If you can buy a dividend stock at a cheap valuation, you might not only lock in a high yield, but by buying at a low price, you can also position yourself for a good return down the road. As interest rates come down, these income-generating investments could be in high demand as investors seek out high returns in the equity markets. There may be some extra motivation to buy attractively valued dividend stocks sooner rather than later -- their prices may not stay low for long.
Three stocks that can be excellent sources of recurring income for your portfolio and that you can get at some incredibly attractive discounts right now are AT&T (NYSE: T), JD.com (NASDAQ: JD), and Comcast (NASDAQ: CMCSA). Here's why you'll want to consider loading up on these stocks today.
1. AT&T
Telecom company AT&T offers an attractive, high-yielding payout of 5.1% right now. That's well above the S&P 500 average of 1.3%. Even though the stock is up 30% this year, because of AT&T's depressed valuation in recent years, it's still trading at an incredibly low forward price-to-earnings multiple of 10.
Given the company's more stable financial performance of late (it has posted a profit of at least $2 billion in each of the past four quarters), there could be even more of a rally ahead for what's still a cheap dividend stock in AT&T. The company is selling its stake in DirecTV, which will bring in billions in extra cash for the business while also simplifying its operating model as it exits the costly and highly competitive media business.
AT&T has generated $21 billion in free cash flow over the trailing 12 months and although it may not be a growth machine, it can make for an incredibly strong dividend stock to buy and hold for the long haul.
2. JD.com
Online Chinese retailer JD.com pays a modest but above-average dividend yielding 1.6%. For much of the year, it has been an underwhelming investment as the Chinese economy hasn't been doing as well as investors had hoped. And in its most recent quarter, which ended on June 30, JD.com reported revenue growth of just 1.2%, totaling $40.1 billion.
Lately, however, the stock has been on a tear on news that China's central bank would be lowering interest rates and that the government would deploy other measures to help stimulate the economy. But even with its recent surge in price, shares of JD.com are trading at around 12 times the company's expected future earnings, based on analyst expectations.
A more favorable outlook on the Chinese economy could heighten those expectations and make JD.com's valuation look even more attractive. If you want exposure to Chinese stocks, JD.com can be one of the better options to add to your portfolio right now.
3. Comcast
Telecom and media company Comcast is another high-yielding stock investors will want to keep on their radars. Its 3% yield can provide you with some exceptional dividend income to help pad the potential gains you might get from this undervalued stock. Comcast trades at just 9 times its estimated future profits and could make for a great buy for long-term investors.
It could seem like an underwhelming investment given that its top line has been struggling to grow in recent quarters, but there are potential catalysts coming for the telecom company. Comcast has raised the price of its Peacock streaming service, which continues to add to its subscriber base -- it grew by 38% in the most recent quarter. And subscriber numbers could continue to ramp up as Peacock strategically locks up key NFL games. Plus, the company is opening a new theme park next year, the Epic Universe, which will leverage many of its iconic brands and will feature a Super Nintendo World.
Between its dividend and multiple catalyst it can potentially use to drive more growth in the future, Comcast can make for a stellar investment to hold on to for the long haul.
Don’t miss this second chance at a potentially lucrative opportunity
Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $20,855!*
Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,423!*
Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $392,297!*
Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
*Stock Advisor returns as of October 7, 2024
David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JD.com. The Motley Fool recommends Comcast and Nintendo. The Motley Fool has a disclosure policy.
3 Dividend Stocks That Are Trading at Dirt Cheap Valuations was originally published by The Motley Fool