- Oversold dividend stocks present an attractive opportunity to buy into steady, assured income streams at bargain prices
- Western Union (WU): Consistent dividend payor even amid the slowdown engendered by geopolitical tensions and macroeconomic uncertainty
- Vornado Realty (VNO): Operating performance has been on the mend following the Covid-induced downturn, increasing the appeal of this oversold dividend stock
- Blackstone (BX): Reputed asset management firm with a diversified portfolio and robust shareholder returns
Recent market troubles provide investors the opportunity to snap up oversold dividend stocks. The double whammy of macroeconomic uncertainty and geopolitical tensions has made the equity market volatile since the start of the year.
Several growth stocks are in the doldrums as the uncertain backdrop has driven investors away from risky bets.
Defensive stocks haven’t fared any better either. A case in point is the biopharma sector. The iShares Biotechnology ETF (NASDAQ: IBB) has shed about 22%, worse than the nearly 13% drop by the SPDR S&P 500 ETF Trust (NYSE:SPY).
Bonds, which are supposedly less risky because they generate steady returns, haven’t fared well.
The yield on the 10-year U.S. Treasury note has been hovering above 3% ever since the Federal Open Market Committee increased rates by 50 basis points. This points to lackluster demand for bonds even as investors swerve away from risky bets.
Against this backdrop, these oversold dividend stocks can be safe havens that can provide regular cash flow for investors. Investment in quality dividend stocks will add stability.
Western Union (WU)
Cross-border money transfer and payment services company Western Union (NYSE:WU) is locked in a lackluster trading range of $17-$20, after having pulled back from the pre-Covid highs of a tad below $28.50.
The company’s fundamentals have been on slippery grounds. Revenue for the first quarter fell 4%, dragged by slowing retail money transfer and the suspension of services in Russia and Belarus.
The Western Union team under the new chief executive officer Devin McGranahan has begun an enterprise-wide strategy review process. The review process has thrown up two focus areas, namely retail business acceleration and digital and omnichannel customer growth.
Fundamental improvement could come slowly and steadily as geopolitical and macro overhangs clear up.
One pulling point is the company’s commitment toward shareholder returns.
Western Union has consistently paid dividends since it was spun off from First Data and began trading as a public company in 2006.
The company found ways to continue to pay out even amid the pandemic and Russia’s invasion of Ukraine which dented its top-line performance.
The company’s annual dividend works out to $0.94, translating to a dividend yield of 5.5%. The payout ratio is 41.37% and the annualized growth over the last five years is 7.34%.
Vornado Realty (VNO)
Vornado Realty (NYSE:VNO) operates both office and retail properties, with office accounting for about 80% of its business.
Founded in 1982, the company stuttered through the pandemic but has been showing green shoots of recovery.
In the March quarter, the company’s adjusted funds from operations (FFO) improved to $0.79 per share, up from $0.65 per share a year ago. Top line grew 16.4% year-over-year.
Vornado was forced to cut back on its dividend in the aftermath of the pandemic. With the current payout of $0.53 per share, the dividend yield is around 6.2%.
Given the recent improvement in its operating performance, the company could nudge up, or at least maintain the current dividend rate.
After failing to hold support around $40, the stock has pulled back sharply since April. The 14-day relative strength index (RSI) is around 31, confirming the oversold nature of the stock.
Asset management firm Blackstone (NYSE:BX) recently paid out its quarterly dividend at $1.32 per share, about a 5.3% yield.
The company’s first-quarter results showed $915.5 billion in assets under management (AUM), a 41% year-over-year increase. It had $49.9 billion in inflows during the quarter.
Blackstone invests in diverse alternative asset classes on behalf of institutional investors. This diversification functions as a portfolio hedge for Blackstone.
The RSI of the stock is skewed more toward the oversold zone, signaling it is now available for a bargain buy.
On the date of publication, Shanthi Rexaline 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.