3 High-Yielding Dividend Stocks Near Their 52-Week Lows

Dividend stocks haven’t been taking off these days, and that’s in part due to high interest rates. When investors can get healthy returns from low-risk, interest-paying assets, the case for buying dividend stocks is naturally less appealing. But the good news for long-term investors is that this means stock prices for some solid dividend stocks are low, and there are some enticing deals available right now.

Bristol Myers Squibb (BMY), Cisco Systems (CSCO), and Starbucks (SBUX) are high-yielding stocks trading near their 52-week lows that you might want to consider adding to your portfolio.

1. Bristol Myers Squibb
Bristol Myers Squibb has been underperforming the markets by a wide margin this year. While the S&P 500 is up by around 17%, this top healthcare stock is down by more than 21%.

There are two big reasons why investors are down on the company: its high debt load and its looming patent expirations. The company has spent a lot on acquisitions over the years and now has around $50 billion in long-term debt. That’s going to make investors nervous, especially in a high-interest rate environment.

Meanwhile, three of its top-selling drugs will lose U.S. patent protection in the years ahead — Eliquis, Revlimid, and Opdivo. Bristol Myers does have a plan for new drugs to help fill the gap of lost revenue. Management has estimated that its new product portfolio may generate up to $25 billion in revenue by the end of the decade.

To buy this stock now, investors need to take a leap of faith that this established healthcare company still knows how to find good growth opportunities and can successfully develop new treatments. If you think that’s true, then this could be an underrated stock to buy, as Bristol Myers is trading right around its 52-week low of $39.35 and pays a dividend that at that share price yields 6% — more than four times the S&P 500’s average yield of 1.3%.

There’s some risk here, but if you can stomach it, Bristol Myers could be a cheap income stock to add to your portfolio right now.

2. Cisco Systems
Cisco shares have also dropped this year, though their 9% decline was more modest. There’s nothing terribly wrong with the tech stalwart’s business, though, and it should benefit from companies updating their computing capabilities and networks.

Right now, all the hype in the tech sector is about artificial intelligence, data centers, and cloud computing. However, the next wave of upgrades could mean an increase in revenue for Cisco and its varied networking and security products, which are crucial for IT departments. Unfortunately, with its revenue down 13% in its fiscal 2024 third quarter (which ended April 27), investors looking for AI-related plays aren’t likely to rush to buy Cisco stock.

Cisco’s time will come, though, as IT upgrades can be only put off for so long. Right now, the stock is within a couple of dollars of its 52-week low, and its dividend yields 3.5%, so it could be an underrated income and growth stock to buy for the long haul.

3. Starbucks
Coffee chain giant Starbucks is down by a whopping 24% year to date. Investors are concerned that its growth has ground to a halt and are having trouble seeing how it could change that narrative in the near term.

When the company reported its fiscal Q2 earnings in April, its comparable-store sales for the period (which ended March 31) were down 4% year over year, which is not the sort of result growth investors want to see. The company has been reducing prices on its menu items, which it hopes will lead to more sales, even if those come at the cost of lower margins.

The stock is trading within a few dollars of its 52-week low, and there is a danger that its slide is not over, especially if its earnings performance for its recently concluded fiscal Q3 proves underwhelming due to those price cuts.

But if you’re a buyer who intends to hold for the long haul, you don’t need to worry as much about issues that may end up only being temporary for a business that still has some exciting growth plans ahead. This includes the goal — unveiled late last year — of adding 17,000 locations by 2030 to its recent count of around 38,000.

Starbucks could still be a good growth stock to hold, and for buyers now, it’s offering an above-average yield of just over 3%.

— David Jagielski

Source: The Motley Fool