These low P/E, dividend-paying plays are poised for meaningful upside in 2022
In general, investors look for capital gains from
high-growth stocks. Dividend stocks, meanwhile, often don’t provide significant
upside. However, investors who prefer regular cash flows tend to go overweight
on dividend stocks.
Of course, there are exceptions among dividend plays, from
the perspective of healthy capital gains as well as dividend gains. My focus in
this column, though, is on dividend stocks that seem to be trading at
attractive valuations.
It’s worth noting that the S&P 500 currently trades at a
cyclically adjusted price-earnings (P/E) ratio of 39.6. As such, I have
screened dividend stocks that trade at a significant discount to broad market
valuations. Over the next six to 12 months, these picks have headroom for
meaningful upside. Investors can therefore enjoy the double benefit of regular
cash inflows as well as capital growth.
I would also add that most of these names are low-beta
stocks. With liquidity tightening around the corner, there is a case for some correction
in the markets. In a bearish sentiment scenario, these picks are likely to be
outperformers.
So, without further ado, let’s take a deeper look into these
seven attractively valued picks.
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