If you can buy a dividend stock at a cheap valuation, not only can you secure a high return, but by buying at a low price you can also expect a good return down the road. With interest rates falling, these income-producing investments may be in high demand as investors look for high returns in the stock markets. There may be an additional motivation to buy attractively valued dividend stocks sooner or later; their rates may not remain low for long.
Three stocks that can be excellent sources of recurring income for your portfolio and that you can get now at incredibly attractive discounts AT&T (NYSE:T), JD.com (NASDAQ: JD)And Comcast (NASDAQ: CMCSA). Here’s why you might want to consider buying this stock today.
1. AT&T
Telecom company AT&T currently offers an attractive, high-yield payout of 5.1%. That is well above S&P500 average 1.3%. Even though the stock is up 30% this year, due to AT&T’s low valuation in recent years, it still trades at an incredibly low forward price-to-earnings ratio of 10.
Given the company’s steadier financial performance lately (it posted profits of at least $2 billion in each of the last four quarters), there could be even more of a rally for what remains a cheap AT&T dividend stock. The company is selling its stake in DirecTV, which will bring the company billions in additional cash while simplifying its business model as it withdraws from the expensive and highly competitive media sector.
AT&T has generated $21 billion in free cash flow over the last twelve months, and while it may not be a growth machine, it could make for an incredibly strong dividend stock to buy and hold for the long term.
2. JD.com
Online Chinese retailer JD.com pays a modest but above-average dividend of 1.6%. This was a disappointing investment for much of the year, as the Chinese economy did not perform as well as investors had hoped. And in the most recent quarter, which ended June 30, JD.com reported revenue growth of just 1.2%, to a total of $40.1 billion.
Lately, however, the stock has been hurt by news that China’s central bank would cut interest rates and that the government would take other measures to help stimulate the economy. But even with the recent share price increase, JD.com’s stock trades at about 12 times the company’s expected future earnings based on analyst expectations.
More favorable prospects for the Chinese economy could strengthen these expectations and make JD.com’s valuation even more attractive. If you want exposure to Chinese stocks, JD.com could be one of the better options to add to your portfolio right now.
3. Comcast
Telecom and media company Comcast is another high-yield stock company that investors will want to keep on their radar. The 3% yield can give you exceptional dividend income to help pad the potential gains you could make from this undervalued stock. Comcast trades at just nine times estimated forward earnings and could be a great buy for long-term investors.
It may seem like a disappointing investment as revenue has struggled to grow in recent quarters, but potential catalysts are coming for the telecom company. Comcast has raised the price of its Peacock streaming service, continuing to grow its subscriber base: It grew 38% in the most recent quarter. And the number of subscribers could continue to rise as Peacock strategically closes major NFL games. Additionally, the company will open a new theme park next year, the Epic Universe, which will leverage many of its iconic brands and include a Super Nintendo World.
Thanks to its dividend and multiple catalysts that have the potential to fuel more growth in the future, Comcast could be an excellent investment to hold for the long term.
Don’t miss this second chance at a potentially lucrative opportunity
Have you ever felt like you missed the boat on buying the most successful stocks? Then you would like to hear this.
On rare occasions, our expert team of analysts provides a “Double Down” Stocks recommendation for companies they think are about to pop. If you’re worried that 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:
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Amazon: If you had invested $1,000 when we doubled in 2010, then you have $20,855!*
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Netflix: If you had invested $1,000 when we doubled in 2004, you would have $392,297!*
We’re currently issuing ‘Double Down’ warnings for three incredible companies, and another opportunity like this may not happen anytime soon.
See 3 “Double Down” Stocks »
*Stock Advisor returns October 7, 2024
David Jagielski has no position in the stocks mentioned. The Motley Fool holds positions in and recommends JD.com. The Motley Fool recommends Comcast and Nintendo. The Motley Fool has a disclosure policy.
3 Dividend Stocks Trading at Dirt-Cheap Valuations was originally published by The Motley Fool
