- Markets are still trading near record levels, but signs of strain are starting to surface
- Dividend stocks may offer relative stability if risk appetite fades
- Which dividend stocks should you watch right now?
Markets are still trading close to record highs, but the tension is easy to feel. moved above $5,100 an ounce this week, setting new records, while lost nearly 22% over two sessions after issuing weak forecasts.
These are only a few signals. More analysts are now warning about the risk of a major market correction, even though markets have avoided a sharp fall for about nine months.
Concerns also come from geopolitics. The United States taking control of Venezuela, tensions around Greenland, and public unrest in Iran have all added to the uneasy mood in global markets.
What stands out is that these same events, which have helped push gold higher, have barely moved equity markets. Stocks have stayed resilient despite the noise.
That raises the risk that the bull market may be running on limited support. With fourth-quarter earnings season underway, a weak result from a major company could quickly change sentiment and trigger a broader pullback.
Several large companies are reporting in the coming days, including Microsoft (NASDAQ:MSFT), Meta (NASDAQ:META), and Tesla (NASDAQ:TSLA), after the market close on Wednesday, followed by Apple (NASDAQ:AAPL). Investors may want to stay alert this week and be ready to respond if markets begin to turn lower.
For this reason, dividend stocks stand out because they share a few key qualities:
- Dividend stocks provide income regardless of share price movements
- Dividend stocks are mostly issued by financially sound companies that withstand crises and have healthy balance sheets
- Automatic reinvestment of dividends allows investors to take advantage of the power of compound interest
- Dividend stocks attract a more stable shareholder base, which is less inclined to sell at the slightest sign of turbulence
That said, picking the right dividend stocks still matters. A high dividend yield alone does not guarantee safety. It helps to look for companies with strong balance sheets, a long track record of paying dividends, and a history of gradual increases. Valuation also matters, since even reliable dividend stocks can disappoint if bought at stretched prices.
10 Undervalued Dividend Stocks to Weather Turbulent Markets
To narrow the list, we used the Investing.com stock screener to find companies that meet these requirements.
Specifically, we applied the following filters:
- Dividend yield of more than 5%
- Uninterrupted dividend payments for at least 10 years
- Dividends increasing over 5 years
- Payout ratio below 50%
- Upside potential of more than 20% according to InvestingPro Fair Value, which synthesizes several valuation models
This research has enabled us to identify 10 opportunities:
- Are you subscribed to InvestingPro with a Pro+ plan? Click here to access this saved search on the screener
- You have a Pro plan and would like to switch to Pro+? Click here
These stocks offer dividend yields ranging from 5% to 10.4% and appear undervalued by 24.5% to 57%, based on InvestingPro’s Fair Value estimates.
There are also other ways to identify attractive stocks. Prebuilt screening tools can help narrow options quickly by applying a ready-made set of criteria with a single click.
These searches cover themes like value, growth, quality, and defensive stocks, making it easier for investors with different goals to find companies that match their strategy.
Please note that some of these pre-configured searches are available only to InvestingPro subscribers with a PRO+ plan.
If you’re not yet an InvestingPro subscriber and want to explore the opportunities mentioned in this article, along with access to InvestingPro tools, you can now take advantage of the New Year’s sale by clicking the button below.
The features mentioned in this article are far from being the only InvestingPro tools useful for market success. In fact, InvestingPro offers a wide range of tools that enable investors to always know how to react in the stock market, regardless of market conditions. These include:
- AI-managed stock market strategies that are re-evaluated monthly.
- 10 years of historical financial data for thousands of global stocks.
- A database of investor, billionaire, and hedge fund positions.
- And many other tools that help tens of thousands of investors outperform the market every day!
Tens of thousands of investors are already using InvestingPro to outperform the market. Why shouldn’t you?
Claim sale now!
Disclaimer: This article is written for informational purposes only. It is not intended to encourage the purchase of assets in any way, nor does it constitute a solicitation, offer, recommendation or suggestion to invest. I would like to remind you that all assets are evaluated from multiple perspectives and are highly risky, so any investment decision and the associated risk belongs to the investor. We also do not provide any investment advisory services.
