As an investor, it is only natural for you to feel inclined towards dividend stocks. Would you not be interested if these stocks are available cheap as well? Some stocks that are trading at attractive prices are great dividend payers as well. Given the volatile nature of the stock market, dividend stocks should be your first priority, as they give you the much-needed stability. If you want to make the maximum out of your investments in the stock market, dividend stocks are the best choice. You can choose to pile on to your returns and secure it in bank deposits, or choose to invest them back into the stock market for long term gains. We will now analyze some good pay-stocks that are trading at low prices due to market reactions.
Risky, but worthy enough to invest
If you are looking for a good dividend stock and are ready to take some risks, you can choose Telefonica (TEF, Financial). This telecom major from Spain has been going through a rough period; however, the future is not so bleak for the company. There were a few things that didn’t go well for the company in the past like the following – drop in the European Union economy, job losses, debts worth $52 billion and a general slowdown ever since the recession in 2008. In order to make amends for these losses, Telefonica is involved in a series of remodelling activities like the following:
- Selling off assets in non-growing economies like Czech Republic and Ireland
- Taking an acquisition worth $9 billion in Vivendi, thereby increasing its presence in Brazil by 30%
- Reorganisation of assets in order to raise cash flow in countries that do not have any potential for growth
- Mobile arm of its UK plant getting a bid worth $15 billion
All these initiatives helped Telefonica increase its subscribers by a large number. During Q3 2014, the number of Pay TV customers and smartphone users increased by 41% and 43% respectively when compared to the figures for Q3 2013. With a dividend yield of an impressive 5.6% and a forward P/E of 13, this stock should be added on to your portfolio if you want an attractively priced dividend stock right now. The share price trend of Telefonica for the last few months is shown below:
Stable energy prices and lower maintenance costs
Another option of a dividend stock that is available at attractive rates right now is Duke Energy (DUK, Financial). Currently, Duke is trading at very low prices because the company’s financial report for the last quarter of 2014 was not great. A whopping $2.7 billion worth of repatriation costs on foreign earnings, $102 million worth of write off fee towards settlement of an ash spill issue along Dan River, and $373 million worth of taxation charges of the repatriation charges were three factors that brought down the reputation of Duke Energy as a good dividend stock.
Nevertheless, with all these factors, analysts recommend that buying Duke Energy stocks now could be a good choice because of various factors. First and foremost, the basic need for electricity is never going to cease among people. Hence, as long as this demand is present, Duke will continue earning a good amount of money. Secondly, since Duke’s revenues will come from electricity provided by government regulated agencies, it will be well-protected against the volatile conditions of the private market. Earnings are expected to be quite stable from this year onwards. Thirdly, since oil and solar costs are costing less these days, Duke will have enough reasons to bring down its maintenance costs by at least 2%, which should spell good news for investors. With a dividend yield of 4% and a forward P/E of 16, Duke’s stocks are available for a steal now. Share price trend of the company for the last few months is seen below:
Conclusion
Sometimes prices of dividend stocks tend to go through a slump due to various external and internal factors. During these times, investors should be smart enough and have the capacity to analyse the “big picture”. This quality will help them analyse if a company that is going through a crash in share prices, is presenting an opportunity or threat. The stocks mentioned above are clear opportunities, given the fact that they have immense growth potential for the coming years.
