5 Top Dividend Stocks To Buy At A Bargain Now

KUMARIE July 23, 2024

65 7 minutes read

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In today’s volatile market, savvy investors constantly seek opportunities to acquire high-quality dividend stocks at a bargain. These stocks not only offer attractive dividend yields but also have the potential for significant capital appreciation. In this article, I will introduce you to five dividend stocks that are currently undervalued and present compelling buying opportunities. These picks have been carefully selected based on their strong fundamentals, consistent dividend payments and attractive valuations, making them ideal additions to any income-focused investment portfolio.

Methodology For Choosing This Dividend Stock List

To select the most reliable and promising dividend stocks, I focused on stocks consistently paying dividends for more than 10 years, demonstrating their commitment to returning value to shareholders. I prioritized companies yielding higher dividend returns than their five-year average.

After narrowing down the list to these consistent dividend payers, key valuation metrics and dividend yields were analyzed to identify stocks that are currently undervalued yet offer attractive returns.

5 Best Dividend Stocks To Buy At A Bargain Now

Data source: Bloomberg

1. Hershey (HSY)

Business Overview

Hershey is a leading American multinational company known for its confectionery products, including chocolate, candy and baked goods. Founded in 1894 by Milton S. Hershey, the company has grown into one of the most recognized and trusted names in the food industry. Hershey’s product portfolio features iconic brands such as Hershey’s, Reese’s, Kit Kat and Twizzlers, among others. The company’s operations extend beyond confectionery, including snack brands like Skinny Pop, Pirate’s Booty and Ice Breakers, contributing to its diverse revenue streams. Hershey’s commitment to quality and innovation is evident in its continuous efforts to introduce new products and expand its global reach. The company places a strong emphasis on sustainability, ethical sourcing and community support, aiming to create positive impacts on society and the environment. Headquartered in Hershey, Pennsylvania, HSY. maintains a robust distribution network and leverages strategic marketing to maintain its market leadership. The company’s dedication to excellence and customer satisfaction has solidified its reputation as a beloved and enduring brand in the confectionery industry.

Why HSY Stock Is A Top Choice

Hershey stands out as a top dividend stock due to its robust financial strength and promising growth prospects. The company’s consistent revenue growth and strong brand portfolio provide a solid foundation for continued success. HSY’s current dividend yield is nearly a full percentage point higher than its five-year average, signaling an attractive valuation. This higher yield suggests that the stock is undervalued, offering investors a compelling opportunity to capitalize on its dividend payouts while potentially benefiting from price appreciation as the market recognizes its true worth.

2. Darden Restaurants (DRI)

Business Overview

Darden Restaurants is a prominent American multi-brand restaurant operator headquartered in Orlando, Florida. It owns and operates several well-known dining brands, including Olive Garden, LongHorn Steakhouse, Cheddar’s Scratch Kitchen, Yard House, Ruth’s Chris, the Capital Grille, Seasons 52, Bahama Breeze and Eddie V’s. Established in 1968, Darden has grown to become a leader in the full-service dining industry, with a focus on providing high-quality food and exceptional customer service. The company’s portfolio spans a variety of cuisines and dining experiences, catering to a broad range of customer preferences. Darden’s strategic approach includes continuous menu innovation, operational excellence and a commitment to sustainability and community engagement. With a network of restaurants across North America, Darden leverages its scale and expertise to drive growth and deliver value to its shareholders. The company emphasizes employee training and development, aiming to create a positive work environment that supports its mission of delighting guests and building long-term customer loyalty.

Why DRI Stock Is A Top Choice

Darden is a top dividend stock bolstered by its strong financial performance and positive business outlook. Total sales for fiscal year 2024 increased 8.6%, driven by successful menu innovations, additional restaurants and efficient cost management across its portfolio of popular dining brands. The company’s ability to adapt to changing consumer preferences and maintain high customer satisfaction underlines its market strength. Darden repurchased $97.3 million worth of shares in the fourth quarter. DRI increased its quarterly dividend to $1.40, a 6.9% increase from its third-quarter payout. Darden’s current dividend yield of 3.7% is almost half a percentage point higher than its five-year average, suggesting that the stock may be undervalued. This higher yield indicates an attractive entry point for investors, offering a substantial income stream and the potential for price appreciation as the market adjusts to reflect the company’s true value.

3. Coca-Cola Euro Pacific Partners (CCEP)

Business Overview

Coca-Cola Europacific is one of the world’s largest independent Coca-Cola bottlers, serving a diverse and expansive market across Western Europe, Australia, the Pacific and Indonesia. Headquartered in Uxbridge, England, CCEP was formed through the merger of Coca-Cola European Partners and Coca-Cola Amatil. The company is responsible for the manufacturing, distributing and marketing of a broad portfolio of beverages, including Coca-Cola, Fanta, Sprite and other leading brands. CCEP is committed to sustainable business practices, focusing on reducing its environmental impact through water stewardship, sustainable packaging and carbon reduction initiatives. The company emphasizes innovation in its product offerings, catering to evolving consumer preferences with a variety of low and no-sugar beverages and expanding its range of premium and functional drinks. With a strong emphasis on corporate responsibility, CCEP works closely with local communities and stakeholders to drive positive social and environmental outcomes. The company’s scale, strategic partnerships and operational excellence position it as a leader in the beverage industry, dedicated to delivering growth and value for its shareholders.

Why CCEP Stock Is A Top Choice

Coca-Cola Europacific Partners is a top dividend stock, driven by the increasing demand for Coca-Cola products in developing markets and the company’s strong financial prospects. As CCEP expands its footprint and capitalizes on growing consumer markets in regions like Asia-Pacific and Latin America, it is well-positioned for sustained revenue and earnings growth. The company’s solid balance sheet and strategic investments in product innovation and distribution networks further bolster its financial strength. CCEP’s current dividend yield is a full percentage point higher than its five-year average, signaling a potentially undervalued stock. This elevated yield offers an attractive entry point for investors, providing a substantial income stream and the opportunity for capital appreciation as the market recognizes the company’s true value.

4. NextEra Energy (NEE)

Business Overview

NextEra Energy is a leading American energy company headquartered in Juno Beach, Florida. It is recognized as one of the largest electric utility companies in the United States, primarily through its subsidiaries, Florida Power & Light Company (FPL) and NextEra Energy Resources. FPL is the largest rate-regulated electric utility in Florida, known for its efficient operations and commitment to clean energy. NextEra Energy Resources, a significant player in the renewable energy sector, develops, constructs and operates wind, solar and energy storage projects across North America. The company’s strategic focus on sustainability and innovation has positioned it at the forefront of the transition to clean energy, making it one of the world’s largest producers of wind and solar energy. NextEra Energy is dedicated to providing reliable, affordable and sustainable energy solutions while driving economic growth and supporting environmental stewardship. Its robust financial performance, operational excellence and forward-looking strategy underpin its leadership in the energy industry.

Why NEE Stock Is A Top Choice

NextEra Energy is a top dividend stock despite a recent dip in performance. The poor summer performance is expected to be short-lived, with the company poised for a strong rebound. NEE’s leadership in renewable energy and its strategic investments in wind, solar and battery storage projects position it for sustained growth as the global shift toward clean energy accelerates. Furthermore, NEE’s current dividend yield of 2.8% is a full percentage point higher than its five-year average, indicating that the stock may be undervalued. This higher yield presents a compelling opportunity for investors, offering a substantial income stream and the potential for significant capital appreciation as the market adjusts to reflect the company’s underlying value and growth prospects.

5. Essential Utilities (WTRG)

Business Overview

Essential Utilities is a prominent water, wastewater and natural gas provider in the United States. The company operates through its subsidiaries, Aqua and Peoples, delivering essential utility services to more than 5 million people in 10 states. Aqua, the water and wastewater division, focuses on maintaining and improving water quality and infrastructure, ensuring reliable and safe water supply. Peoples, the natural gas division, provides natural gas distribution services, emphasizing safety and reliability. Essential Utilities is committed to sustainability and environmental stewardship, investing in infrastructure upgrades and adopting innovative technologies to enhance service delivery and reduce environmental impact. The company’s dedication to operational excellence, customer satisfaction, and community engagement underpins its strong reputation in the utility sector. Through strategic growth initiatives and a focus on sustainable practices, Essential Utilities aims to continue delivering value to its customers and shareholders while contributing positively to the communities it serves.

Why WTRG Stock Is A Top Choice

Essential Utilities is a top dividend stock, driven by its strong financial performance, stable cash flows and essential services. First-quarter 2024 net income increased to $265.8 million from $191.4 million in first-quarter 2023. The company provides millions of customers with critical water, wastewater and natural gas services, ensuring steady and reliable revenue. Essential has signed six purchase agreements for additional wastewater systems in Pennsylvania and Illinois. Recent infrastructure investments and upgrades have enhanced service delivery and operational efficiency, positioning Essential Utilities for sustained growth. While the company’s stock price recently dropped due to increased political risk, the market is likely overweighting this factor. Essential Utilities has a track record of consistent dividend payments, making it an attractive choice for income-focused investors. With its current dividend yield of 3.30% being higher than its historical average, Essential presents a compelling opportunity for investors seeking stability, income and potential capital appreciation.

Bottom Line

The five dividend stocks highlighted in this article—Hershey, Darden Restaurants, Coca-Cola Europacific, NextEra Energy and Essential Utilities (WTRG)—offer compelling investment opportunities. These companies stand out due to their strong fundamentals, consistent dividend payments and attractive valuations. The recent market conditions have presented these stocks at a bargain, with dividend yields significantly higher than their historical averages, indicating potential undervaluation. Adding these high-yield dividend stocks to your portfolio can benefit from stable income streams and the potential for capital appreciation as the market recognizes their true value. As always, thorough due diligence and consideration of your individual financial goals and risk tolerance are essential when making investment decisions.