UE - 7 Overlooked Dividend Stocks to Buy for Income at a Bargain

2024-07-11 06:00:00 ET

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While targeting public enterprises for passive income represents a sound strategy, the sector can get overcrowded. By focusing on less-appreciated ideas, investors may be able to snag better deals. Therefore, the concept of overlooked dividend stocks should be on your radar for a holistic approach to the market.

As with anything in life, sometimes the actual weight of a much-anticipated product or event doesn’t match the hype. When that happens in the market, the typical response is a correction. Disappointment often leads to stakeholders exiting or at least trimming their exposure. The initial blast of crimson ink could send shares spiraling, which isn’t particularly helpful.

Further, going for the less-heralded plays may provide a mixture of passive income and capital gains potential. That may not readily happen with ideas that are in the spotlight because all the underlying nuances are carefully assessed. With under-the-radar plays, there are more opportunities for pleasant surprises. On that note, below are overlooked dividend stocks to consider.

Delta Air Lines (DAL)

On paper, Delta Air Lines (NYSE: DAL ) isn’t exactly what you would call one of the overlooked dividend stocks. As a major carrier, it’s frequently in the news. However, DAL stock has been struggling for traction since mid-May. Therefore, plenty of investors aren’t paying attention to Delta. Over the long run, that could be a mistake.

While pressures against the consumer economy pose headwinds against the company’s demand profile, it’s also worth keeping mind the concept of travel prioritization . While not as acute as the related concept revenge travel, workers are still allocating a significant amount of their discretionary budget for vacations and other experiential expenditures. It’s worth keeping tabs on the opportunity.

In the trailing 12 months (TTM), Delta posted diluted earnings per share of $7.80 on sales of $59.04 billion. For fiscal 2024, covering experts anticipate a nearly 6% rise in EPS to $6.61. On the top line, sales could also rise by 6% (actually 6.1%) to $58.01 billion.

In terms of passive income, Delta isn’t super generous. However, it does offer a forward yield of nearly 1.3%. Thus, it’s one of the overlooked dividend stocks to consider.

Urban Edge Properties (UE)

Structured as a real estate investment trust or REIT, Urban Edge Properties (NYSE: UE ) focuses on owning, managing, acquiring and developing retail properties in urban communities. Primarily, the company serves the Washington, D.C. to Boston, Massachusetts corridor. Per its public profile , Urban Edge owns 76 properties totaling 17.1 million square feet of gross leasable area.

Again, the consumer economy faces challenges. And although the latest jobs report was mixed – particularly with unemployment rising to 4.1% – the labor market still saw an increase of 206,000 payrolls. Generally speaking, more money continues to chase after fewer goods, which should be positive for retail-oriented REITs. Plus, the aforementioned corridor tends to cover high-income communities.

In the TTM period, Urban Edge posted net income of $270 million or $2.29 per share. Revenue in the period hit $417.11 million, with the business recently showing signs of expansion. For fiscal 2024, experts believe that revenue could hit $431.84 million. If so, that would imply a growth rate of 3.6% from last year.

As for passive income, Urban Edge carries a forward yield of 3.76%. It’s a candidate for overlooked dividend stocks.

Travel + Leisure (TNL)

Falling under the consumer cyclical sector, Travel + Leisure (NYSE: TNL ) – as you might imagine – operates in the travel services space. With its subsidiaries, TNL provides hospitality services and travel products in the U.S. and other international markets. Per its corporate profile , the enterprise operates in two segments: Vacation Ownership and Travel and Membership. Essentially, the company specializes in selling vacation ownership interests along with boutique experience packages.

Fundamentally, it’s an intriguing idea but it also presents risks. As stated earlier, the travel prioritization concept should theoretically bolster TNL stock. In addition, the underlying business model caters to a more affluent consumer base. On the other hand, depending heavily on wealth can be a hit-or-miss affair. For example, look at some of the underperformance of electric vehicle stocks until recently.

Still, for the adventurous, TNL could be intriguing. Its earnings and sales expand at a slow but steady clip. Shares also trade at 0.84X trailing-year sales. That’s a bit undervalued compared to the trailing year, when the average averaged around 0.89X.

Analysts see a sales bump of 4.2% to $3.91 billion. The company also offers a forward yield of 4.62%.

GeoPark (GPRK)

Based in Colombia, GeoPark (NYSE: GPRK ) falls under the oil and gas exploration and production segment of the hydrocarbon value chain. Also known as upstream, this sector has become especially relevant due to geopolitics. Basically, the world continues to run on oil yet most of this “black gold” is the hands of questionable authorities. That’s the best way I can put it diplomatically.

Fundamentally, what makes GeoPark attractive is where its upstream business is occurring. Covering nations such as Chile, Brazil, Argentina, Ecuador and its home market, these are relatively friendly jurisdictions. Certainly, it’s not like dealing with Russia or Saudi Arabia. Plus, the closer geography helps.

Admittedly, the company’s earnings performances in the past four quarters have been a bit soft. During the TTM period, it posted net income of $115 million or $2.03 per share. Revenue came out to $741.59 million. For fiscal 2024, analysts anticipate EPS to hit $3.11 on sales of $787.4 million. The latter metric implies a 4.1% gain, which isn’t unreasonable given the geopolitical backdrop.

What also may attract investors is the forward yield, which stands at 5.51%. While risky, it’s one of the enticing overlooked dividend stocks to consider.

Global Ship Lease (GSL)

Conducting business in the industrial sector, Global Ship Lease (NYSE: GSL ) falls under the rental and leasing services ecosystem. Together with its subsidiaries, Global Ship engages in the ownership and chartering of containerships under fixed-rate contracts. As of March of this year, the company owned 68 mid-sized and smaller containerships .

As alluded to earlier, the challenges of the consumer economy – both in the U.S. and throughout the world – present obstacles. At the same time, if you have a more optimistic view of the post-pandemic recovery, GSL stock could be interesting. In the past four quarters, the company posted an average EPS of $2.36. In contrast, analysts were only anticipating $2.21.

In the TTM period, Global Ship posted net income of $312.25 million or $8.62 per share. Revenue in the cycle hit $688.85 million. By the end of the year, EPS could rise by 6.42% to hit $9.61. On the top line, sales may see an increase of 2.9% to $694.65 million.

For passive income, the shipping firm offers a forward yield of 5.52% along with a lowly payout ratio of 17.4%. Therefore, it ranks among the overlooked dividend stocks to consider.

Opera (OPRA)

Headquartered in Oslo, Norway, Opera (NASDAQ: OPRA ) operates in the Internet content and information industry. According to its public profile , Opera along with its subsidiaries provides mobile and PC web browsers and related products and services. In particular, the company has attracted attention for its artificial intelligence-powered personalized news discovery and aggregation offering.

With generative AI becoming an increasingly important component of everyday life, Opera could be one of the early enterprises to leverage the technology for practical applications. The signs are encouraging. In the past four quarters, the company’s average EPS landed at 49 cents. On the other hand, analysts were anticipating a print of only 19 cents.

Presently, OPRA stock trades hands for only 2.89X trailing-year sales. Over the past year, this metric clocked in at 3.85X. So, there may be good value to be had here. Enticingly, covering experts believe that revenue could pop 15.9% by the end of this year to $459.8 million. It could jump another 14.3% to $525.34 million in fiscal 2025.

Lastly, the enterprise offers a robust forward yield of 6.24%. The payout ratio is modest too at 47%, making OPRA one of the overlooked dividend stocks.

Dine Brands (DIN)

Another risky but tempting idea for overlooked dividend stocks, Dine Brands (NYSE: DIN ) – as you probably deduced – operates in the restaurant industry. Along with its subsidiaries, Dine owns, franchises and operates restaurants both in the U.S. and in international markets. It’s perhaps best known for its International House of Pancakes brand or IHOP. It also owns Applebee’s Neighborhood Grill + Bar.

To be sure, the restaurant space is tricky because the consumer discretionary segment is tricky. Many folks are trying to save their money in a high inflation and high interest rate environment. At the same time, the labor market is quite healthy, relatively speaking. Therefore, people who want jobs generally can find them. That should be net positive for the consumer demographic that Dine is targeting.

Right now, DIN stock trades at 0.59X trailing-year sales. That’s quite low compared to the prior year’s average of around 0.97X. Granted, there’s not much growth projected for Dine – less than 0.7% in fiscal 2024. Still, that is growth, not a negative trend. Further, in fiscal 2025, sales could pop almost 2% to $850.97 million.

For those who are willing to take the risk, the company offers a forward yield of 6.34%.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines .

On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.

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