In this article, we will analyze the list of the best 52-week low stocks that pay dividends.
Dividend stocks have noticeably lagged over the past year or so, with tech stocks dominating the spotlight. However, with major tech companies beginning to implement dividend policies, there is renewed optimism for investors, offering a mix of growth and dividend potential. Currently, all eyes are on the Fed’s upcoming decision on interest rate cuts, which could significantly benefit dividend-paying stocks.
While keeping an eye on the future performance of dividend stocks is crucial, it’s also wise to look back and see how these equities have weathered different market storms. A report from S&P Dow Jones Indices revealed that dividends have been crucial in generating overall equity returns. Since 1926, dividends have accounted for about 32% of the total return for the broader market, with capital appreciation contributing 68%. Consequently, both reliable dividend income and the potential for capital appreciation are key factors in setting expectations for total returns.
Also read: 14 Best 52-Week High Stocks to Buy According to Short Sellers
Inflation is rarely a friend to investments, as the past year has demonstrated. However, dividend stocks have historically held their ground during periods of high inflation. In the 1940s, 1960s, and 1970s—decades characterized by high inflation and total returns below 10%—dividends made a significant contribution to overall returns, as reported by Hartford Funds.
Among dividend strategies, the Dividend Aristocrats Index is the most well-known, tracking companies with at least 25 consecutive years of dividend growth. These stocks are generally less volatile than other asset classes, according to S&P Dow Jones Indices. Over the long term, the Dividend Aristocrats have outperformed the broader market with lower volatility, resulting in higher risk-adjusted returns. The index’s ability to protect against downside risk is evident in its capture ratios: it has outperformed the market in 69.34% of down months and 43.61% of up months. Moreover, the Dividend Aristocrats experienced a smaller drawdown compared to the benchmark index.
Analysts believe that the movement of returns on investments is shaped by market forces. Daniel Peris, a portfolio manager with Federated Hermes and author of a recent book on the future of dividends, suggested that stock market price appreciation alone might not meet the needs of income-seeking investors in the coming years. This, he believed, would likely drive companies to increase their payouts to remain competitive with cash and bonds. He indicated that more companies might start offering dividends and make them a more significant part of their value proposition. However, investors need to be cautious when investing in dividend equities. According to Michael Clarfeld, who manages the Dividend Strategy portfolios at ClearBridge Investments, dividend investing is about making informed decisions by examining a company’s cash flows and how they distribute payouts to investors.
The recent dip in the performance of dividend stocks has made them more attractive to investors. The Dividend Aristocrats Index has seen an increase of nearly 9% since the beginning of 2024, while the broader market has returned 16.5%. These stocks could present a good entry point for investors due to the steady income they offer, providing stability and predictability for a portfolio during volatile times. Given this, we will take a look at some of the best 52-week low stocks that pay dividends.
Image by Sergei Tokmakov Terms.Law from Pixabay
Our Methodology:
For this article, we first listed down all dividend stocks that recently hit their 52-week lows. We then used Insider Monkey’s exclusive database of 912 leading hedge funds to get the hedge fund sentiment for each stock. Finally, we narrowed our list to 12 of these stocks that had the highest number of hedge fund investors, as tracked by Insider Monkey in Q2 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
12. Hillenbrand, Inc. (NYSE:HI)
Number of Hedge Fund Holders: 7
1-Year Share Price Decline as of September 4: 31.8%
52 Week Range: $30.57 – $50.58
Hillenbrand, Inc. (NYSE:HI) is an Indiana-based company that specializes in industrial processing solutions and materials handling equipment. In the past 12 months, the stock is down by nearly 32% due to a difficult macro environment. Many industrial manufacturers are facing an uncertain time, as their customers are concerned about the state of the economy and are holding off on major, costly expansions.
Hillenbrand, Inc. (NYSE:HI)’s latest quarterly earnings somewhat reassured investors about its operations, although it isn’t likely to bring about any major changes for the business. In fiscal Q3 2024, the company reported revenue of $787 million, which showed a 10% growth from the same period last year. The revenue mainly increased due to its FPM acquisition. On the other hand, due to the difficult economic backdrop, the company saw much lower than anticipated orders and revenue in its Advanced Process Solutions segment. This performance was largely driven by ongoing delays in customer projects, which became more prevalent during the quarter as concerns about interest rates, inflation, and overall economic uncertainty persisted.
From a dividend perspective, Hillenbrand, Inc. (NYSE:HI)’s cash position also appeared weak. Debt reduction remains the primary focus for capital allocation, but cash flow is still being affected by the sluggish demand environment. Consequently, the company expects its deleveraging efforts to face challenges until order levels return to normal. Its operating cash flow for the quarter came in at $46 million, down significantly by 49% from the same period last year.
That said, Hillenbrand, Inc. (NYSE:HI) remained committed to its shareholder obligation. During the quarter, the company returned approximately $16 million to shareholders in dividends. Moreover, it has raised its payouts for 17 consecutive years, which makes HI one of the best 52-week low stocks that pay dividends. It currently pays a quarterly dividend of $0.2225 per share and has a dividend yield of 2.88%, as of September 4.
At the end of Q2 2024, 7 hedge funds tracked by Insider Monkey owned stakes in Hillenbrand, Inc. (NYSE:HI), up from 6 in the previous quarter. These stakes have a total value of over $26.8 million. Among these hedge funds, Adage Capital Management was the company’s leading stakeholder in Q2.
11. Mercer International Inc. (NASDAQ:MERC)
Number of Hedge Fund Holders: 15
1-Year Share Price Decline as of September 4: 33.9%
52 Week Range: $5.56 – $11.20
Mercer International Inc. (NASDAQ:MERC) is a Canadian company that deals in market pulp and solid wood products. The company provides investors with a relatively secure option to navigate the cyclical nature of the pulp market. Like all commodity and material stocks, pricing is driven by the balance between supply and demand. In the second quarter of 2024, pulp prices improved across all major markets due to rising demand and supply disruptions. As these disruptions subside and the market enters a period of typically lower seasonal demand, the company anticipates a slight decline in pulp prices during the third quarter of 2024. In the past year, the stock has declined by 33%.
In Q2 2024, Mercer International Inc. (NASDAQ:MERC) reported revenue of $499.3 million, which fell by 5.7% from the same period last year. The strong pulp market during the quarter led to an increase in operating cash flow. This boost in overall liquidity enabled the company to reduce its borrowings by roughly $45 million on its revolving credit facilities during the quarter.
Mercer International Inc. (NASDAQ:MERC) started paying dividends in 2015 and has never missed a dividend since then. In addition, the company returned $156 million to shareholders through dividends and share buybacks between 2018 to 2023. Its quarterly dividend comes in at $0.075 per share and has a dividend yield of 5.36%, as of September 4. It is among the best 52-week low stocks that pay dividends.
The number of hedge funds tracked by Insider Monkey owning stakes in Mercer International Inc. (NASDAQ:MERC) grew to 15 in Q2 2024, from 11 in the previous quarter. These stakes have a consolidated value of nearly $30 million.
10. Movado Group, Inc. (NYSE:MOV)
Number of Hedge Fund Holders: 16
1-Year Share Price Decline as of September 4: 18.40%
52 Week Range: $22.41 – $31.44
Movado Group, Inc. (NYSE:MOV) is an American designer, manufacturer, and distributor of watches. The company is mainly known for its luxury and fashion watch brands. Movado Group faced a challenging environment last year as inflation in both Europe and the United States curbed discretionary spending. As the year went on, business conditions worsened, which hurt the company’s overall performance in fiscal year 2023. Since the start of 2024, the stock has been down by over 25.5% and its 12-month returns came in at -18.40%.
That being said, the overall economic environment wasn’t entirely detrimental for Movado Group, Inc. (NYSE:MOV), which managed to navigate through the challenges fairly effectively. The company’s results for the first quarter of 2024 were somewhat encouraging. They met expectations as the quarter saw positive progress, driven by successful new product innovations, notably the Movado Bold Quest, and robust double-digit growth at Movado.com, which was boosted by a spring television campaign. As planned, Movado Group, Inc. (NYSE:MOV) will increase its marketing investments in the second quarter to support strategic growth opportunities, including an anticipated new Movado campaign set to launch in the fall.
Movado Group, Inc. (NYSE:MOV)’s balance sheet also remained strong as it ended the quarter with $225.3 million available in cash and cash equivalents. Moreover, the company has no debt, which makes it a solid investment option for income investors. During its last fiscal year, it returned $53.1 million to shareholders in dividends, which also included a special cash dividend of $1.00 per share.
One of the best 52-week low stocks, Movado Group, Inc. (NYSE:MOV) has consistently paid dividends to shareholders since 1996, with the exception of 2020, when it briefly suspended payouts due to the pandemic. Currently, it offers a quarterly dividend of $0.35 per share for a dividend yield of 6.20%, as of September 4.
As of the close of Q2 2024, 16 hedge funds in Insider Monkey’s database owned stakes in Movado Group, Inc. (NYSE:MOV), down from 20 in the preceding quarter. These stakes have a collective value of over $57.8 million. With over 1.4 million shares, Royce & Associates was the company’s largest stakeholder in Q2.
