Most of the market’s best dividend stocks are well-known, and well-owned.
Thing is, there’s more than another handful of stocks with strong dividend yields that are either off-the-radar, unrecognized as solid dividend stocks or both.
So, if you’re looking for a few possibly underestimated and underappreciated dividend stocks out there, consider this list of five of the best names with a great dividend yield that might surprise most investors.
Dividend Stocks to Buy: Cisco (CSCO)
The networking and router company pays a dividend? Yes, and a pretty good one too. The current dividend yield for Cisco (CSCO) is just north of 3% — so no, it’s not the market’s best dividend payer, but CSCO certainly is one of the best dividend stocks within the tech sector.
“But isn’t Cisco a struggling brand?” Yes, challenges remain on all fronts, with year-over-year sales as well as earnings slipping in each of the past two quarters. But much of the reason Cisco hasn’t grown of late is that CEO John Chambers didn’t want to open up the company’s $50 billion war chest.
That’s changing, though. Recently, Chambers has been more keen to invest in growth.
CSCO stock might be one of the market’s dark-horse stories of 2014; the dividend yield is the icing on the cake.
Dividend Stocks to Buy: Tupperware Brands (TUP)
The idea of selling plastic kitchen bowls by hosting parties might seem antiquated. But the fact that Tupperware Brands (TUP) has continued to grow sales for years now says, antiquated or not, it’s an effective approach.
That said, there’s another reason that income-seekers may like TUP stock … it has a surprisingly strong dividend yield of 3.2%. Again, there are higher-yielding dividend stocks out there, but there aren’t too many that doubled their quarterly dividend between 2011 and 2014. Tupperware’s quarterly payout has gone from 30 cents in 2011 to 68 cents as of this writing.
While the pace of that dividend growth will have to slow sooner or later (and probably sooner) for TUP stock, it’s pretty clear that Tupperware Brands is listening to its shareholders and giving them what they want — cash.
Dividend Stocks to Buy: ABB Ltd (ABB)
A power-management hardware company might not be riveting stuff, but if the dividend yield is solid enough, some investors could be swayed.
And what kind of payout does Swiss company ABB Ltd (ABB) offer? A solid 3.4% currently, paid once annually.
Not only does it pay a dividend religiously, it raises it like clockwork. ABB stock has upped its payout every year, from 9 cents per share in 2006 to 78 cents this year, making ABB one of the better dividend stocks in addition to offering investors some overseas exposure.
But what about its recently reported quarter, which could only be described as miserable? Yes, ABB blew it in Q1 thanks to weak sales of high-voltage equipment. And, ABB stock suffered a handful of downgrades in the shadow of the setback, tumbling 8% as a result.
The time to go bargain shopping, though, is when a stock is actually on sale. And that setback means a better yield on cost for anyone buying now.
Dividend Stocks to Buy: Canon (CAJ)
Contrary to popular belief, the paperless office isn’t going to become a reality anytime soon. In fact, our ability (and willingness) to create a paper document is as strong now as it’s ever been.
That’s why photocopier and printer maker Canon (CAJ) is still alive and kicking. Well, it’s not the only reason. While photographic film is all but extinct, Canon is waist-deep into cameras, camcorders and a wide variety of other lens-centric products, all of which remain highly marketable.
But what does CAJ stock offer to income seekers? A dividend yield hovering around 4%, and reliable increases of that payout (paid semiannually) over time, make it one of the market’s more attractive dividend stocks.
Dividend Stocks to Buy: Paychex (PAYX)
Don’t worry if you’ve never heard of Paychex (PAYX) — a lot of people haven’t. The company provides outsourced human resources services, including benefits administration services.
In other words, PAYX stock is a temporary staffing play.
It’s not a bad business to be in, either. Following the economic implosion of 2007 and the subsequent recession of 2008, temporary staffing employment following a recession has grown faster than it ever has before. It’s apt to stay that way as well, as businesses now recognize that a permanent workforce is an unnecessary liability.
That’s not the only reason an investor might want to own PAYX stock, however. The current dividend yield for Paychex is a healthy 3.4%, and the payout has been steadily rising for years. There are better-paying dividend stocks out there, but there aren’t many that offer the same combination of income, growth and reliability that Paychex does.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.