5 Best Undervalued Dividend Stocks to Buy Now

2. The Allstate Corporation (NYSE: ALL)

Number of Hedge Fund Holders: 38

PE Ratio: 11.9

The Allstate Corporation (NYSE: ALL) is an Illinois-based insurance firm founded in 1931. It is ranked second on our list of 10 best undervalued dividend stocks to buy now. Allstate stock has returned more than 44% to investors over the past year. The firm offers property and casualty insurance products mainly in the United States and Canada. Some of the brands it owns include Allstate Protection Plans, Allstate Dealer Services, Allstate Roadside Services, Arity, and Allstate Identity Protection, among others. 

On May 5, The Allstate Corporation (NYSE: ALL) posted a revenue of $12.4 billion for the first quarter of 2021, up more than 34% compared to the same period last year and beating market predictions by $2.24 billion.

At the end of the fourth quarter of 2020, 38 hedge funds in the database of Insider Monkey held stakes worth $828 million in The Allstate Corporation (NYSE: ALL), the same as in the preceding quarter worth $1.2 billion.

In its Q2 2020 investor letter, Generation PMCA, an asset management firm, highlighted a few stocks and The Allstate Corporation (NYSE: ALL) was one of them. Here is what the fund said:

“Allstate, the second largest personal auto and home insurance writer in the U.S., should see earnings expand this year, during a challenging period when most companies aren’t expected to deliver year-over-year earnings growth. Higher mortality rates from coronavirus are being offset by lower mortality outside of virus-related deaths and expense control. In auto, the benefits of lower miles driven due to the pandemic offset auto rebates. Historically, Allstate’s scale and conservative underwriting have translated to superior profitability metrics. The company is on pace to achieve a mid-teen return on equity for ’21, well above peers. However, with shares currently at 1.3x book value, Allstate trades at a discount to competitors. We believe skepticism around recent acquisitions to diversify away from life and auto insurance (e.g., identify theft and warranties) is the reason for its discounted valuation. We expect the company to continue to cast its net further afield given the long-term threat of autonomous vehicles to its automobile franchise. We are comfortable with the strategy, especially since these acquisitions are immaterial. Meanwhile, the company should continue to post peer-beating results. Our FMV estimate is $120.”