5 Most Undervalued Dividend Stocks To Buy According To Analysts

2. RTX Corporation (NYSE:RTX)

Number of Hedge Fund Holders: 56

Average Analyst Price Estimate: $84

Aerospace and defense company RTX Corporation (NYSE:RTX), also known as Raytheon, is one of the top undervalued dividend stocks to buy according to hedge funds. Out of the 910 hedge funds tracked by Insider Monkey, 56 hedge funds had stakes in RTX Corporation (NYSE:RTX). The most significant stakeholder of RTX Corporation (NYSE:RTX) was Ken Griffin’s Citadel Investment Group which owns a $276 million stake in the company.

RTX Corporation (NYSE:RTX) shares were gaining on October 11 amid Israel-Hamas war. Citibank said in a note:

“We continue to expect low-single-digit top-line growth for the [U.S. Department of Defense] and mid-single-digit growth for defense contractors through 2030 as spending mix shifts to the weapons-buying accounts.”

ClearBridge Dividend Strategy made the following comment about RTX Corporation (NYSE:RTX) in its Q3 2023 investor letter:

“On the downside, shares of industrials company RTX Corporation (NYSE:RTX) underperformed significantly. On July 25 RTX announced it had discovered a manufacturing defect in some of its jet engines. RTX would have to ground the engines, replace the parts and reimburse the airlines for the downtime.

While this development weighed on the stock, our active management of the position meaningfully reduced the size of the blow. Earlier in July we had significantly trimmed our position to reflect some cyclical risks, so we were relatively less exposed when shares sold off following the announcement. When RTX delayed a scheduled update in early September, we interpreted it as a modestly negative development and further pared our position. When the update came, the stock sold off significantly on news the debacle would amount to around $3 billion over three years — the high end of investor expectations.

As we sit here today, we think the market’s reaction to RTX is likely overdone. $3 billion is a large sum, but the company’s market cap has declined over $30 billion since first releasing the news in late July. While this is a black eye for the company and will create headwinds for some time, we think it likely that the current level will mark a durable low and see opportunities to add back a small amount of the RTX we sold at higher prices earlier in the summer.”