In this article, we discuss 12 oversold dividend stocks to buy now. You can skip our detailed analysis of dividend stocks and their previous performance, and go directly to read 5 Oversold Dividend Stocks To Buy Now.
The S&P 500 is consistently recording gains this year, having risen for four months in a row. According to Bank of America’s chief global strategist Michael Hartnett, the remarkable returns achieved by the S&P 500 over a short time period have been rare and only occurred ten times since the 1930s. He further said that these returns materialized either during the aftermath of the recession, like the ones in 2009 and 2020, or at the onset of a bubble, similar to the situation experienced in 1999. That said, Apple Inc. (NASDAQ:AAPL), which played a significant role in driving the market rally in 2023, has entered the oversold territory this year. The stock is down by 7.63% year-to-date, facing pressures due to concerns over iPhone sales in China and a fine from the European Union, as reported by Bloomberg.
Investors are trying to navigate this directionless market, seeking to maximize their returns by making informed decisions. Over the years, dividend stocks have served as a safeguard against market downturns, making them an appealing option in the current environment. When considering investments in dividend stocks, combining dividend yields with dividend growth can be a good strategy. In our article titled 25 Things Every Dividend Investor Should Know, we referred to data from S&P Dow Jones Indices, which analyzed the performance of the S&P 500 High Yield Dividend Aristocrats. The index tracks the performance of high-yield dividend companies within the S&P 500 Composite 1500 with at least 20 consecutive years of dividend growth. The report revealed that between December 31, 1999, and March 31, 2022, the index outperformed its benchmark index by 140 basis points per month. During this period, the index also surpassed the S&P 500 High Dividend Index by 49 basis points per month.
Our research also showed that dividend stocks have performed better than other asset classes during inflationary periods. We cited data from Hartford Funds, examining the performance of dividend stocks during decades of the 1940s, 1960s, and 1970s when inflation in the US was at its peak. The report highlighted that during these decades the average market returns were below 10%, and dividends contributed 67%, 44%, and 73% to the market’s returns, respectively. One of the main reasons for this performance of dividend stocks can be attributed to the fact that they have the potential to grow over time. The companies that generate more profit may opt to increase their dividends, remaining more committed to their shareholder obligation. The Procter & Gamble Company (NYSE:PG), Colgate-Palmolive Company (NYSE:CL), and PepsiCo, Inc. (NASDAQ:PEP) are some of the best dividend stocks in this regard, returning their capital to shareholders consistently for years.
That said, dividend stocks’ past performance does not guarantee immunity against severe market conditions. During market clampdowns, investors' confidence may decline which triggers widespread selling across various stocks resulting in some becoming oversold. The Relative Strength Index (RSI), introduced by J. Welles Wilder Jr. in 1978, is a technical analysis tool that is used to analyze the speed and change of price movements of a stock. The RSI is calculated based on the average gains and losses over a specific period, typically 14 trading days. However, this period can be adjusted depending on the trader's preference. In this article, we have compiled a list of oversold stocks based on 14-day RSI levels as of March 30.
For this list, we used a Finviz stock screener and looked for dividend stocks with a 14-day Relative Strength Index (RSI) below 40 as of March 30. An RSI below 40 suggests that the stock is oversold. The stocks are ranked in descending order of their RSI. We also mentioned hedge fund sentiment data for these stocks using Insider Monkey's database of 933 hedge funds as of Q4 2023. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).
Jack in the Box Inc. (NYSE:JACK) is a California-based fast-food restaurant chain that is known for its wide variety of fast-food menus. The company started paying dividends in 2014 and has paid regular dividends to shareholders since then. It currently offers a quarterly dividend of $0.44 per share and has a dividend yield of 2.57%, as of March 30.
In the first quarter of 2024, Jack in the Box Inc. (NYSE:JACK) reported revenue of $487.5 million, which beat analysts' estimates by $5.94 million. The company's cash generation remained strong as it generated over $22.6 million in operating cash flow during the quarter and had over $82.5 million available in cash and restricted cash.
The number of hedge funds tracked by Insider Monkey owning stakes in Jack in the Box Inc. (NYSE:JACK) jumped to 21 in Q4 2023, from 14 in the previous quarter. The collective value of these stakes is over $109 million. Among these hedge funds, Millennium Management was the company's leading stakeholder in Q4.
Accenture plc (NYSE:ACN) is a multinational professional services company that offers services in strategy, digital, technology, and operations. On March 21, the company announced a quarterly dividend of $1.29 per share, which was in line with its previous dividend. The company has paid uninterrupted dividends to shareholders since 2005, which makes ACN one of the best dividend stocks on our list. As of March 30, the stock has a dividend yield of 1.49%.
At the end of Q4 2023, 58 hedge funds in Insider Monkey's database reported having stakes in Accenture plc (NYSE:ACN), up from 55 in the previous quarter. These stakes have a total value of nearly $2.4 billion.
10. Brown-Forman Corporation (NYSE:BF-B)
14-Day RSI As of March 30: 35.3
Brown-Forman Corporation (NYSE:BF-B) is next on our list of the best dividend stocks that are oversold. The American beverage company has been paying regular dividends to shareholders for the past 80 years while maintaining a 40-year streak of consistent dividend growth. The company currently offers a quarterly dividend of $0.2178 per share and has a dividend yield of 1.69%, as of March 30.
As of the close of Q4 2023, 21 hedge funds held stakes in Brown-Forman Corporation (NYSE:BF-B), down from 30 in the previous quarter, as per Insider Monkey's database. The consolidated value of these stakes is more than $1 billion. With over 11.6 million shares, Fundsmith LLP was the company's leading stakeholder in Q4.
BCE Inc. (NYSE:BCE) is a Canadian telecommunications and media company, offering services related to wireless communications, internet access, and television. The company's current quarterly dividend comes in at $0.9975 per share for a dividend yield of 8.67%, as of March 30. With 14 years of consistent dividend growth under its belt, BCE is one of the best dividend stocks on our list.
BCE Inc. (NYSE:BCE)'s cash position remained strong in the fourth quarter of 2023. The company generated $2.3 billion in operating cash flow and its free cash flow for the period came in at $913 million.
Insider Monkey's database of Q4 2023 indicated that 19 hedge funds held stakes in BCE Inc. (NYSE:BCE), growing from 15 in the previous quarter. The collective value of these stakes is roughly $85 million.
Methode Electronics, Inc. (NYSE:MEI) is an Illinois-based electronics company that manufactures related components and subsystems. The company's main focus is on innovation and technology in order to deliver high-performance electronic solutions to its consumers. Though the company has not raised its dividends for quite some time now, it has been paying regular dividends to shareholders since 1989, which makes MEI one of the best dividend stocks on our list. It offers a quarterly dividend of $0.14 per share and has a dividend yield of 4.60%, as of March 30.
At the end of December 2023, 14 hedge funds in Insider Monkey's database owned stakes in Methode Electronics, Inc. (NYSE:MEI), compared with 16 in the previous quarter. These stakes are worth over $44 million in total. Among these hedge funds, Royce & Associates was the company's leading stakeholder in Q4.
MillerKnoll, Inc. (NASDAQ:MLKN) is an American company that specializes in the manufacturing of office furniture, equipment, and home furnishings. The company offers a quarterly dividend of $0.1875 per share and has a dividend yield of 3.03%, as recorded on March 30. It has a 52-year run of paying regular dividends to shareholders, which makes MLKN one of the best dividend stocks on our list.
According to Insider Monkey's database of Q4 2023, 19 hedge funds held stakes in MillerKnoll, Inc. (NASDAQ:MLKN), up from 18 in the preceding quarter. These stakes are collectively valued at over $71.2 million.
Cross Timbers Royalty Trust (NYSE:CRT) ranks sixth on our list of the best dividend stocks that are oversold. The royalty trust currently offers a monthly dividend of $0.0193 per share and has a dividend yield of 12.02%, as of March 30.
At the end of the fourth quarter of 2023, Navellier & Associates was the only stakeholder of Cross Timbers Royalty Trust (NYSE:CRT), owning stakes worth $362,209.
