In this article, we discuss 10 undervalued dividend stocks to buy in 2022.
According to a survey conducted by Bloomberg Markets, 35% of the investors in a sample of 900 consider value stocks as the most effective hedge against rampant inflation. In February, value stocks performed better than growth stocks by 10 percentage points. BoFA’s Savita Subramanian recently warned investors against chasing growth stocks and tech giants in the currently volatile market. She told investors to look for quality value stocks instead.
Rising interest rates have prompted investors to seek higher yield returns from their investment portfolios. Dividend strategies have proven to survive inflationary pressures and have delivered strong outperformance in 2021 and year-to-date. The 2021 acceleration in corporate earnings and profits have improved dividend payouts and dividend growth.
Investors looking to add income stocks to their portfolios usually seek out dividend payers like Microsoft Corporation (NASDAQ:MSFT), Johnson & Johnson (NYSE:JNJ), and Altria Group, Inc. (NYSE:MO). However, value plays are preferable in this market, and we will focus on undervalued dividend stocks to buy in 2022 in this article.
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Our Methodology
We selected dividend stocks that have a price to earnings ratio under 20. These companies have received positive analyst ratings in the last few weeks. We have mentioned the hedge fund sentiment around the stocks as well.
Undervalued Dividend Stocks to Buy in 2022
10. Alliance Resource Partners, L.P. (NASDAQ:ARLP)
Dividend Yield as of April 1: 6.19%
P/E Ratio as of April 1: 11.86
Number of Hedge Fund Holders: 5
Alliance Resource Partners, L.P. (NASDAQ:ARLP) is an Oklahoma-based natural resource company that is primarily involved in mining and selling coal to utilities and industrial users in the United States. It also gains royalty income from oil and gas mineral interests across lucrative properties. The company offers a price to earnings ratio of 11.86, making it a notable undervalued dividend player in 2022.
On January 28, Alliance Resource Partners, L.P. (NASDAQ:ARLP) declared a $0.25 per share quarterly dividend, a 25% increase from its prior dividend of $0.20. The dividend was distributed on February 14, to shareholders of record on February 7. Alliance Resource Partners, L.P. (NASDAQ:ARLP)’s dividend yield on April 1 stood at 6.19%.
Alliance Resource Partners, L.P. (NASDAQ:ARLP) had a solid financial run in 2021. The company reported a full-year revenue of $1.57 billion, up from $1.3 billion in 2020. Similarly, Alliance Resource Partners, L.P. (NASDAQ:ARLP) posted a net income of $178.2 million in 2021, a strong rebound from its net loss of $129.2 million in the prior year.
Noble Capital analyst Mark Reichman on March 30 initiated coverage of Alliance Resource Partners, L.P. (NASDAQ:ARLP) with an Outperform rating and a $22 price target. The analyst noted that Alliance Resource Partners, L.P. (NASDAQ:ARLP)’s strong cash flows are expected to finance growth in its oil and natural gas royalty business. The diversification into green energy sources will also be advantageous for the company, the analyst added.
According to the fourth quarter database of Insider Monkey, 5 hedge funds were bullish on Alliance Resource Partners, L.P. (NASDAQ:ARLP), compared to 6 funds in the prior quarter. Adam Peterson’s Magnolia Capital Fund is the largest shareholder of the company, with 4.95 million shares worth $62.5 million.
In addition to Microsoft Corporation (NASDAQ:MSFT), Johnson & Johnson (NYSE:JNJ), and Altria Group, Inc. (NYSE:MO), Alliance Resource Partners, L.P. (NASDAQ:ARLP) is a notable dividend stock to look out for in 2022.
9. Eagle Bulk Shipping Inc. (NASDAQ:EGLE)
Dividend Yield as of April 1: 11.83%
P/E Ratio as of April 1: 5.90
Number of Hedge Fund Holders: 12
Eagle Bulk Shipping Inc. (NASDAQ:EGLE) was incorporated in 2005 and is headquartered in Stamford, Connecticut. The company deals in ocean transportation of dry bulk cargoes around the world. Eagle Bulk Shipping Inc. (NASDAQ:EGLE) delivers a dividend yield of 11.83% as of April 1.
In 2021, Eagle Bulk Shipping Inc. (NASDAQ:EGLE)’s revenue for the year came in at $594.5 million, compared to $275.1 million in 2020. The company announced a net income of approximately $185 million in 2021, a notable recovery from the net loss of $35.1 million in the prior year.
On March 11, Eagle Bulk Shipping Inc. (NASDAQ:EGLE) declared a $2.05 per share quarterly dividend, a 2.5% increase from its earlier dividend of $2.00. The dividend was distributed on March 25, to shareholders of record on March 15.
Following the company’s fourth quarter results, B. Riley analyst Liam Burke raised the price target on Eagle Bulk Shipping Inc. (NASDAQ:EGLE) to $67 from $62 and maintained a Buy rating on the shares. The analyst lifted estimates to account for the better than expected outlook for 2022. He told investors that Eagle Bulk Shipping Inc. (NASDAQ:EGLE) has suitable assets to benefit from a feasible macro environment.
Among the hedge funds tracked by Insider Monkey, 12 funds were bullish on Eagle Bulk Shipping Inc. (NASDAQ:EGLE) at the end of December 2021, compared to 13 funds in the prior quarter. Howard Marks’ Oaktree Capital Management is the leading shareholder of the company, with 3.7 million shares worth $172 million.
8. Big 5 Sporting Goods Corporation (NASDAQ:BGFV)
Dividend Yield as of April 1: 5.99%
P/E Ratio as of April 1: 3.67
Number of Hedge Fund Holders: 14
Big 5 Sporting Goods Corporation (NASDAQ:BGFV) is a California-based sporting goods company that sells sports, fitness, camping, hunting, and home recreation products. Big 5 Sporting Goods Corporation (NASDAQ:BGFV)’s dividend yield on April 1 came in at 5.99%.
Publishing its Q4 results on March 1, Big 5 Sporting Goods Corporation (NASDAQ:BGFV) reported earnings per share of $0.89, exceeding estimates by $0.04. Revenue for the period stood at $273.40 million, outperforming estimates by $3.91 million.
On March 1, Big 5 Sporting Goods Corporation (NASDAQ:BGFV) declared a $0.25 per share quarterly dividend, which was distributed to shareholders on March 25. The company also announced a share buyback program of up to $25 million.
Lake Street analyst Mark Smith reiterated a Buy recommendation on Big 5 Sporting Goods Corporation (NASDAQ:BGFV) on March 2, but lowered the price target to $28 from $31, in light of the company’s Q4 results. According to the analyst, the company had a strong quarter and most of the momentum continued into Q1. The stock also remains undervalued, Smith added.
Among the hedge funds tracked by Insider Monkey, 14 funds were bullish on Big 5 Sporting Goods Corporation (NASDAQ:BGFV) at the end of Q4 2021, compared to 17 funds in the earlier quarter. Alok Agrawal’s Bloom Tree Partners is the leading shareholder of the company, with 568,068 shares worth $10.7 million.
7. British American Tobacco p.l.c. (NYSE:BTI)
Dividend Yield as of April 1: 8.60%
P/E Ratio as of April 1: 10.90
Number of Hedge Fund Holders: 18
British American Tobacco p.l.c. (NYSE:BTI) is a London-based manufacturer and distributor of tobacco and nicotine products. The stock delivered a dividend yield of 8.60% as of April 1. With a price to earnings ratio of 10.90, British American Tobacco p.l.c. (NYSE:BTI) is one of the most notable undervalued dividend stocks to buy in 2022.
On February 17, British American Tobacco p.l.c. (NYSE:BTI) declared a $0.735 per share quarterly dividend, a 1.4% increase from its earlier dividend of $0.725. The dividend will be distributed on May 9, to shareholders of the company at the close of business on March 25.
JPMorgan analyst Jared Dinges on March 24 upgraded British American Tobacco p.l.c. (NYSE:BTI) to Overweight from Neutral, lifting the price target to 4,000 GBp from 3,550 GBp. The analyst noted that vapor will be a “key pillar” in the nicotine industry and the company is “best placed” to benefit from this transition towards profitability.
Elite hedge funds are largely bullish on British American Tobacco p.l.c. (NYSE:BTI). According to the fourth quarter database of Insider Monkey, 19 hedge funds were bullish on British American Tobacco p.l.c. (NYSE:BTI), up from 9 funds in the prior quarter. Rajiv Jain’s GQG Partners is the largest shareholder of the company, with more than 15 million shares worth $567.7 million.
6. Guess’, Inc. (NYSE:GES)
Dividend Yield as of April 1: 3.96%
P/E Ratio as of April 1: 8.86
Number of Hedge Fund Holders: 22
Guess’, Inc. (NYSE:GES) was founded in 1981 and is headquartered in Los Angeles, California. The company designs and markets apparel and accessories for men, women, and children. Guess’, Inc. (NYSE:GES)’s dividend yield on April 1 stood at 3.96%.
On March 17, B. Riley analyst Susan Anderson maintained a Buy rating on Guess’, Inc. (NYSE:GES) but lowered the price target to $36 from $38 following the company’s Q4 results. In 2022, the analyst expects Guess’, Inc. (NYSE:GES)’s Americas business to benefit from a rebound in tourism after a strong 2021. She marginally reduced estimates to account for higher air freight.
Guess’, Inc. (NYSE:GES) declared on March 16 a $0.225 per share quarterly dividend, in line with previous. The dividend is payable on April 15, for shareholders of record on March 30. The company also announced on March 21 an additional share buyback program of $175 million, on top of the $100 million share repurchase scheme announced on March 16.
According to Insider Monkey’s Q4 data, Richard Mashaal’s Rima Senvest Management is a significant shareholder of Guess’, Inc. (NYSE:GES), with more than 1 million shares worth $24.30 million. Overall, 22 hedge funds held long positions in Guess’, Inc. (NYSE:GES) at the end of December 2021, compared to 21 funds in the last quarter.
Just like Microsoft Corporation (NASDAQ:MSFT), Johnson & Johnson (NYSE:JNJ), and Altria Group, Inc. (NYSE:MO), elite hedge funds are piling into Guess’, Inc. (NYSE:GES).
5. BP p.l.c. (NYSE:BP)
Dividend Yield as of April 1: 4.36%
P/E Ratio as of April 1: 13.47
Number of Hedge Fund Holders: 26
BP p.l.c. (NYSE:BP) is a London-based energy company that operates worldwide via four main segments – Gas & Low Carbon Energy, Oil Production & Operations, Customers & Products, and Rosneft.
On February 10, BP p.l.c. (NYSE:BP) declared a $0.3276 per share quarterly dividend, in line with previous. The dividend was paid on March 25, to shareholders of record on February 18. The company’s dividend yield as of April 1 came in at 4.36%.
BP p.l.c. (NYSE:BP) posted its fourth quarter results on February 8. The company announced earnings per share of $1.23, beating estimates by $0.09. Revenue over the period jumped 12.87% year-over-year to $50.55 billion, exceeding analysts’ expectations by $26.07 billion.
Deutsche Bank analyst James Hubbard maintained a Buy recommendation on BP p.l.c. (NYSE:BP) but lowered the price target to 450 GBp from 455 GBp on March 23.
According to the Q4 database of Insider Monkey, 26 hedge funds placed long calls on BP p.l.c. (NYSE:BP), compared to 29 funds in the earlier quarter. The total stakes owned in Q4 amounted to $1.2 billion. Fisher Asset Management is the biggest shareholder of the company, with 13.7 million shares worth over $367 million.
4. Kellogg Company (NYSE:K)
Dividend Yield as of April 1: 3.62%
P/E Ratio as of April 1: 14.81
Number of Hedge Fund Holders: 31
Kellogg Company (NYSE:K) is a Michigan-based multinational company that manufactures and markets convenience foods. The company sells its products under brands such as Kellogg’s, Pringles, Crunchy Nut, Nutri-Grain, Special K, Pop-Tarts, Coco Pops, Frosties, and more.
On February 10, Kellogg Company (NYSE:K) reported earnings for the fourth quarter of 2021. The company announced an EPS of $0.83, topping market estimates by $0.04. Kellogg Company (NYSE:K)’s Q4 revenue amounted to $3.42 billion, outperforming consensus by $28.64 million.
UBS analyst Cody Ross on March 30 initiated coverage of Kellogg Company (NYSE:K) with a Buy rating and a $73 price target as part of a broader research note on Packaged Goods. The analyst observed that consumers are presently “the healthiest they have been in some time”, with record high net-worth, increasing salaries, and strong balance sheets. The analyst further noted that Kellogg Company (NYSE:K) exiting its Snacks segment has enabled it to stabilize its position in developed markets.
According to Insider Monkey’s Q4 database, 31 hedge funds were bullish on Kellogg Company (NYSE:K), up from 22 funds in the prior quarter. Renaissance Technologies is the leading stakeholder of the company, owning 2.1 million shares worth $139.2 million.
3. Omnicom Group Inc. (NYSE:OMC)
Dividend Yield as of April 1: 3.24%
P/E Ratio as of April 1: 13.53
Number of Hedge Fund Holders: 33
Omnicom Group Inc. (NYSE:OMC) is a New York-based company that provides corporate communications services, advertising, customer relationship management, and public relations services. Omnicom Group Inc. (NYSE:OMC)’s dividend yield on April 1 came in at 3.24%.
The company published its fourth quarter results on February 8. Omnicom Group Inc. (NYSE:OMC) posted an EPS of $2.11, beating estimates by $0.40. The $3.86 billion revenue also outperformed estimates by $184.27 million.
On March 18, Argus analyst Kristina Ruggeri upgraded Omnicom Group Inc. (NYSE:OMC) to Buy from Hold with a $95 price target. According to the analyst, the company benefits from current trends in e-commerce marketing and data analytics while expanding its capabilities via acquisitions. The analyst also stated that Omnicom Group Inc. (NYSE:OMC) pays an “attractive” dividend yield and has solid share repurchase programs. She also increased her FY22 EPS estimates by $0.30 to $6.70.
Omnicom Group Inc. (NYSE:OMC) declared on February 15 a $0.70 per share quarterly dividend. The dividend is payable on April 8, for shareholders of record on March 10.
According to Insider Monkey’s fourth quarter database, 33 hedge funds were bullish on Omnicom Group Inc. (NYSE:OMC), up from 25 funds in the last quarter. Cliff Asness’ AQR Capital Management is the biggest shareholder of the company, owning 900,756 shares valued at roughly $66 million.
2. Citizens Financial Group, Inc. (NYSE:CFG)
Dividend Yield as of April 1: 3.33%
P/E Ratio as of April 1: 9.08
Number of Hedge Fund Holders: 36
Headquartered in Providence, Rhode Island, Citizens Financial Group, Inc. (NYSE:CFG) operates as the bank holding company for Citizens Bank, specializing in retail and commercial banking products and services.
On March 28, Morgan Stanley analyst Betsy Graseck maintained an Overweight rating on Citizens Financial Group, Inc. (NYSE:CFG), but reduced the price target to $62 from $69. The analyst stated that in the war backdrop, higher inflation increases credit risk and slows economic growth, all of which led the firm to downgrade its industry view to In-Line from Attractive and slash price targets across the Banking group.
Citizens Financial Group, Inc. (NYSE:CFG) declared a $0.3968 per share quarterly dividend, a 1.7% increase from its prior dividend of $0.39. The dividend will be paid on April 6, for shareholders of record on March 22. Citizens Financial Group, Inc. (NYSE:CFG)’s dividend yield on April 1 came in at 3.33%.
According to the Q4 database of Insider Monkey, 36 hedge funds were long Citizens Financial Group, Inc. (NYSE:CFG), compared to 34 funds in the prior quarter. Marshall Wace LLP is the largest shareholder of the company, with 3.8 million shares worth $183.2 million.
1. Exxon Mobil Corporation (NYSE:XOM)
Dividend Yield as of April 1: 4.20%
P/E Ratio as of April 1: 15.58
Number of Hedge Fund Holders: 71
Exxon Mobil Corporation (NYSE:XOM) is a Texas-based producer of crude oil, petroleum, petrochemicals, and natural gas in the United States and international markets. Exxon Mobil Corporation (NYSE:XOM) delivers a dividend yield of 4.20% as of April 1.
Elite hedge funds are exceedingly bullish on Exxon Mobil Corporation (NYSE:XOM). In Q4 2021, 71 hedge funds were bullish on the company, compared to 64 funds in the prior quarter. GQG Partners is the biggest shareholder of the company, with 32.3 million shares worth approximately $2 billion.
On January 26, Exxon Mobil Corporation (NYSE:XOM) declared a quarterly dividend of $0.88 per share. The dividend was distributed on March 10, for shareholders of record on February 10.
Barclays analyst Jeanine Wai on March 9 raised the price target on Exxon Mobil Corporation (NYSE:XOM) to $98 from $91 and kept an Overweight rating on the shares. The analyst updated the company’s model to reflect the current gas price strip, as well as the updated Permian production and capital expenditure assumptions.
Here is what First Eagle Investment Management has to say about Exxon Mobil Corporation (NYSE:XOM) in its Q2 2021 investor letter:
“Leading contributors in the First Eagle Global Fund this quarter included Exxon Mobil Corporation. The continued recovery in oil prices as economies reopen helped fuel another strong performance across the energy complex, including shares of Exxon Mobil. Exxon Mobil recently lost a proxy fight with an activist investor that took three of the company’s 12 board seats. While the press was focused on the investor’s concerns over Exxon Mobil’s long term energy transformation strategy, other factors fundamental to shareholder returns—like capital discipline and balance sheet management—were also at play.”
You can also take a look at 10 Fertilizer Stocks to Buy Today and 10 Stocks to Buy Before the Next Recession.
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Disclosure: None. 10 Undervalued Dividend Stocks to Buy in 2022 is originally published on Insider Monkey.
