We recently published a list of 13 Best Cheap Dividend Stocks To Buy Right Now. In this article, we are going to take a look at where Bristol-Myers Squibb Company (NYSE:BMY) stands against other best cheap dividend stocks to buy right now.
Value investing has remained a favored approach among investors for years, largely popularized by Warren Buffett, who continues to focus on stocks he believes are undervalued relative to their true worth. While growth investing has dominated market sentiment in recent times, the long-term performance of value stocks remains solid.
Former professor-turned-investment manager Josef Lakonishok and value investing specialist David Dreman strongly advocated for a patient, long-term approach to investing, believing that steady, disciplined strategies often outperform rapid, high-growth ones. Their research indicated that value investing tends to outperform growth strategies approximately 70% of the time, regardless of a company’s size. After analyzing companies across different market capitalizations, they found that, over long periods, value stocks consistently generated average annual returns slightly above 7%, surpassing the performance of growth stocks.
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Much of the Russell Index’s gains this year have been concentrated in a handful of mega-cap stocks, particularly the tech-heavy “Magnificent Seven.” These companies now make up over 25% of the index and were responsible for nearly 40% of its 21% total return in the first three quarters of 2024. However, market dynamics have started to shift in recent months, with value stocks gaining traction. In the third quarter, the Russell Value Index surged 9.4%, significantly outpacing the 3.2% rise in the Russell Growth Index, according to a report from BlackRock.
The report highlighted several key drivers behind this trend. Strong employment numbers, easing inflation, and the Federal Reserve’s move to start cutting interest rates have bolstered investor confidence, prompting a broader market rally beyond the dominant mega-cap stocks. Additionally, sectors that are more sensitive to interest rates—such as financials, utilities, and real estate investment trusts (REITs)—have benefited from a lower-rate environment.
Analysts advise investors against favoring a single investment strategy. JP Morgan noted that large technology companies are widely held both individually and within major indices. As a result, significant market fluctuations can occur when developments—such as the recent introduction of a Chinese large language model in late January—impact the sector. However, the firm does not recommend actively betting against the dominant tech giants that hold the largest weightings in the broader market.
Drawing comparisons to the dot-com bubble of 2000, JP Morgan highlighted that the leading companies of that era traded at forward price-to-earnings ratios between 50x and 75x. In contrast, most of today’s mega-cap stocks are valued at roughly half of those peak multiples. The firm further advised investors to diversify beyond growth equities, particularly by considering financial stocks. Alongside industrials, a balanced approach between growth and value stocks remains its preferred strategy.
Stocks that pay dividends are often associated with value investing, as they generally provide higher yields and demonstrate stronger financial stability compared to growth stocks. According to a report by S&P Dow Jones Indices, investment strategies centered on generating income tend to share traits commonly found in value stocks. Companies with attractive dividend yields and lower valuations often capture investor attention.
However, the report also pointed out that the Dividend Aristocrats Index does not adhere strictly to a value-focused approach. Instead, it maintains a mix of both growth and value stocks. A long-term review of the index, covering the period from 1999 to 2022, indicated that, on average, 59.04% of its holdings were classified as value stocks, while 40.94% fell into the growth category.
Our Methodology
For this list, we used a Finviz screener and identified dividend companies with forward P/E ratios below 15, as of March 6. The low price-to-earnings ratio shows that they are traded below their intrinsic value. From the resultant dataset, we selected 13 companies that have the highest number of hedge fund investors at the end of Q4 2023. The stocks are ranked in ascending order of hedge funds having stakes in them.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A pharmacy shelves stocked with pharmaceutical drugs awaiting distribution.
Bristol-Myers Squibb Company (NYSE:BMY)
Number of Hedge Fund Holders: 88
Forward P/E Ratio: 8.83
Bristol-Myers Squibb Company (NYSE:BMY) is a New York-based pharmaceutical industry company. In the fourth quarter of 2024, the company reported revenue of $12.34 billion, reflecting a 7.5% increase from the previous year. Its Growth Portfolio performed exceptionally well, with revenue climbing 21% to $6.4 billion. This strong performance was driven by rising demand for key treatments such as Reblozyl, Breyanzi, and Camzyos, which saw annual sales growth of 71%, 125%, and 101%, respectively.
By the end of the year, Bristol-Myers Squibb Company (NYSE:BMY) maintained a solid financial position with over $10.3 billion in cash and cash equivalents. As one of the best dividend stocks, BMY has consistently paid dividends for 93 years and has raised its payouts for 16 consecutive years. The company’s quarterly dividend comes in at $0.62 per share and has a dividend yield of 4.12%, as of March 6.
Bristol-Myers Squibb Company (NYSE:BMY) remains focused on developing new molecular entities while strategically acquiring businesses to enhance its research and development capabilities. This approach strengthens its competitive position, fosters innovation, and reinforces its leadership in the pharmaceutical industry. The company was a part of 88 hedge funds at the end of Q4 2024, up from 70 in the previous quarter, as per Insider Monkey’s database. The stakes owned by these hedge funds are worth over $3.2 billion.
Overall, BMY ranks 5th on our list of best cheap dividend stocks to buy right now. While we acknowledge the potential for BMY as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BMY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.