Undervalued shares may experience dividend boosts of up to 35%, according to Morningstar's assessment.
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In a recent analysis, financial research firm Morningstar has identified three undervalued dividend stocks that could be worth considering for investors. These stocks are Johnson & Johnson, Merck, and U.S. Bancorp.
Johnson & Johnson and Merck, both with a Morningstar Rating of 4 stars, are trading below their fair value estimates, signalling undervaluation. Johnson & Johnson is currently trading around 4% below its fair value of $164 per share, offering a trailing dividend yield of 3.20%. Meanwhile, Merck is trading 26% below its fair value of $111 per share, providing a trailing dividend yield of 3.87%.
Johnson & Johnson benefits from a wide economic moat, a diverse revenue base, and a solid pipeline, with low uncertainty and stable dividends. Merck, on the other hand, has a wide moat and a sound balance sheet, with steady future dividends expected despite a recent sales decline affecting its fair value estimation.
U.S. Bancorp also receives a strong moat rating and has a target price of $53, according to Morningstar. The bank's stock dividend was increased by 2% to $2.00 per share, and it offers a dividend yield of 4.00%.
Another notable mention is T-Mobile US, which has recently increased its dividend significantly, according to Morningstar. The telecommunications company's dividend yield is now at 2.00% after a 35% increase.
As for Verizon, the stock is in a nice uptrend, and its dividend yield is 6.0 percent. The company's dividend was increased by 2% to a value of $2.71 per share. Verizon stock offers around 20% potential, making it an attractive option for investors.
In conclusion, Morningstar recommends buying two undervalued dividend stocks – Johnson & Johnson, Merck, and U.S. Bancorp – as well as the U.S. Bancorp stock. It is important to note that all investments come with risks, and investors should conduct their own research before making any investment decisions.
- In the realm of personal-finance and investing, Johnson & Johnson and U.S. Bancorp, both recommended by Morningstar, are currently trading below their fair value estimates, offering potentially profitable investing opportunities for those seeking dividend stocks.
- For individuals interested in expanding their personal-finance portfolio through investing, Merck and U.S. Bancorp, along with Johnson & Johnson, could be of particular interest as they are currently undervalued, offering higher-than-average dividend yields.
