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10 Best Beaten Down Dividend Stocks to Buy

In this article, we discuss 10 best beaten down dividend stocks to buy. You can skip our detailed analysis of dividend stocks and their performance over the years, and go directly to read 5 Best Beaten Down Dividend Stocks to Buy

Dividend stocks haven’t been performing as good in 2023 as they did last year, due in part to the AI-led tech rally that increased investors’ risk appetite. But this is a buying opportunity for long-term income investors, according to many analysts. UBS’ Julie Fox spoke about dividend stocks in the current environment in her interview with CNBC in August this year. Here are some comments from the analyst:

“Investors who really want to put their money to work in stocks should focus on the areas of the market that have not participated in this year’s rally. Areas like consumer staples and industrials. And we also think that income generation is a really important component of a portfolio, so we also like dividend-paying stocks and sectors as well.”

Morgan Stanley’s chief investment officer Mike Wilson also presented a positive outlook on dividend stocks this year. He said that in the recent market dip, dividend stocks could boost investors’ earnings. While receiving dividend payments is beneficial, selecting stocks that could also increase in value in the near future can give an extra boost to investors’ returns. Wilson also believes that the reliability of guaranteed dividend payments encourages investors to invest in dividend stocks, especially when the rest of their investment portfolio is underperforming. He also suggests that companies paying dividends tend to see their stock prices increase over the long term, making them more resilient during market downturns and less susceptible to market fluctuations.

It’s reasonable to agree with analysts’ views on dividend stocks because historical performance aligns with their assessments. According to a report by Wisdom Tree, dividends made up almost 30% of the S&P 500’s annual total returns, which averaged 10.4% over a long period. During the 1970s, a decade marked by high inflation and sluggish economic growth, dividends accounted for a significant 70% of the total returns.

Though some of the best dividend stocks like Exxon Mobil Corporation (NYSE:XOM), Cisco Systems, Inc. (NASDAQ:CSCO), and Nucor Corporation (NYSE:NUE) have delivered positive returns this year, many other dividend stocks have underperformed in comparison. However, these underperforming stocks have solid foundations that could potentially lead to a recovery in the near future. In this article, we will discuss the best beaten down stocks to buy now.

Image by Steve Buissinne from Pixabay

Our Methodology:

For this list, we used a stock screening tool to identify stocks that reached their 52-week lows around October 18. We then narrowed down our selection to 10 stocks using hedge fund data from Insider Monkey for the second quarter. These stocks are ranked based on the number of hedge funds holding positions in them, from the lowest to the highest number. We’ve also included the year-to-date share price decline of these stocks to offer a comprehensive overview.

10. Hormel Foods Corporation (NYSE:HRL)

Number of Hedge Fund Holders: 24

1-Year Share Price Decline as of October 18: 30.9%

Hormel Foods Corporation (NYSE:HRL) is an American food company that specializes in producing and marketing a wide range of food products. On September 25, the company declared a quarterly dividend of $0.275 per share, which was in line with its previous dividend. The company is a Dividend King with 57 years of consecutive dividend growth. The stock’s dividend yield on October 18 came in at 3.42%.

In the third quarter of 2023, Hormel Foods Corporation (NYSE:HRL) posted revenue of $2.96 billion, which fell by 2.3% from the same period last year. The company’s operating cash flow for the quarter came in at $317 million. Its operating income stood at $217 million. HRL is down by 30.9% in the past year, as of October 18, unlike Exxon Mobil Corporation (NYSE:XOM), Cisco Systems, Inc. (NASDAQ:CSCO), and Nucor Corporation (NYSE:NUE), which have delivered positive returns this year so far.

As of the close of Q2 2023, 24 hedge funds in Insider Monkey’s database reported having stakes in Hormel Foods Corporation (NYSE:HRL), down from 30 in the previous quarter. The overall value of these stakes is over $267.2 million. Among these hedge funds, Bill & Melinda Gates Foundation Trust was the company’s leading stakeholder in Q2.

9. Brown-Forman Corporation (NYSE:BF-B)

Number of Hedge Fund Holders: 30

1-Year Share Price Decline as of October 18: 13.20%

Brown-Forman Corporation (NYSE:BF-B) is an American company that is engaged in the production and marketing of alcoholic beverages. The company currently pays a quarterly dividend of $0.2055 per share and has a dividend yield of 1.47%, as of October 18. It is one of the best dividend stocks as the company has been raising its dividends consistently for the past 39 years.

In fiscal Q1 2024, Brown-Forman Corporation (NYSE:BF-B) generated $1.04 billion in revenues, which showed a 3% growth from the same period last year. The company ended the quarter with $374 million available in cash and cash equivalents. It also reported an operating cash flow of $38 million.

At the end of Q2 2023, 30 hedge funds tracked by Insider Monkey reported having stakes in Brown-Forman Corporation (NYSE:BF-B), up from 29 a quarter earlier. These stakes have a total value of $1.47 billion.

8. Southwest Airlines Co. (NYSE:LUV)

Number of Hedge Fund Holders: 31

1-Year Share Price Decline as of October 18: 25.4%

Southwest Airlines Co. (NYSE:LUV) is a major airline company known for its focus on providing low-cost, domestic air travel services. The company was a part of 31 hedge fund portfolios at the end of Q2 2023, compared with 37 a quarter earlier. The stakes owned by these hedge funds have a total value of over $548.8 million.

Southwest Airlines Co. (NYSE:LUV), one of the best dividend stocks on our list, currently pays a quarterly dividend of $0.18 per share. Since 2010, the company has returned over $13 billion to shareholders through share repurchases and dividends. The stock has a dividend yield of 2.89%, as of October 18.

In the second quarter of 2023, Southwest Airlines Co. (NYSE:LUV) posted revenue of $7.04 billion, which showed a 4.6% growth from the same period last year. Year-to-date, the company returned $214 million to shareholders through dividends.

7. McCormick & Company, Incorporated (NYSE:MKC)

Number of Hedge Fund Holders: 35

1-Year Share Price Decline as of October 18: 18.05%

McCormick & Company, Incorporated (NYSE:MKC) is a Maryland-based spice and extract manufacturing company that specializes in the production, marketing, and distribution of various flavoring and seasoning products. In the third quarter of 2023, the company reported revenue of $1.68 billion, up 5.7% from the same period last year. Its operating cash flow for the quarter also jumped to $660 million, from $250 million in the year-ago period.

McCormick & Company, Incorporated (NYSE:MKC) declared a quarterly dividend of $0.39 per share on September 29. Though the stock has lost 26.5% of its value in 2023 so far, the company has raised its dividends for 37 consecutive years. As of October 18, the stock has a dividend yield of 2.54%.

The number of hedge funds tracked by Insider Monkey owning stakes in McCormick & Company, Incorporated (NYSE:MKC) grew to 35 in Q2 2023, from 27 in the previous quarter. The consolidated value of these stakes is over $1.8 billion. With over 15.4 million shares, Fundsmith LLP was the company’s leading stakeholder in Q2.

6. The Kraft Heinz Company (NASDAQ:KHC)

Number of Hedge Fund Holders: 39

1-Year Share Price Decline as of October 18: 12.57%

The Kraft Heinz Company (NASDAQ:KHC) is next on our list of the best dividend stocks. It is one of the world’s largest food and beverage companies, known for its extensive portfolio of well-known consumer brands. The company currently pays a quarterly dividend of $0.40 per share and has a dividend yield of 5.03%, as of October 18. It has been rewarding shareholders with regular dividends since its merger in 2015.

The Kraft Heinz Company (NASDAQ:KHC) generated $6.7 billion in revenues in the second quarter of 2023, which saw a 2.6% growth from the same period last year. Year-to-date, its operating cash flow came in at $1.6 billion and its free cash flow amounted to over $1.1 billion. The stock is down by 12.57% in the past year. However, Exxon Mobil Corporation (NYSE:XOM), Cisco Systems, Inc. (NASDAQ:CSCO), and Nucor Corporation (NYSE:NUE) have produced positive returns to shareholders this year.

At the end of Q2 2023, 39 hedge funds owned stakes in The Kraft Heinz Company (NASDAQ:KHC), up from 34 in the previous quarter, as per Insider Monkey’s database. The overall value of these stakes is over $12.2 billion. Warren Buffett’s Berkshire Hathaway was the company’s leading stakeholder in Q2.

Click to continue reading and see 5 Best Beaten Down Dividend Stocks to Buy.

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Disclosure. None. 10 Best Beaten Down Dividend Stocks to Buy is originally published on Insider Monkey. 

AI, Tariffs, Nuclear Power: One Undervalued Stock Connects ALL the Dots (Before It Explodes!)

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The “Toll Booth” Operator of the AI Energy Boom

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A New Dawn is Coming to U.S. Stocks

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Should I put my money in Artificial Intelligence?

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Click to continue reading…