The 3 Most Undervalued Dividend Stocks to Buy in June 2024

  • Investors may want to monitor these top undervalued dividend stocks.
  • Caterpillar (CAT): The construction giant has been in business for almost 100 years.
  • Waste Management (WM): The company offers an essential service and steady cash flow.
  • Costco (COST): The wholesaler has hundreds of locations worldwide and many Buy ratings.
undervalued dividend stocks - The 3 Most Undervalued Dividend Stocks to Buy in June 2024

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Dividend stocks generate passive income for their investors. They are optimal for individuals who want to buy and hold stocks for the long run instead of people who quickly enter and exit positions.

While many corporations look like they can offer dividends for numerous years, some firms also have reasonable valuations. It’s possible to receive growing dividend payouts alongside meaningful stock price appreciation. These are some of the most undervalued dividend stocks to keep on your radar.

Caterpillar (CAT)

Caterpillar (CAT) excavator vehicle backlit by sunset
Source: Shutterstock

Caterpillar (NYSE:CAT) has been outperforming the stock market for several years despite having a 15 P/E ratio. Shares are up by 16% year-to-date and have gained 172% over the past five years. 

The construction giant reported respectable results in Q1 2024. Revenue was roughly flat and came to $15.8 billion. The bright spot was the adjusted profit per share soar gin from $4.91 to $5.60 per share. That’s a 14.1% year-over-year increase. 

Although revenue was flat, the company still made an effort to reward long-term investors. Caterpillar deployed $4.5 billion into stock buybacks and distributed $0.6 billion to investors as dividend payments. Caterpillar has raised its dividend for 31 consecutive years and has an annualized dividend growth rate of 8.04% over the past decade.

Wall Street analysts are mixed on the stock. It’s rated as a Moderate Buy with a projected 7% upside from current levels. The stock has received eight Buy ratings, six Hold ratings, and one Sell rating.

Waste Management (WM)

Image of green Waste Management (WM) branded truck in the foreground and building with Waste Management flag in the background.
Source: rblfmr /

Some companies will never go out of business due to an essential demand that they fulfill. Waste Management (NYSE:WM) has been cleaning up trash and helping to keep streets clean since 1968. Governments and small businesses use the firm’s services.

Shares have been keeping up with the market. They’re up by 17% year-to-date and have gained 84% over the past five years. Waste Management currently has a 34.5 P/E ratio and offers a 1.42% yield. 

The firm increased its full-year financial outlook for earnings and cash flow after a strong first quarter. Revenue increased by 5.5% year-over-year while net income soared by 32.8% year-over-year. 

Wall Street analysts have currently assigned a Moderate Buy rating for the stock. The average price target suggests that the stock can gain an additional 7% from current levels. The lowest price target of $205 per share suggests minimal downside, while the highest price target of $256 implies a 21.3% gain.

Costco (COST)

Costco logo on a sign on a Costco store.

Costco (NASDAQ:COST) has received plenty of love from Wall Street analysts. It’s rated as a Strong Buy with a projected 3% upside. The highest price target of $940 implies a 16% upside. Costco has ratings from 26 analysts which include 20 Buy ratings and six Hold ratings. 

There’s more to Costco stock than the enthusiasm of Wall Street analysts. The wholesaler has a good mix of affordable products and a $60 annual fee that gets members into the stores. This business model translated into revenue and net income growth.

Sales in the third quarter of fiscal 2024 increased by 6.6% year-over-year. Canada and international markets were both up by 7.7% year-over-year while U.S. sales increased by 6.2% year-over-year. E-commerce was a bright spot with its 20.7% year-over-year sales growth.

Costco stock currently trades at a 50 P/E ratio and offers a 0.57% yield. The dividend payout is much higher during the company’s special dividend payouts which typically happen once every two years. The stock is up by 24% year-to-date and has gained 216% over the past five years. 

On the date of publication, Marc Guberti 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.comPublishing Guidelines.

Marc Guberti is a finance freelance writer at who hosts the Breakthrough Success Podcast. He has contributed to several publications, including the U.S. News & World Report, Benzinga, and Joy Wallet.

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