In this article, we are going to discuss the top 12 undervalued dividend stocks to buy now.
Morningstar Chief US Market Strategist David Sekera wrote, “Stocks are undervalued, but for a reason,” in his Q2 2026 stock market outlook. He said the ongoing war in Iran has added another layer of uncertainty to the market, while weaker macroeconomic conditions are also starting to appear. Sekera believes investors should use market volatility to their advantage. His view is that investors can take profits from overvalued stocks and move that money into stocks trading below their fair value.
A Forbes report said undervalued stocks can provide downside protection along with long-term growth potential. That mix becomes especially appealing when the market outlook depends on uncertain developments, including how long and severe the US-Iran conflict could become.
At the same time, the report noted that finding truly undervalued stocks is difficult. Many stocks trade cheaply for legitimate reasons, and only a small number are actually overlooked by the market.
Investors continue to debate growth versus value stocks, with many analysts strongly leaning toward one strategy or the other. Hartford Funds took a more balanced approach and argued that both styles have an important place in a portfolio. The report pointed out that growth and value stocks have historically moved in cycles. Growth stocks dominated during the dotcom boom in the 1990s and continued to perform well for years afterward. Value stocks, on the other hand, performed better between 2001 and 2008, a period when investors paid closer attention to dividends and stock valuations. Hartford Funds said this back-and-forth pattern shows the benefit of owning both growth and value investments rather than relying too heavily on one category.
Fidelity Investments also explained that value stocks usually trade at prices that look low compared to a company’s earnings and profitability. Many of these businesses are large, established companies with stable financial positions. The firm added that value stocks are often more likely to pay dividends because mature companies may not need to reinvest as much excess cash into expansion as fast-growing companies do.
Given this, we will take a look at some of the most undervalued dividend stocks.
Photo by Viacheslav Bublyk on Unsplash
Our Methodology
To collect data for this article, we used several screeners to identify stocks with a forward P/E ratio of less than 15, as of May 17. We then further shortlisted stocks that boast an annual dividend yield of at least 3%. Finally, we limited our selection to companies that have recently reported noteworthy developments likely to impact investor sentiment. The following are the Most Undervalued Dividend Stocks to Buy Now.
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12. Target Corporation (NYSE:TGT)
Forward P/E Ratio: 14.95
Dividend Yield as of May 17: 3.75%
Target Corporation (NYSE:TGT) operates as a general merchandise retailer with stores in all 50 states and the District of Columbia.
On May 15, JPMorgan raised its price target on Target Corporation (NYSE:TGT) from $120 to $129, but kept a ‘Neutral’ rating on the shares. The revised target, which reflects an upside of over 6% from the current share price, comes after the analyst firm updated its estimates in the retailing group as part of a Q1 earnings preview.
According to JPMorgan, the pressure from higher energy prices was outweighed by the tax stimulus in the quarter. However, the firm expects minimal revisions to guidance, since the key back-to-school and holiday season are still ahead in a “high uncertainty” environment.
Target Corporation (NYSE:TGT) expects an adjusted EPS in the range of $7.50 to $8.50 for FY 2026, indicating a YoY growth of 5% to 6% at the midpoint. Moreover, the company is targeting to open more than 30 new stores this year, and over 300 new stores by 2035.
Target Corporation (NYSE:TGT) was recently included in our list of the 14 Best Dividend Stocks to Buy for Steady Growth.
11. Exelon Corporation (NASDAQ:EXC)
Forward P/E Ratio: 14.91
Dividend Yield as of May 17: 3.87%
Exelon Corporation (NASDAQ:EXC) is one of the country’s largest utility companies, serving more than 10 million customers through six fully regulated transmission and distribution utilities.
On May 15, TD Cowen trimmed its price target on Exelon Corporation (NASDAQ:EXC) from $51 to $49, but kept a ‘Hold’ rating on the shares. The lowered target, which still reflects an upside of 13% from the current price level, comes after the analyst firm updated its models in the utilities group following the Q1 earnings season.
TD Cowen increasingly expects utilities to deliver incremental growth on a cost-neutral basis. The firm expects a faster pace of capital plan increases, but cautions against the issue of over-promising.
The target cut comes despite Exelon Corporation (NASDAQ:EXC) reporting strong results for its Q1 2026 on May 6, with the company exceeding estimates in both earnings and revenue. The company reaffirmed its operating earnings guidance of $2.81 to $2.91 per share for FY 2026. Moreover, the utility is targeting an annualized earnings growth of 5% to 7% through 2029, with the expectation of being near the top end of that range.
Exelon Corporation (NASDAQ:EXC) is forecasting $41.7 billion of capital expenditures over the next four years, resulting in expected rate base growth of 7.9%.
10. Chevron Corporation (NYSE:CVX)
Forward P/E Ratio: 14.22
Dividend Yield as of May 17: 3.63%
Chevron Corporation (NYSE:CVX) manufactures and sells a range of high-quality refined products, including gasoline, diesel, marine and aviation fuels, premium base oil, finished lubricants, and fuel oil additives.
It was reported on May 15 that Berkshire Hathaway has trimmed its stake in Chevron Corporation (NYSE:CVX) by selling around $8 billion worth of its stock in the first quarter. The Omaha-based conglomerate capitalized on the soaring oil prices, which pushed the oil giant’s stock to a record high.
The transaction, which occurred at a volume-weighted average price of $182.59 a share, reduced Berkshire’s position in Chevron by around a third. However, despite the sale, the conglomerate still owns a 4.2% stake in the integrated energy major and remains its fourth-largest shareholder.
Chevron Corporation (NYSE:CVX)’s upstream business received a significant boost from the oil price rally amid the Iran war, helping the company exceed profit estimates in its recent Q1 report. The oil and gas giant revealed that it is less exposed to the Middle East war compared to its peers, as less than 5% of its production comes from the region.
With an impressive dividend yield of 3.63%, Chevron Corporation (NYSE:CVX) was also recently included in our list of the 12 Best Blue Chip Dividend Stocks to Buy Now.
9. AbbVie Inc. (NYSE:ABBV)
Forward P/E Ratio: 14.14
Dividend Yield as of May 17: 3.31%
AbbVie Inc. (NYSE:ABBV) is a research-based biopharmaceutical company that engages in the research and development, manufacturing, commercializing, and sale of medicines and therapies worldwide.
On May 15, Evercore ISI slightly trimmed its price target on AbbVie Inc. (NYSE:ABBV) from $236 to $235, but maintained its ‘Outperform’ rating on the shares. The lowered target, which still indicates an upside of over 12% from the current price level, comes after the company reported mixed results for its Q1 last month.
AbbVie Inc. (NYSE:ABBV) reported adjusted earnings of $2.65 per share for the first quarter, falling slightly below estimates by $0.02. However, its revenue grew by over 12% YoY to $15 billion and exceeded estimates by $280 million. The strong revenue growth was driven by the demand for the company’s newer immunology drugs Skyrizi and Rinvoq, as it continues to move beyond former top-selling treatment Humira.
AbbVie Inc. (NYSE:ABBV) also raised its full-year 2026 adjusted EPS guidance to a range of $14.08 to $14.28, from $13.96 to $14.16 previously. Moreover, the company now expects total net revenues of approximately $67.3 billion for the year, up from its prior forecast of around $67 billion.
8. Enterprise Products Partners L.P. (NYSE:EPD)
Forward P/E Ratio: 13.09
Dividend Yield as of May 17: 5.61%
Enterprise Products Partners L.P. (NYSE:EPD) is one of the largest publicly traded partnerships and a leading North American provider of midstream energy services to producers and consumers of natural gas, NGLs, crude oil, refined products, and petrochemicals.
On May 12, JPMorgan analyst Jeremy Tonet slightly boosted the firm’s price target on Enterprise Products Partners L.P. (NYSE:EPD) from $40 to $41, while maintaining a ‘Neutral’ rating on the shares. The target bump indicates an upside of almost 5% from the current levels.
Enterprise Products Partners L.P. (NYSE:EPD) reported mixed results for its Q1 2026 last month, with the company’s adjusted earnings of $0.73 per share falling slightly below expectations by $0.01. However, its revenue of $14.4 billion managed to top estimates by $770 million, despite a YoY decline of 6.7%.
Enterprise Products Partners L.P. (NYSE:EPD) generated EBITDA of $2.7 billion in the first quarter, up 10% over the last year. Moreover, the company delivered record volumes across most of its integrated system, driven by the new assets placed in service over the past year, including the Bahia NGL pipeline, fractionator 14, and three Permian natural gas processing plants.
7. Shell plc (NYSE:SHEL)
Forward P/E Ratio: 13.08
Dividend Yield as of May 17: 3.46%
Next on our list of the Most Undervalued Dividend Stocks is Shell plc (NYSE:SHEL). It is an integrated energy company with operations spanning exploration, production, refining, marketing, and chemical manufacturing, alongside growing investments in biofuels and hydrogen.
On May 12, Morgan Stanley lowered its price target on Shell plc (NYSE:SHEL) from £3,589 to £3,495, but maintained its ‘Equal Weight’ rating on the shares. The trimmed target still represents an upside of almost 10% from the current price level.
The move comes despite Shell plc (NYSE:SHEL) exceeding profit estimates in its Q1 2026 report on May 7. The energy giant’s profit of $6.9 billion was its highest in two years, boosted by gains amid the Iran war. However, its revenue of $69.7 billion fell below expectations by over $10.6 billion. Moreover, Shell’s total oil and gas production fell 4% from the previous quarter, mainly due to the outages in Qatar.
The strong Q1 profit prompted Shell plc (NYSE:SHEL) to raise its quarterly dividend by 5% to $0.7812 per share. However, the company reduced its quarterly share buyback program from $3.5 billion to $3 billion to bolster its balance sheet, since a short-term liquidity squeeze after the ongoing energy supply disruptions increased its debt.
6. Altria Group, Inc. (NYSE:MO)
Forward P/E Ratio: 12.17
Dividend Yield as of May 17: 5.80%
Altria Group, Inc. (NYSE:MO) manufactures and sells smokeable and oral tobacco products in the United States.
On May 15, Altria Group, Inc. (NYSE:MO) declared a quarterly dividend of $1.06 per share. The dividend is payable on July 10 to all shareholders as of the June 15 record. The company has increased its payouts for 56 consecutive years and maintains the prestigious title of a Dividend King. MO currently boasts a robust annual dividend of 5.80%.
Altria Group, Inc. (NYSE:MO) reported strong results for its Q1 2026 last month, exceeding expectations in both profits and revenue. The company’s adjusted EPS grew by 7.3% YoY to $1.32, while its revenue also surged by over 5% YoY to around $4.8 billion.
Altria Group also reaffirmed its target to deliver adjusted diluted EPS in the range of $5.56 to $5.72 for FY 2026, representing a growth rate of 2.5% to 5.5% from a base of $5.42 in 2025.
While we acknowledge the potential of MO as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than MO and that has 100x upside potential, check out our report about the cheapest AI stock.
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