I get questions from retired and income investors asking about oversold dividend stocks. In the current market, a lot of dividends stocks — particularly the more well-known ones — are hitting new 52-week highs on a regular basis.
These investors want to know if buying at all-time or 52-week highs is a mistake. The answer is usually, “it depends.” If you have a long-term horizon of, say, ten years or more, it doesn’t really matter.
The other answer, however, is that if the investor is looking for solid dividend stocks, there’s no reason to confine oneself to Johnson & Johnson (JNJ). There are other dividend payers out there, and I prefer to look for stock that are 10% or more off their 52-week highs.
It suggests that, in an environment where everyone is looking for yield, that the stock has sold off for reasons that aren’t critical to its ongoing operations. That creates a buying opportunity.
Here are 3 stocks I think fit that bill: