In this article, we discuss 11 best beaten down dividend stocks to invest in. You can skip our detailed analysis of dividend stocks and their performance in the past, and go directly to read 5 Best Beaten Down Dividend Stocks to Invest in Now.
In 2023, investors piled into tech stocks as the sector benefitted from favorable macroeconomic conditions and the rise of generative artificial intelligence. Investors’ inclination toward tech stocks left dividend equities in the dust, despite being the winners in 2022. The tech-heavy NASDAQ finished 2023 with 43% gains, compared with a 5.74% return of the S&P 500 Dividend Aristocrats Index. However, due to consistent market volatility in recent years, investors are continually gravitating back to dividend-paying stocks, even after being distracted by the attractiveness of other asset classes temporarily. This becomes evident after analyzing the gradual increase in the amount of dividends paid by the S&P 500 over the years.
CNBC referred to data from S&P Dow Jones Indices and highlighted that S&P 500 companies paid $483 billion in dividends in 2020, down slightly from $485 billion in 2019. This is understandable as the year 2020 was marked by the widespread ramifications of the pandemic, causing nearly every industry and business to suffer. That said, there has been a constant uptick in dividend payments since then. After recovering from the ill effects of the pandemic, the US companies distributed $522 billion in dividends in 2021, which grew to over $564 billion in 2022, showing a significant increase of 8.1%. Finally, the figure reached a new record of $588.2 billion last year.
The constant increase in dividend payments over the years has restored investors’ confidence in their dividend investments. In addition to this, historical analysis has shown how dividend stocks have offered a buffer against certain market fluctuations due to their capacity to generate regular income. Brian Bollinger, president of Simply Safe Dividends, spoke about the importance of dividend stocks during market downturns in his interview with CNBC earlier this year. He said:
“When stock prices fall, it’s so easy to panic, but dividend investing can overcome that because you’re just trying to stay focused on your income stream. You don’t care so much about the market’s short-term ups and downs anymore.”
Despite being the underdogs in the stock market last year, analysts and seasoned investors have retained their interest in dividend stocks. Janus Henderson predicts the total dividend payments for 2024 will reach $1.72 trillion, showing a nearly 4% growth on a headline basis from last year, which translates to underlying growth of 5%. Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices, commented on dividend growth in 2024. Here is what he said:
“For 2024, the dollar aggregate of dividends is expected to increase once again. Absent an economic or geopolitical event, S&P 500 large caps appear to be weathering volatility better, as the index is expected to post its 15th consecutive year of dividend increases. In addition, the index is also expected to log its 13th consecutive record year, with a 4.5% - 5% increase in payments for 2024, compared to its 5.1% increase in 2023 and its 10.8% increase in 2022.”
Though some of the best dividend stocks like The Procter & Gamble Company (NYSE:PG), Colgate-Palmolive Company (NYSE:CL), and PepsiCo, Inc. (NASDAQ:PEP) delivered positive returns so far this year so far, many dividend stocks have shown negative returns in comparison. However, these stocks have strong fundamentals that may lead to potential recovery in the near future. In this article, we will take a look at the beaten down dividend stocks to invest in.
11 Best Beaten Down Dividend Stocks to Invest in Now
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Our Methodology:
For this list, we used a stock screening tool to identify dividend stocks that reached their 52-week lows around March 29. We then narrowed down our selection to 11 stocks using hedge fund data from Insider Monkey for the fourth quarter. These stocks are ranked based on the number of hedge funds holding positions in them, from the lowest to the highest number. We've also included the year-to-date share price decline of these stocks to offer a comprehensive overview.
Sasol Limited (NYSE:SSL) is a South African chemicals company that is involved in the exploration, production, and refining of crude oil and natural gas. The company currently pays an interim dividend of $0.5321 per share and has a dividend yield of 8.20%, as of March 30.
The number of hedge funds tracked by Insider Monkey owning stakes in Sasol Limited (NYSE:SSL) grew to 12 in the fourth quarter of 2023, from 8 in the previous quarter. The overall value of these stakes is over $20.2 million. Among these hedge funds, Millennium Management was the company's leading stakeholder in Q4.
BCE Inc. (NYSE:BCE) is a telecommunications and media company, based in Canada. The company offers a wide range of related services and products, including wireless communication, internet access, and television services. In the fourth quarter of 2023, the company reported revenue of C$6.47 billion, which showed a 0.5% growth from the same period last year. Its operating cash flow and free cash flow for the period came in at $2.3 billion and $913 billion, respectively.
BCE Inc. (NYSE:BCE), one of the best dividend stocks on our list, currently offers a quarterly dividend of C$0.9975 per share. The company has been growing its dividends for the past 14 consecutive years. The stock supports a dividend yield of 8.67%, as of March 30.
At the end of Q4 2023, 19 hedge funds in Insider Monkey's database owned stakes in BCE Inc. (NYSE:BCE), growing from 15 in the previous quarter. These stakes have a total value of nearly $85 million.
American States Water Company (NYSE:AWR) is an American water and utility services company that is engaged in delivering safe, reliable, and sustainable services and products to its consumers. The company announced a quarterly dividend of $0.43 per share on February 8, which was in line with its previous dividend. It is one of the best dividend stocks on our list with 69 consecutive years of dividend growth under its belt. Moreover, the company has raised its dividends at a CAGR of 9.4% over the last five years. The stock's dividend yield on March 30 came in at 2.38%.
As of the end of Q4 2023, 21 hedge funds tracked by Insider Monkey reported having stakes in American States Water Company (NYSE:AWR), up from 16 in the preceding quarter. These stakes are valued at more than $52.5 million in total. Israel Englander's Millennium Management was the company's leading stakeholder in Q4.
8. Brown-Forman Corporation (NYSE:BF-B)
Number of Hedge Fund Holders: 21
Year-to-Date Share Price Decline: 9.2%
Brown-Forman Corporation (NYSE:BF-B) is a Kentucky-based company that operates in the alcoholic beverage industry. The company's cash position remained strong for FY23 as it generated over $410 million in operating cash flow in the first nine months of the year that ended in January 2023, up from $362 million in the prior year period. It ended the year with nearly $428 million available in cash and cash equivalents.
Brown-Forman Corporation (NYSE:BF-B) holds an impressive dividend history with 80 years of uninterrupted dividend payments. The company also maintains a 40-year streak of consistent dividend growth, which makes BF-B one of the best dividend stocks on our list. The stock offers a quarterly dividend of $0.2178 per share and has a dividend yield of 1.69%, as of March 30.
Insider Monkey's database of Q4 2023 indicated that 21 hedge funds held stakes in Brown-Forman Corporation (NYSE:BF-B), compared with 30 in the previous quarter. These stakes are collectively valued at over $1.03 billion. With over 11.6 million shares, Fundsmith LLP was the company's leading stakeholder in Q4.
CONMED Corporation (NYSE:CNMD) is a New York-based global medical technology company that specializes in the marketing and development of surgical devices and equipment. The company pays a quarterly dividend of $0.20 per share and has a dividend yield of 1.00%, as of March 30. Since the start of 2024, the stock has declined by 27.2%. It is among the best dividend stocks on our list.
In the fourth quarter of 2023, CONMED Corporation (NYSE:CNMD) generated revenue of $327 million, up 30.3% from the same period last year. For FY24, the company expects its revenue between $1.34 billion to $1.365 billion.
CONMED Corporation (NYSE:CNMD) was a part of 23 hedge fund portfolios at the end of Q4 2023, growing from 19 in the previous quarter. The total value of these stakes is more than $148.4 million.
Leggett & Platt, Incorporated (NYSE:LEG) ranks sixth on our list of the best dividend stocks. The diversified manufacturing company has been growing its dividends for the past 52 years and currently offers a quarterly dividend of $0.46 per share. The stock's dividend yield on March 30 came in at 9.61%.
According to Insider Monkey's database of Q4 2023, 24 hedge funds held stakes in Leggett & Platt, Incorporated (NYSE:LEG), up from 19 in the previous quarter. These stakes have a collective value of over $123.6 million. Among these hedge funds, Millennium Management was the company's leading stakeholder in Q4.
