There are far too many solid dividend stocks out there that simply do not get as much attention as they deserve. Undoubtedly, such under-the-radar names could be a great opportunity for willing buyers who care to do a bit of looking, even when the stock market is perceived as overly frothy and due for a bit of a sharp pullback at some point over the near term.
On a scale of one to 10, with 10 being the most underrated, this piece will have a closer look at a fair number of dividend stocks that I think are at least a seven, eight, or nine on the scale.
And while things could change as the steady dividend payers continue marching forward, even in the face of a choppier market environment and harsh economic headwinds, I expect the following dividend stocks to be less influenced by events that weigh down (or power up) the rest of the market.
So, without further ado, let’s get into the underrated (and likely highly undervalued) dividend stars:
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Restaurant Brands International
Restaurant Brands International (TSX: QSR) may be behind such household names as Tim Hortons, Popeye’s Louisiana Kitchen, Burger King, and Firehouse Subs. But the stock itself, I find, is incredibly underrated. On our underrated scale, I’d pin shares of QSR with an eight. Sure, the stock is well-known, but it has been tremendously volatile in recent years, and I do think newer investors are underappreciating the solid, growing dividend, which currently yields just shy of 3.5%.
For a company behind some of the most iconic brands in the fast-food world, I’d expect a far richer multiple than what shares are commanding right now, especially given the resilience that each quick-serve restaurant might exhibit as the lower-end consumer feels considerable pressure amid high food inflation and dimming economic prospects. At 12.6 times forward price-to-earnings (P/E), I just don’t get why the stock is so cheap. I think it’s a massive bargain, especially after a strong quarter and a recent upgrade (from hold to buy), courtesy of Argus.
Argus thinks favourable comps at home and abroad could help keep the firm’s “earnings prospects” as “favourable.” I couldn’t agree more. The dividend star is starting to outclass its rivals. And that’s why it’s time to buy while the stock is cheap.
National Bank of Canada
National Bank of Canada (TSX: NA) may not seem underrated, with a stock that’s just a percentage point away from fresh all-time highs. However, compared to its five peers in the Big Six, I’d say NA stock doesn’t get nearly enough respect from retail investors. On the scale, I’d pin a seven on National Bank. It’s not as underrated as QSR, but it is compared to its red-hot banking peers.
Maybe it’s because shares boast a very modest 2.8% dividend yield, or maybe it’s because of the relatively small $66 billion market cap, which is far smaller than its larger Big Six peers. Either way, National Bank is managing through the environment really well, and I’d be willing to give it a growth edge over most of its peers! In my view, National Bank deserves every bit of attention that its much-larger rivals are getting right now amid their bull runs.
