In this article, we discuss 11 oversold dividend stocks to invest in. You can skip our detailed analysis of dividend stocks and their performance over the years, and go directly to read 5 Oversold Dividend Stocks to Invest In.
Dividend investing stands as a highly significant investment strategy for generating reliable and stable cash flow. Over the years, dividend stocks demonstrated their ability to outperform the broader market on several occasions. This makes them an attractive choice for investors seeking both income and potential long-term growth. Moreover, dividend stocks have represented a significant portion of overall market returns. We also reported Hartford Fund’s data which revealed that dividends have accounted for approximately 41% of the index's total return on average from 1930 to 2022.
Though investors favored tech growth stocks in early 2023, analysts believe that dividend stocks may make a comeback due to the potential for a mild recession. On July 18, Bank of America released a global fund manager survey indicating that sentiment has turned more bearish. The majority consensus is now leaning towards a mild recession in the last quarter of 2023. The main concerns cited by respondents include potential risks related to inflation, policy mistakes, and a credit crunch. To navigate this bearish sentiment, analysts advise adding dividend-paying stocks to portfolios as these stocks historically perform better during economic downturns compared to non-dividend ones.
Dividend stocks are not completely recession-proof, but they tend to be more stable compared to high-growth or speculative stocks when the economy is going through a downturn. Last year’s bear market also showed a strong outperformance of dividend stocks in comparison with other asset classes. The S&P 500 Dividend Aristocrat index declined by 6.47% in 2022, whereas the S&P 500 recorded its worst performance since 2008, falling by over 19%. Investors often pay attention to companies that have raised their dividends for long periods of time rather than those with high yields. The Procter & Gamble Company (NYSE:PG), Colgate-Palmolive Company (NYSE:CL), and PepsiCo, Inc. (NASDAQ:PEP) are some of the best dividend stocks because of their continuous commitment to shareholders for decades.
When speaking about economic downturns, these periods can negatively impact investor confidence, leading to widespread selling across various stocks and causing some to become oversold. Relative Strength Index, introduced by J. Welles Wilder Jr. in 1978, is a popular technical analysis indicator used to measure 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 July 30.
11 Oversold Dividend Stocks to Invest In
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Our Methodology:
For this list, we used a Finviz stock screener and looked for dividend stocks with a 14-day Relative Strength Index (RSI) below 30 as of July 30. An RSI below 30 suggests that the stock is oversold. The stocks are ranked in descending order of their RSI.
Exponent, Inc. (NASDAQ:EXPO) is a California-based engineering and scientific consulting firm. The company provides related businesses and products to businesses, insurance companies, and law firms. In the second quarter of 2023, the company reported revenue of roughly $130 million, which showed a 9.67% growth from the same period last year. For the first half of 2023, the company returned $27.7 million to shareholders through dividends, which makes it one of the best dividend stocks on our list.
On July 28, Exponent, Inc. (NASDAQ:EXPO) declared a quarterly dividend of $0.26 per share, which was in line with its previous dividend. In February this year, the company grew its dividend for the ninth consecutive year. The stock has a dividend yield of 1.17%, as of July 30. It can be added to dividend portfolios alongside The Procter & Gamble Company (NYSE:PG), Colgate-Palmolive Company (NYSE:CL), and PepsiCo, Inc. (NASDAQ:PEP).
At the end of Q1 2023, 23 hedge funds in Insider Monkey's database reported having stakes in Exponent, Inc. (NASDAQ:EXPO), up from 18 in the previous quarter. These stakes have a consolidated value of over $92.3 million. Ken Griffin's Citadel Investment Group was the company's leading stakeholder in Q1.
Conestoga Capital Advisors mentioned Exponent, Inc. (NASDAQ:EXPO) in its Q1 2023 investor letter. Here is what the firm has to say:
“Exponent, Inc. (NASDAQ:EXPO): Founded in 1967 and headquartered in Menlo Park, CA, EXPO is a global engineering and consulting company that specializes in the analysis of products, people, property, processes and finances related to litigation, product recall, regulatory compliance and development and design. EXPO has over 750 employees and more than 450 of those have PhD’s in their field of expertise. EXPO benefits from its breadth of services, offering over 90 disciplines versus a typical competitor with five or less. EXPO has been a steady grower that generates a material amount of cash flow, which has historically been used to benefit shareholders. With litigation and high profile accidents (BP Oil Spill, DeflateGate, Toyota Unexpected Acceleration Recall, etc.) as the source of their demand, the company operates a business model that is less sensitive to the macro economy. EXPO is also held in our Small Cap and SMid Cap Growth strategies.”
Equifax Inc. (NYSE:EFX) is an American consumer credit company that provides information solutions and services to businesses, consumers, and governments. It is one of the best dividend stocks on our list as it has paid regular dividends to shareholders since 1987. The company currently pays a quarterly dividend of $0.39 per share for a dividend yield of 0.77%, as recorded on July 30.
Equifax Inc. (NYSE:EFX) generated $1.32 billion in revenues in the second quarter of 2023, which fell in line with its revenue in the same period last year. For the first half of the year, the company posted an operating cash flow of $413 million, up significantly from $76.8 million in the prior-year period. The stock's 14-day Relative Strength Index on July 30 came in at 29.
As of the close of Q1 2023, 30 hedge funds in Insider Monkey's database reported having investments in Equifax Inc. (NYSE:EFX), growing from 26 in the previous quarter. The total value of these stakes is over $2.23 billion.
HCA Healthcare, Inc. (NYSE:HCA) is a Tennessee-based leading healthcare provider. The company operates a vast network of hospitals, surgery centers, and other healthcare facilities across the country. HCA is one of the most oversold stocks on our list with a 14-day RSI of 28.8, as of July 30.
In the second quarter of 2023, HCA Healthcare, Inc. (NYSE:HCA) reported a strong cash position. Its operating cash flow for the quarter amounted to over $2.475 billion and had over $862 million available in cash and cash equivalents.
HCA Healthcare, Inc. (NYSE:HCA), one of the best dividend stocks on our list, currently pays a quarterly dividend of $0.60 per share. The stock's dividend yield on July 30 came in at 0.88%.
The number of hedge funds tracked by Insider Monkey owning stakes in HCA Healthcare, Inc. (NYSE:HCA) grew to 65 in Q1 2023, from 64 in the previous quarter. The collective value of these stakes is roughly $2.8 billion.
Baron Funds mentioned HCA Healthcare, Inc. (NYSE:HCA) in its recently-published Q2 2023 investor letter. Here is what the firm has to say:
“The flip side of higher medical utilization trends is that health care providers and medical device companies will benefit. We own HCA Healthcare, Inc. (NYSE:HCA), one of the nation’s largest providers of health care services, with 182 hospitals and 2,300 ambulatory sites of care in 20 states and the U.K. We own several medical device companies that should benefit in the short term from procedure recovery and in the long term from new product innovation and increasing demand driven by an aging global population and a higher disease burden from chronic diseases. For the most part, our investments are in companies addressing non-elective procedures, which makes them less likely to be deferred in a recession.”
Clearway Energy, Inc. (NYSE:CWEN) is an American renewable energy company that operates, develops, and acquires clean energy assets in the country. On May 30, the company declared a 1.9% hike in its quarterly dividend to $0.3818 per share. This marked the company's 13th consecutive quarter of dividend growth, which makes it one of the best dividend stocks on our list. As of July 30, the stock has a dividend yield of 5.81%.
At the end of March 31, 25 hedge funds tracked by Insider Monkey reported having stakes in Clearway Energy, Inc. (NYSE:CWEN), compared with 27 in the previous quarter. Their collective stake value is over $106.1 million.
The Shyft Group, Inc. (NASDAQ:SHYF) is next on our list of the best dividend stocks. The company manufactures specialty vehicles and also specializes in a wide range of purpose-built vehicles and vehicle bodies. It serves various industries and markets with its customized transportation solutions.
In the second quarter of 2023, The Shyft Group, Inc. (NASDAQ:SHYF)'s revenue declined by 3.1% on a year-over-year basis at $225.1 million However, its operating cash flow for the quarter jumped to $29.7 million, from an outflow of $8.9 million in the prior-year period. It also returned $1.8 million to shareholders through dividends, which makes it one of the best dividend stocks on our list.
The Shyft Group, Inc. (NASDAQ:SHYF) currently pays a quarterly dividend of $0.05 per share and has a dividend yield of 1.32%, as of July 30.
Insider Monkey's database of Q1 2023 showed that 17 hedge funds owned stakes in The Shyft Group, Inc. (NASDAQ:SHYF), up from 16 in the previous quarter. These stakes have a consolidated value of over $97.5 million. With over 1.2 million shares, Driehaus Capital was the company's leading stakeholder in Q1.
Luxfer Holdings PLC (NYSE:LXFR) is a UK-based specialty vehicle manufacturer that designs, builds, and sells a wide range of purpose-built vehicles and vehicle bodies. On June 29, the company declared a quarterly dividend of $0.13 per share, which was consistent with its previous dividend. The stock offers a dividend yield of 4.15%, as of July 30. The Procter & Gamble Company (NYSE:PG), Colgate-Palmolive Company (NYSE:CL), and PepsiCo, Inc. (NASDAQ:PEP) are some other popular dividend stocks grabbing investors' attention.
In the second quarter of 2023, Luxfer Holdings PLC (NYSE:LXFR) reported revenue of $110.4 million, which showed a 0.8% growth from the same period last year. The company's free cash flow for the quarter came in at $10.2 million, compared to a $16.4 million outflow in the prior-year period. The company's dividend payments amounted to over $3.5 million in Q2, which places it as one of the best dividend stocks on our list.
Luxfer Holdings PLC (NYSE:LXFR) was a part of 14 hedge fund portfolios in Q1 2023, up from 13 in the preceding quarter, as per Insider Monkey's database. The stakes held by these funds have a collective value of over $112.5 million.