber-optic network, Verizon Fios product portfolio, and a copper-based network.

The Business segment provides wireless and wireline communications services and products, including:

• FWA broadband
• Data
• Video and conferencing
• Corporate networking
• Security and managed network
• Local and long-distance voice
• Network access services to deliver various IoT services and products to businesses, government customers, and wireless and wireline carriers in the United States and internationally

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