The stock market has been performing well in the first half of the year, with the S&P 500 up by around 15%. Despite this, there are still opportunities for investors to find undervalued stocks with good dividends. With the Federal Reserve planning to cut interest rates later in the year, dividend stocks may become more attractive as bond yields decrease. The central bank has indicated that it may cut rates, with one cut expected by 2024. Investing in dividend-paying stocks can help protect portfolios during market volatility.
To identify discounted dividend stocks, CNBC Pro used FactSet data to screen the S&P 500. They looked for stocks with buy or overweight ratings from at least 60% of analysts, a forward price-to-earnings ratio lower than the S&P 500’s, and potential upside to the average analyst price target. These stocks also had a dividend yield of at least 2%, higher than the index’s yield.
Vici Properties and Host Hotels & Resorts, both real estate investment trusts, stood out as promising options. Despite the real estate sector being down this year, analysts see potential in these stocks. Utilities have also performed well, with Sempra offering a 3.3% dividend yield and upside to the average price target.
In the energy sector, Baker Hughes, SLB, and ConocoPhillips were highlighted for their dividend yields and potential for growth. ConocoPhillips recently announced a deal to acquire Marathon Oil, which is expected to strengthen its shale assets. Hasbro, a toy company, also stands out with a 4.8% dividend yield and positive outlook from analysts.
Overall, there are still opportunities for investors to find undervalued stocks with solid dividends in the current market.