28 Undervalued Dividend Stocks

In the past year, a friend of mine has shifted a large percentage of his portfolio to stable, dividend paying companies from growth stocks. The allure of a steady stream of dividends overcame his desire for capital appreciation. He is not alone in his quest but is he correct to place a greater emphasis on dividends than on capital appreciation? I do not think this is an either/or proposition. Dividends contribute significantly to an investment’s total return. Ibbotson Associates estimates that over the very long term, dividends contribute as much as 40% to total return. However, the largest gains in total return are derived from capital appreciation. To resolve this dichotomy, I try to identify undervalued dividend paying stocks. The income stream provides a certain level of support while I wait for the market to recognize the value in company I select. I constructed a screen for my database to... Read more