Income seekers, take note! Underdogs in the dividend race

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In an era of rising interest rates, investors seeking passive income are navigating a sea of options. While bonds have witnessed a resurgence, dividend stocks present compelling opportunities for both yield and potential capital appreciation.

Dividend Dominance in Economic Recovery

According to Bank of America, dividend stocks are poised to thrive as the economy recovers. Strategist Savita Subramanian predicts that dividends will play a substantial role in driving market returns.

Unearthing Undervalued Dividend Gems

CNBC Pro has scoured the vast S&P 1500 universe for stocks that have consistently raised their dividends and are currently underperforming the broader market.

  • Criteria: Dividend growth for at least four out of the past five years, forward price-to-earnings (P/E) ratio below 21, analyst ratings predominantly “buy” or “overweight,” and substantial upside potential (at least 10%).

Mondelez: Snacking Amid Uncertainty

Mondelez products display

Mondelez International, the snacking giant behind Oreos and Ritz, offers a solid 2.4% dividend yield and impressive upside potential of 20%. Despite global uncertainties and cautious consumer spending, the company remains a snacking powerhouse.

  • Analysts’ Outlook: 90% rate the stock as “buy” or “overweight.”
  • Key Takeaway: Consumers prioritize snacking despite inflationary pressures.

Chesapeake Energy: Energy Exploration Energizes Returns

Chesapeake Energy, a leading natural gas and oil producer, has surged over 16% this year. Its 2.5% dividend yield and 14% upside potential make it an attractive investment.

  • Analysts’ Outlook: Approximately 65% of analysts rate the stock as “buy” or “overweight.”
  • Key Takeaway: Strategic acquisitions and mergers strengthen the company’s position in the energy sector.

East West Bancorp: A Regional Banking Triumph

East West Bancorp, a financial institution focused on Asian-American communities, boasts a 2.8% dividend yield and 11% upside potential.

  • Analysts’ Outlook: An overwhelming 93% of analysts rate the stock as “buy” or “overweight.”
  • Key Takeaway: The regional banking crisis has created a fertile landscape for East West Bancorp to gain market share.

Investing Wisely in Dividend Gems

Investors seeking income and capital appreciation should consider incorporating these undervalued dividend stocks into their portfolios. Their strong track records, analyst support, and substantial upside potential position them as compelling investment opportunities in an evolving market landscape.

Disclaimer: This article does not constitute financial advice. Consult with a qualified financial advisor before making any investment decisions.