With all the major U.S. indexes now in bear markets, investors would be smart to focus on high-yielding, cheap dividend stocks. These are shares of companies that are affordable and offer strong quarterly payouts to shareholders.
With stock gains hard to come by in the current, volatile market, what else can investors be expected to do but chase dividend yields? Over time, dividends can help build up portfolios or provide a steady stream of income to retired people.
And most dividends are secure even during a severe market downturn such as the one we are now experiencing. With markets continuing to trend lower, investors should seek a safe harbor in dividend-paying stocks. Here are seven cheap dividend stocks to buy right now that could give a much needed lift to beaten-down portfolios.
Pioneer Natural Resources
Yamana Gold Inc. (AUY)
Look north to Canada and gold mining firm Yamana Gold (NYSE:AUY). The Toronto-based company’s stock has performed well this year with gold prices steadily rising. In 2022, AUY stock is up 6% to $4.49 per share.
While that price technically makes Yamana Gold a penny stock, it still offers investors a dividend yield of 2.62% and a payout of 4 cents per share each quarter. And with proven reserves of 14 million ounces of gold and 111 million ounces of silver, there is every reason to be confident that Yamana Gold will continue to pay out at least that much for the foreseeable future.
Earlier this year, South African miner Gold Fields (NYSE:GFI) offered to buy Yamana Gold for $7 billion . However, the deal has yet to win the approval of Gold Fields’ shareholders, with many expressing concerns about the timing of a potential acquisition and asserting that GFI might be overpaying to buy Yamana.
Some of Gold Fields top shareholders have exited their positions in GFI stock in protest. Unless there is a change in the deal, Yamana Gold is likely to remain an independent concern moving forward.
North Carolina-based Hanesbrands (NYSE:HBI) is an American clothing company best known for selling underwear and undershirts. The company owns brands such as Hanes, Wonderbra, Just My Size, and Champion. A going concern since 1901, Hanesbrands today employs nearly 60,000 people and has annual revenues of more than $7 billion. The company also has a market capitalization of $2.60 billion and pays out a dividend that yields a spectacular 7.85% or 15 cents a share every three months.
The dividend yield, which is about as good as most investors will find in today’s market, is meant to partially compensate for the share price that has been steadily eroding since it peaked near $35 a share in 2015. Today HBI stock trades right around $7.30 per share, down over 60% in the last 12-months and more than 70% lower than where it was five years ago.
While some analysts and investors might dismiss Hanesbrands as an outdated company whose stock has become a value trap, it still offers a decent quarterly payout to shareholders looking to earn regular income from their investments. With a price-earnings ratio of 5.75, there’s no arguing that it’s a cheap stock . And people will always need underwear.
Telecommunications giant AT&T (NYSE:T) is another old American business whose stock has underperformed for many years. Today T stock is trading at $15.50 a share. Back in 1999, at the height of the dotcom bubble, the shares were being passed around for $42 apiece.
Over the past five years, T stock has come down 50%. However, there’s reason to be optimistic about AT&T after the company restructured itself this year and spun-off WarnerMedia, which ended up becoming part of the Warner Bros. Discovery (NASDAQ:WBD) streaming company.
The spinoff of WarnerMedia enables AT&T to focus on its core telecommunications business, which primarily consists of fifth generation (5G) cell phone service. Analysts who cover the company have been generally encouraged by this approach, with some saying it should lead to an eventual recovery by T stock.
While shareholders wait for the turnaround to take hold, they can take solace in a rich dividend yield of 7% or a quarterly payout of 28 cents a share. AT&T also has a valuation that is even cheaper than the aforementioned Hanesbrands, with a price–earnings ratio of just 5.8. That’s rock bottom for a technology stock.
Pioneer Natural Resources (PXD)
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One of the biggest dividend yields around belongs to oil and natural gas exploration company Pioneer Natural Resources (NYSE:PXD). The Texas-based company currently boasts a dividend yield of 10.34%, which equates to a hefty payout every three months of $6.36 per share. Investors will be hard pressed to find a better yield or payout, even among energy companies that are known for offering shareholders some of the best dividends in the market.
Unlike many of the other names on this list, PXD stock has been marching higher over the past five years. At its current price of $210 a share, the stock is up 13% this year and has risen 24% in the last 12 months.
Since 2017, Pioneer Natural Resources’ share price has gained 43%. Throw in a price-earnings ratio of 8.7, and PXD stock looks like a steal at its current valuations. With oil prices pulling back, Pioneer’s stock is now 27% below its 52-week high of $288.46.
As a result, investors can buy the stock cheaply and bank the dividend.
Icahn Enterprises (IEP)
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Investors who are only chasing yield might want to consider Icahn Enterprises (NASDAQ:IEP), the conglomerate that is controlled by famed investor, corporate raider, and activist shareholder Carl Icahn. Currently, IEP stock has a dividend yield of 15.92%, which equates to a quarterly payment of $2 a share. By buying the shares of Icahn Enterprises, investors get what is essentially a holding company that has investments in industries ranging from energy and automotive to food and fashion.
Investors should be aware, though, that IEP stock does not move a great deal either up or down. This might be viewed as a positive in today’s topsy-turvy market. Year-to-date, Icahn Enterprises stock is down a slight 3% and IS NOW trading at right around $50 a share.
In the past year, the stock has declined a mere 0.02%. Over the past five years, the share price is down 8%. These SMALL moves in the stock might be tolerable to investors who are willing to treat owning IEP stock as an investment in an ultra-high yielding bond.
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Shipping and logistics giant Federal Express (NYSE:FDX) has taken a beating this year with its share price having fallen 42% since January. Trading now around $150 a share and with a price-earnings ratio of 10.98, the valuation of FedEx has come down a lot in recent months, making it an attractive option for buy-and-hold investors.
However, investors should also be interested in the fact that newly installed FedEx CEO Raj Subramaniam has quickly made the dividend a key focus.
Since taking over the CEO role from company founder Fred Smith in June, Subramaniam has lifted the FDX dividend by 53%. The company’s dividend now yields 3.08% or $1.15 a share per quarter.
Investors loudly cheered the dividend hike, sending FDX stock up 14% immediately after it was announced, its biggest one-day gain since 1986. Since the dividend increase was introduced in June, FDX stock has taken a bruising after the company reported disappointing earnings and pulled its forward guidance for the year. But again, this has only made FedEx a more affordable to stock to buy.
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3M (NYSE:MMM) is the Minnesota-based company that is best known as the maker of post-it-notes and other handy office supplies. With 95,000 employees and operations in 70 countries around the world, 3M also makes healthcare and car products. But it is the post-it-notes where 3M has found the most traction (pun intended).
The company is also known as a dividend aristocrat, having increased its quarterly payout to shareholders for 25 consecutive years. Now yielding 5.3%, the dividend associated with MMM stock pays $1.49 a share each quarter.
While the dividend is impressive, MMM stock’s performance is another matter. The company’s share price is down 54% from its all-time high of $245 reached in 2018 before the pandemic struck. So far this year, the stock has come down 36%.
While no doubt disappointing, the decline has made 3M another cheap dividend stock to buy now. The price–earnings ratio of MMM stock is 15.92, making it fairly valued relative to its peers. The stock is also now trading near its 52-week low of $111 a share, presenting a clear buying opportunity.
On the date of publication, Joel Baglole 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.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.