If you have $1,000 that you can afford to invest in the stock market, dividend stocks can help make the most of your money, specifically those that are trading at low valuations. While buying Nvidia and investing in hot tech stocks can be alluring, they can also be volatile investments. You can set yourself up for safer returns by targeting much more reasonably priced options instead.
Three excellent dividend stocks that can make for more practical investments right now include PepsiCo (NASDAQ: PEP), AT&T (NYSE: T), and Pfizer (NYSE: PFE). Let’s take a close look at these businesses and why these stocks look undervalued today.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
PepsiCo
PepsiCo is a leader in the soft drink and snack market. Although it hasn’t generated much growth of late, this is still a highly stable company to invest in. In each of the past three years, its revenue has been in excess of $90 billion, and earnings have been north of $8 billion.
This is also the 54th consecutive year that the company has increased its payout, which puts it in the category of a Dividend King. Not many stocks belong to the illustrious club, which features many of the safest income stocks to own. At 4.2%, PepsiCo also already offers a fairly high yield as it is; it’s four times that of the S&P 500 average, which is just over 1%.
While PepsiCo’s stock has declined this year, it’s an intriguing option to hold on to for the long term, given the value it possesses. Currently, it’s trading at a forward price-to-earnings (P/E) multiple of 16, which is based on analysts’ expectations of its future earnings.
AT&T
Another excellent dividend stock to consider is AT&T. The telecom giant pays 4.5%, which is an even higher payout than PepsiCo. While the company hasn’t raised its dividend in years, with AT&T’s financials looking strong of late, it may only be a matter of time before it gets back to growing its payout. This year, the company projects its free cash flow to total at least $18 billion, which is far higher than the roughly $8.2 billion that it issues in dividends over the course of 12 months.
At a forward P/E of just 11, the stock is incredibly cheap when compared to the average S&P 500 stock, which trades at 22 times its expected future earnings. With some great value and a high dividend, AT&T looks to be an underrated buy right now. This is a low-volatility investment you can safely hold on to, even amid uncertainty in the markets.
