The one thing that makes buying a high-yielding stock even better is buying it at a reduced price. Then, not only is it possible to benefit from the yield being higher than normal, but it can also set investors up for capital gains in the future, if the stock is able to rebound.
Three dividend stocks that pay above-average yields and that are trading near their 52-week lows right now are Kroger (KR +1.82%), Duke Energy (DUK +0.87%), and McDonald’s (MCD +1.20%). Here’s why now may be the time to pounce on these cheap-looking stocks.
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Kroger
Leading grocery company Kroger makes for a terrific long-term investment. It generates plenty of recurring, consistent income, and the stock also offers a decent yield of 2.6% — more than double the S&P 500 average of 1%.
Kroger’s stock has fallen about 9% this year, now trading just a few dollars above its 52-week low of $54.15. It’s admittedly not a terribly exciting stock to own, especially when the market is fully entrenched in tech these days and the opportunities related to artificial intelligence. A solid company such as Kroger may simply not be at the top of investors’ lists.
Today’s Change
(1.82%) $1.02
Current Price
$57.09
Key Data Points
Market Cap
Day’s Range
$56.71 – $57.38
52wk Range
$54.15 – $76.58
Volume
1.4M
Avg Vol
7.9M
Gross Margin
20.98%
Dividend Yield
2.57%
However, the business is doing well and is what you would expect from a top grocer with slow but steady operations. During the first quarter of its fiscal year (the period ended on May 23), the company’s sales were up slightly, from $45.1 billion in the prior-year period to $46.1 billion. Nothing terribly exciting, but that’s the kind of stability that dividend investors often seek out from a reliable dividend investment.
Trading at just under 11 times its estimated future earnings, based on analyst expectations, Kroger makes for a compelling income stock to own today.
Duke Energy
Another attractive option for income investors is Duke Energy, an energy company that provides essential gas and electric services to millions of customers across the country. This is another business that may not be all that exciting, but like Kroger, it’s precisely the type of investment that can appeal to dividend investors who want to keep their risk fairly low. Currently, it’s yielding 3.5%.
In its most recent quarter, which went up until the end of June, Duke Energy’s operating revenue showed minimal growth, rising from $7.5 billion to just under $7.6 billion for the period. Operating income of just over $2 billion showed a more meaningful increase from $1.8 billion in the prior-year period.
Today’s Change
(0.87%) $1.07
Current Price
$124.65
Key Data Points
Market Cap
Day’s Range
$124.02 – $125.66
52wk Range
$113.89 – $134.49
Volume
907.6K
Avg Vol
3.9M
Gross Margin
31.37%
Dividend Yield
3.46%
Although the stock is up around 7% this year, it’s still trading within about 10% of its 52-week low of $113.90. Admittedly, however, it generally doesn’t move too wildly in either direction, as it is a low-volatility stock, which is another reason it can make an ideal income investment to buy and hold for the long haul.
McDonald’s
Fast-food company McDonald’s doesn’t sell essential groceries or services like the other stocks on this list, but it still has a loyal customer base that helps keep its financial results strong.
During the June quarter, it reported $7.1 billion in revenue, which was up a modest 4% year over year. Net income of $2.4 billion grew at a slightly higher rate of 5%. Investors, however, may have been unimpressed with the 0.8% comparable sales growth it reported in the U.S. market.
Today’s Change
(1.20%) $3.17
Current Price
$268.70
Key Data Points
Market Cap
Day’s Range
$267.01 – $270.21
52wk Range
$260.96 – $341.75
Volume
1.2M
Avg Vol
4.6M
Gross Margin
57.38%
Dividend Yield
2.77%
This year, McDonald’s stock is down 12%, pushing its yield up to around 2.8%. It’s not a terribly high payout, but the value investors get from the stock is from buying and holding, as McDonald’s has increased its dividend for 49 consecutive years. Its strong financials and consistent but stable growth make it an enticing option for dividend-focused investors.
The stock is trading around $270, which isn’t far from its 52-week low of $260.96. For long-term investors, now may be an opportune time to invest in this iconic company.
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