3 dividend shares to buy on sale
In today’s market, low-cost companies are hard to come by. When you add in the fact that low interest rates have forced income-oriented investors to move up the income risk curve, finding trades in stocks that pay their owners has become even more difficult.
Fortunately, agreements exist between some companies that pay dividends. Nowadays, they are often found among companies in disadvantaged industries or where short-term problems have scared the market. As long as you are willing to go against the general market consensus, you may find that these three dividend paying stocks appear to be on the market and may be worth buying.
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N ° 1: A leader in fast delivery
FedEx (NYSE: FDX) has seen his stocks plummet in recent weeks as his earnings missed expectations and offered pessimistic forecasts for the short term future. These short-term worries have opened up what appears to be an opportunity for patient investors to recover its shares at a potentially beneficial price.
At a recent market price of $ 223.44, it is trading just 10 times analysts’ earnings estimates for fiscal 2023 of $ 22.27 per share. It sounds like a good deal in a market that is currently trading at around 22 times expected earnings. Especially when combined with FedEx’s anticipated earnings growth rate of nearly 12% annualized over the next five years, the company’s shares look reasonably priced.
From a dividend perspective, FedEx is currently offering its investors $ 0.75 per share per quarter. Its dividend has generally increased over time, but the company does not increase its payout every year. This works out to a current yield of around 1.3%, which isn’t too bad considering the potential for long-term dividend growth. Even with the short-term challenges the company faces, this dividend consumes only about 15% of its profits, giving reason to believe that growth can continue.
# 2: a hard money lender with an impeccable track record
Broadmark Real Estate Capital (NYSE: BRMK) is a publicly traded lender that focuses on the construction industry. This means that it is focused on providing loans that might otherwise fall through the cracks of traditional home loans, such as rehabilitations, project completion and bridging loans.
It’s a bit of a risky business, which is probably why the market is offering its shares at around 15 times the expected earnings in 2022 and 10 times the expected earnings. This reasonable price is part of what makes it attractive. Additionally, the company is structured as a Real Estate Investment Trust (REIT), which means Broadmark Realty Capital must pay out at least 90% of its profits as dividends. This requirement, combined with its reasonable valuation, means that it offers investors a current yield of around 8.4%.
The REIT’s dividend requirement combined with the company’s expected earnings growth means investors could see an even higher payout going forward if those earnings materialize. Of course, given that the industry in which it operates is known to be risky, there is always a chance that those higher payouts may not actually show up.
In an attempt to offset a decent amount of this risk, Broadmark Realty Capital has two key strengths: an impeccable balance sheet and lending standards that help mitigate its risk of large losses. The company has exactly $ 0 debt on its own balance sheet, although it has a moderate amount of lease obligations reflected as a liability. Even those lease obligations are low relative to the company’s cash flow, giving it an incredibly healthy balance sheet for a company in the lending industry.
From a lending standards perspective, Broadmark Realty Capital insists on a loan-to-value ratio of no more than 65% when undergoing its loans. This gives good reason to believe that even if one of its borrowers is in difficulty, the company has a good chance of recovering a large part of its capital.
# 3: an insurance titan with a rock solid reputation
Prudential financial (NYSE: PRU) focuses so much on being a strong business that they use a real rock – the Rock of Gibraltar – as their company logo. This focus on her strength means she isn’t exactly one of the high-growth cohort of stocks the market loves, which is one of the main reasons her stocks are available at such a reasonable price.
Today, investors can buy Prudential Financial for about 8 times the company’s expected earnings, and those earnings are expected to grow by about 8% on an annualized basis over the next five years. This low valuation means that Prudential Financial can offer investors a return of around 4.2%, while paying only around a quarter of its profits.
The company has a habit of increasing its dividend every year, although it reduced its payout during the financial crisis. The current dividend is much higher than it was before this crisis, which shows that it will reward its shareholders when it can, but that it really prioritizes protecting its balance sheet in the event of a crisis. For investors with a long-term view, this should be a good sign of its ability to adapt over time.
From a long-term perspective, these dividend-paying stocks may be worth holding
Dividend stocks like FedEx, Broadmark Realty, and Prudential Financial might not be the fastest producers, but if you can buy them for decent prices, they could provide reasonable returns in the long run. Just make sure you have both the patience to let that long haul and the willingness to keep tabs on their operations to make sure they continue to be worth holding while you wait.
Of course, while you wait, these dividends are rewarding you for your patience and these payouts are part of your total return on investment. To receive their next dividend, however, you must own shares before the companies next ex-dividend date. So start now and decide for yourself if these three dividend paying stocks are selling enough to be worth buying now.
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Chuck saletta owns shares of Broadmark Realty Capital, FedEx and Prudential Financial and has the following options: long January 2022 calls for $ 100 on Prudential Financial, short January 2022 sells $ 100 on Prudential Financial, runs January 2022 calls for $ 115 on Prudential Financial and runs January 2022 $ 95 bet on Prudential Financial. The Motley Fool owns stock and recommends FedEx. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.