3 Undervalued Dividend Stocks to Buy This September

Who doesn’t love passive income? As investors, we love dividend stocks, especially the ones that have high yields since they provide a steady source of income and improve the total return potential. The total return for any investment includes dividends, interest and capital gains.

So as we step into September with the hope of the Federal Reserve enacting an interest rate cut, it is time to focus on the high-yield dividend stocks that can generate more passive income for you since fixed income will be less appealing in a lower rate environment. 

In a record-high market, investing in undervalued, dividend-paying stocks can be a smart move. The dividends can be reinvested or used to cover monthly expenses as the market decides where it’s heading next.

So, 24/7 Wall St. conducted some research to find three undervalued dividend stocks to buy this month.

1. PepsiCo

Dividend yield: 4.02%

Beverage giant PepsiCo (NASDAQ:PEP | PEP Price Prediction) is a solid dividend company with a history of rewarding investors for 53 years. The company hasn’t been able to deliver outsized gains this year, which has left investors worried. PEP stock is down 34% in 12 months and 4.55% in 2025. However, as a dividend stock, PepsiCo is one of the best to own. With a P/E ratio of 25.83, the stock looks highly undervalued and is down from the 52-week high of $179. It is exchanging hands for $141 as of writing. 

Elliott Investment Management recently disclosed a $4 billion stake in the company, and in the presentation, Elliott explained that the stock is deeply undervalued compared to its brand and international position in the snacks and beverages segment. PepsiCo is working at modernizing the portfolio and adding products that meet the changing demands of consumers. 

It is working on portfolio expansion and increased its stake in Celsius Holdings by $585 million, it bought Siete Foods for $1.2 billion and Poppi for $1.95 billion. While this has increased debt, it has increased the potential for higher returns.

For the second quarter, PepsiCo saw a 1% year-over-year rise in revenue to $22.7 billion, but the overall volume dropped 1.5%. Its net income saw a 59% drop to $1.26 billion due to impairments. Despite the mixed results, management raised the quarterly dividend by 5% in June. It plans to spend $7.6 billion for dividends this year and has the means to do so. 

Yes, PepsiCo is struggling right now. But investors need to look at it as an opportunity to scoop up the stock. It is a rock-solid company that will continue to deliver in the long term. 

2. Pfizer

Dividend yield: 7.01%

One of the largest and oldest drug companies, Pfizer (NYSE:PFE) has an enviable dividend yield of 7.01%. During Covid-19, the stock soared to new highs, but it is down 60% from its peak. Exchanging hands for $24, PFE stock is down 7.7% year-to-date and 16% in 12 months. 

Investors need to look at the drugmaker beyond its Covid vaccine. While it did see impressive revenue growth, the boost was temporary since it was driven by a one-time event. Pfizer is also facing patent expiration on many drugs, and products facing loss of exclusivity could also impact revenue. 

There’s no reason to believe that the company’s business is broken. It has an impressive pipeline of drugs and a history of managing to swim through business cycles. 

Pfizer has a market cap of $140 billion and a history of rewarding shareholders. The company has increased dividends for 15 consecutive years and is an attractive stock for long-term wealth generation. Its dividend yield is the highest in the healthcare industry, and the payout ratio has significantly improved in the recent quarters, going from 89% to over 100%. 

While a 100% payout ratio can seem risky, investors must keep in mind that even a small cut in the dividend will keep Pfizer at the top. If the management decides to reduce the dividend to 5%, you’d still be taking home a steady, solid income. The company’s Seagen acquisition has given a boost to the pipeline and is expected to drive growth.

Management expects a revenue of $10 billion from Seagen by 2030. For now, Pfizer’s dividend looks safe, and a cut isn’t imminent. The payout will survive the next few years, and the high yield can compensate for the patent risks. 

3. Verizon Communications

Dividend yield: 6.37%

Income investors love Verizon Communications (NYSE:VZ), and for the right reasons, too. The stock has a juicy 6.37% dividend yield and has a record of increasing dividends for 18 consecutive years. The telecommunications giant delivered solid results for the second quarter. It beat estimates and reported a revenue of $34.5 billion and an EPS of $1.22. 

The management raised full-year guidance and is aiming for a free cash flow in the range of $19.5 billion to $20.5 billion and an adjusted EPS of 1% to 3%. The increase in cash flow could make the dividends more secure and places Verizon in a solid position to maintain its dividend hikes. 

Last year, the company agreed to buy Frontier Communications in a $20 billion deal, which will enhance its fiber operations and is expected to generate $500 million in annual cost savings. 

The telecommunications industry plays a huge role in the country, and it is hard to imagine a world without its services. Verizon remains at the forefront of the industry and is ready to lay a solid foundation for 2026. Exchanging hands for $43, the stock looks cheap to me. It has a P/E ratio of 10.12 and is up 8.31% in 2025. Its biggest competitor AT&T (NYSE:T), has a yield of 3.79% and a P/E ratio of 16.70, making VZ a better bet for income investors. 

While you may not see growth this year, the stock will keep rewarding you quarterly. Buying it now could be a good move for long-term income.