3 Dividend Stocks That Are Reasonably Valued: ConocoPhillips (COP), Realty Income Corp (O), B&G Foods, Inc. (BGS)

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This week the S&P 500 index ended lower than it started, at one point dipping down to 1497 before closing at 1515. There’s no doubt that valuations are higher than they were three months ago. Many seem to be waiting for a dip, and if this week’s one was it, it indeed was a shallow one.

For those who are feeling nervous that the ship has already sailed, all is not lost! There are a few stocks that are priced reasonably and have pulled back. Today I will look at three dividend-paying stocks that are on sale and have sound businesses. I believe they could be added today.

Realty Income Corp (NYSE:O) – Dividend Yield: 4.9%

Realty Income Corp, a retail Real Estate Investment Trust [REIT] with a market cap of under $6 billion, is known as “The Monthly Dividend Company.” They acquire and own commercial real estate, collect rent and distribute dividends monthly. They own over 2500 properties in 49 states spread to over 100 tenants in long-term, triple-net lease agreements.

Realty Income has paid over 500 consecutive monthly dividends and has increased its dividend over 60 times. Unlike many other REITs, Realty Income did not have to cut its dividend during the “Great Recession.” They are a consistent company. This consistency comes from targeting retail tenants in non-discretionary markets, with low price-points and services which can’t be bought on the internet.

In its most recent board meeting, Realty Income Corp (NYSE:O) raised its monthly dividend from $0.15 to $0.18, increasing the yield to around 4.9%. Investors can take advantage of this generous dividend and feel reassured by its long history of maintaining these payouts.

Looking at the above chart, we can see that Realty Income is at or near its highs. This is because the increased dividend has put a higher floor under the stock price. Even with the higher price, the current dividend yield is among the highest in its recent history.

ConocoPhillips (NYSE:COP) – Dividend Yield: 4.55%

ConocoPhillips explores for and mostly produces crude oil, natural gas and natural gas liquids. They have recently spun off their refining assets into Phillips66, thus becoming an independent Exploration and Production company. In an effort to reposition themselves for growth and higher margins, ConocoPhillips has been selling off non-core assets and focusing on North American unconventional plays and other projects mostly in OCED countries.

This turnaround has taken time and asset sales have effected production. Some investors have been disappointed or have gotten scared by their funding gap, resulting in a relatively depressed stock price. Meanwhile, however, management has been moving assets and increasing production according to plan. Asset sales will ensure that the dividend is well covered while the company repositions itself. The new ConocoPhillips (NYSE:COP) will be centered around the following five areas:

  • North American oil and gas shale plays
  • Canadian oil sands
  • Australian LNG
  • North Sea oil on both the UK and Norwegian side, and finally
  • Malaysian Deepwater

When all the dust is settled, ConocoPhillips should have higher margins and long term production growth of 3-5%. Last but not least, it will be able to grow its already industry-leading dividend. I believe that ConocoPhillips represents good value right now.

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