The 3 Most Undervalued Dividend Stocks to Buy in March 2024


  • Consider these three stocks if you believe in high-dividend value investing!
  • Cogent Communications Holdings (CCOI): Highly rated by Bank of America with well-aligned valuation metrics.
  • Bain Capital Speciality Finance (BCSF): An opportunity to invest in a loan portfolio yield of more than 13% with internal credit enhancement prospects.
  • Intesa Sanpaolo (ISNPY): Implied funding costs and consequent effects on spreads could lead to enhanced profit margins.
Undervalued Dividend Stocks - The 3 Most Undervalued Dividend Stocks to Buy in March 2024

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Value investing can be partitioned into various categories, one of which is high-yield dividend investing. High-yield value investing allows investors to experience the best of both worlds by receiving optimal utility for money via income and value appreciation.

However, despite the allure of high-yield value investing, caution is necessary because value traps are common.

To sidestep value traps, one must differentiate between accretive value and busted growth. Doing so requires diligence in the investment research process, which is where I come in. I researched the stock market and discovered three value-based dividend stocks to buy by implementing comprehensive criteria spanning fundamental and quantitative aspects.

Here are my three best-in-class high-dividend value stock picks.

Cogent Communications Holdings (CCOI)

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As its name implies, Cogent Communications (NASDAQ:CCOI) operates in the telecommunications industry. The firm has a global footprint but primarily features in the United States, servicing enterprises, carriers, and content providers. Besides managing one of the largest fiber-optic networks, Cogent’s key offerings include adjacent internet products, VPN, colocation, and transport.

Cogent’s stock has traded flat since acquiring T-Mobile’s wireless business, also known as Sprintin May 2023, indicating that market participants had mixed feelings about the deal. However, various benefactors have emerged. For example, Cogent Communications received a “Buy” rating from Bank of America (NYSE:BAC) this month, with the bank citing increased carrier tower demand. Furthermore, Cogent delivered a stellar fourth-quarter earnings report last month, which communicated $272.09 million in revenue, a 79% year-over-year increase.

Lastly, CCOI stock’s valuation and dividend metrics are superb. For instance, Cogent’s price-to-earnings ratio of 2.55x is at a sector discount of approximately 86%, and its dividend yield of 5.69% is alluring.

CCOI stock is ready to deliver multiyear returns!

Bain Capital Speciality Finance (BCSF)

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Bain Capital Speciality Finance (NYSE:BCSF) runs an underrated business model. The firm invests in private credit and engages with its portfolio companies via business development. The objective of Bain’s business development is to deliver its portfolio constituents with internal credit enhancement while concurrently enhancing the risk-return profile of its loan book.

Recent data communicates the success of Bain Capital Speciality Finance’s business model. For example, Bain’s portfolio spans 137 investments with a weighted average yield of 13%, illustrating optimized diversification. Moreover, the entity has a solid liquidity position of $448 million, showing that it can invest throughout the economic cycle to deliver its investors with robust returns.

BCSF stock’s price-to-book ratio of 0.9x suggests it is grossly undervalued. In addition, BCSF’s forward dividend yield of 10.65% is sumptuous.

Although subdued U.S. credit spreads are a threat to the company’s near-term profitability, the aforementioned factors show that BCSF stock is a solid investment.

Intesa Sanpaolo (ISNPY)

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Intesa Sanpaolo (OTCMKTS:ISNPY) is a favorite of JPMorgan (NYSE:JPM). JPMorgan recently scouted European stocks with safe dividend yields and listed ISNPY as one of its top 40 picks. However, JPMorgan’s analysis is isolated. So, let’s explore Intesa Sanpaolo in more depth.

For those unaware, Intesa Sanpaolo is an Italian bank. Its strength lies in its ability to tap into high-yielding consumer debt while maintaining cheap financing costs, echoed by its net profit margin of 32.72%.

Intesa is set to benefit from interest rate pivots in the Euro region. This allows for affordable financing costs and wider credit spreads on loans. Moreover, developed market equities are in good shape, which could translate into higher intermediation profits for Intesa Sanpaolo.

Key metrics indicate that ISNPY stock looks likely to prosper. For example, ISNPY stock has a price-to-book ratio of merely 0.93x and a dividend yield of 7.47%. In addition, Intesa Sanpaolo’s common equity tier 1 ratio of 13.7% conveys operational resilience.

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On the date of publication, Steve Booyens did not hold (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 Publishing Guidelines.

Steve Booyens co-founded Pearl Gray Equity and Research in 2020 and has been responsible for cross-asset research and PR ever since. Before founding the firm, Steve spent time working in various finance roles in London and South Africa. He holds an MSc in Investment Banking from Queen Mary – University of London. Furthermore, Steve obtained his CFA Charter on April 26, 2024, and is working toward his Ph.D. in Finance. His articles are published on various reputable web pages such as Seeking Alpha, TipRanks, Yahoo Finance, and Benzinga. Steve’s articles on InvestorPlace form an interesting juxtaposition between mainstream opinion and objective theory. Readers can expect coverage on frequently traded stocks, REITs, fixed-income funds, CEFs, and ETFs.

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