Back to top

4 Dividend Stocks Value Investors Will Love

Read MoreHide Full Article

As the U.S. economy is braving challenges amid the global macro headwinds, market volatility is expected to persist in the near term. While the market continues to react to concerns related to the Chinese economy and the still low oil prices, the latest factor at play is the unchanged low rate environment in the U.S. Notably, the S&P 500 declined 4.5% year to date while the Dow Jones Industrial Average is down 7.4%.

Reaffirming the current 0–0.25% interest rate, the Sep 17 release of the U.S. Federal Reserve acknowledged the expanding economic activity in the U.S with an improving housing sector as well as the labor market. However, it highlighted that “recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term.”

While there is still uncertainty over the timing of a rate hike, the release mentioned that the Federal Open Market Committee “anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen some further improvement in the labor market, and is reasonably confident that inflation will move back to its 2 percent objective over the medium term.”

On the other hand, the global economic outlook for 2015 is not that impressive. According to a July 2015 release by the International Monetary Fund (IMF), U.S. growth is projected at 2.5% for 2015, marginally up year over year. Global growth is projected at 3.3 % in 2015, marginally down from 2014. While growth in advanced economies is estimated to increase to 2.1% in this year from 1.8% last year, growth in emerging market and developing economies is projected to slow down to 4.2% from 4.6 % in 2014.

Nevertheless, it is not time for investors to fret. It’s rather time to focus on readjusting their investment portfolios. Adding dividend stocks are always a good decision for investors looking for a steady return not only for countering the short term market challenges but to stay afloat in the long term as well. Moreover, it’s a good time to focus on value stocks as well.

The Right Picks

Selecting the right dividend stock that promises value as well may be a tedious task. Here is how to make it easy.

We have selected stocks with a Zacks Rank #1 (Strong Buy) or #2 (Buy), dividend yield more than 4% and trade at a Price/Earnings (F1) ratio of less than 15. These stocks sport promising value metrics (Value Score = ‘A’ or ‘B’) as determined by our new style score system.

The Value Style Score condenses all valuation metrics into one actionable score that helps investors steer clear of ‘value traps’ and identify stocks that are truly trading at a discount. Our research shows that stocks with a Style Score of ‘A’ or ‘B’ when combined with a Zacks Rank #1 or #2 offer best of both worlds.

Here are the four stocks that met the criteria:  

AT&T, Inc. (T - Free Report) : AT&T is one of the largest providers of wireless services in North America and one of the world’s leading communications service carriers. Through its subsidiaries and affiliates, AT&T offers a wide range of communication and business solutions that include wireless, local exchange, long-distance, data/broadband and Internet, video, managed networking, wholesale and cloud-based services.

  • Value Score: ‘A’
  • Zacks Rank: 2
  • Dividend Yield: 5.78%
  • P/E Multiple: 12.46
  • Projected EPS Growth for the Current Year:  4.85% (in line with the industry average)

Old Republic International Corp. (ORI - Free Report) : The Illinois-based company is one of the nation's biggest publicly held insurance organizations. Through its subsidiaries the company is engaged in marketing, underwriting, and providing risk management services for an array of coverages primarily in the general and title insurance spaces.

  • Value Score: ‘A’
  • Zacks Rank: 1
  • Dividend Yield: 4.66%
  • P/E Multiple: 13.34
  • Projected EPS Growth for the Current Year:  42.86% (versus industry average of 10.89%)

PDL BioPharma, Inc. (PDLI - Free Report) : Based in Nevada, the company is engaged in managing a portfolio of patents and royalty assets, comprising of its Queen et al. patents, license agreements with various biotechnology and pharmaceutical firms, and royalty and other assets acquired. The company is focused on intellectual property asset management with the acquisition of new income generating assets and maximizing shareholders value.

  • Value Score: ‘A’
  • Zacks Rank: 2
  • Dividend Yield: 11.36%
  • P/E Multiple: 2.14
  • Projected EPS Growth for the Current Year:  34.39% (versus industry average of 4.92%)

OCI Resources LP : This Georgia-based company is engaged in trona ore mining and soda ash production businesses in the U.S. and global market. It operates the business of its parent company OCI Wyoming LLC, from its facility in the Green River Basin of Wyoming.

  • Value Score: ‘A’
  • Zacks Rank: 2
  • Dividend Yield: 9.62%
  • P/E Multiple: 8.11
  • Projected EPS Growth for the Current Year:  21.08% (versus a negative industry average)


Given the decent fundamentals, we believe investing in the above mentioned stocks will not disappoint you. While the impact of uncertainties in the stock market is always difficult to assess, it is the steady income part where we could be sure to some extent. Added to these, the inherent value associated with these stocks turn them must buys for the value investors.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

AT&T Inc. (T) - free report >>

PDL BioPharma, Inc. (PDLI) - free report >>

Old Republic International Corporation (ORI) - free report >>