Good morning,
In our FOMO society, few things are more of an insult than being called cheap. It's counterculture to count the cost of the things that we buy.
And for many investors, that includes the stocks they buy.
But if you're reading this, you may be cut a little differently.
You understand that there's a difference between a stock's price and its true value.
That's not meant to criticize investors who are making a killing in artificial intelligence (AI) stocks. If you held shares of Nvidia anytime in the last five to ten years, you've had a great year.
But the party has ended for many mega-cap stocks in 2024. And even some reliable dividend stocks are looking expensive.
That's why you should be looking at cheap dividend stocks. These are stocks that are trading near the bottom of their 52-week range and have dividend yields of over 3%.
It's true that some stocks are cheap for a reason. In those cases, price really does equal value. But when you can find undervalued stocks that also pay an attractive dividend, it can set your portfolio up for years of gains.
That's the case with the seven stocks we analyze in this special presentation. We'll explain the buying case for each. And we'll tell you how MarketBeat gives you a way to find other cheap dividend stocks whenever you want, on your schedule.
View the 7 Cheap Dividend Stocks Offering Value and Price Upside
Laycee Kluin
MarketBeat
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When we talk about cheap dividend stocks, we're diving into a unique area of the stock market that combines affordability with the bonus of earning regular income. Dividend stocks are shares in companies that pay out a portion of their earnings to shareholders at regular intervals, like getting a paycheck for owning part of a company. The "cheap" part means these stocks have a lower price, making them accessible to a wider range of investors, including those just starting out or with less money to invest. Let's explore the potential and considerations of investing in cheap dividend stocks:
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Income Plus Growth Potential: One of the appealing aspects of cheap dividend stocks is the combination of income generation through dividends and the potential for stock price growth. It's a bit like having a two-layer cake – you get the steady sweetness of dividends on top of the chance for the stock value to rise. For investors looking for both income and growth, these stocks can be an attractive option.
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Research Is Crucial: Just because a stock is cheap and pays dividends doesn't automatically make it a good investment. Some companies might offer high dividends to attract investors even when they're not in great financial health, which can be risky. Thorough research into the company's earnings, dividend payout ratio (the percentage of earnings paid out as dividends), and growth prospects is essential. Look for companies with a consistent history of paying dividends and the financial stability to continue doing so.
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Sector Trends: Certain sectors are more likely to offer cheap dividend stocks with solid prospects. Utilities, telecommunications, and consumer goods companies often have stable demand for their products and services, which can support consistent dividend payments. Pay attention to sector trends and economic cycles, as these can impact companies' abilities to pay dividends.
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Diversification Matters: Investing all your money in a single stock or in cheap dividend stocks alone can be risky. Diversification, or spreading your investments across various sectors and types of assets, helps manage risk. Even within the category of cheap dividend stocks, aim to hold shares in companies from different industries to mitigate the impact of sector-specific downturns.
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Long-Term Perspective: Investing in dividend stocks, especially cheaper ones, often requires a long-term perspective. While the allure of regular dividends is strong, the true benefit often comes from holding these stocks over time, allowing you to reinvest dividends and benefit from compounding. This strategy can help grow your investment portfolio steadily.
For those considering diving into the world of cheap dividend stocks, keep in mind the balance between risk and reward. While these stocks can offer the dual benefits of income and growth potential, they require diligent research and a thoughtful approach to investing. Look beyond the dividend yield to consider the company's overall financial health, the stability of its dividend payments, and its future growth prospects. By doing so, you can identify opportunities that align with your investment goals and risk tolerance, ultimately building a more robust and income-generating portfolio.
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