• Tue. May 21st, 2024

Taking a Second Look at Cheap Dividend Stocks

  • (1:00) – Are Dividend Stocks Starting To Slow Down?
  • (10:10) – Stocks To Keep On Your Radar: Finding The Strong Dividends
  • (29:45) – Episode Roundup: HBI, INTC, KSS, WLKP, CALM      
  •             [email protected]


Welcome to Episode #318 of the Value Investor Podcast.

Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.

In 2023, she has covered cheap dividend paying stocks because they have become more popular after last year’s market sell-off. Why not get some extra income along with your value stock?

But in recent weeks, two prominent companies have cut, or eliminated, their dividends.

How risky are dividend paying stocks?

Is there any way to protect yourself from dividend cuts?

The Tales of 5 Dividend Paying Stocks

1.      Hanesbrands, Inc. HBI

Hanesbrands has been featured on the Value Investor podcast recently because it was paying a dividend yielding 7%. But on Feb 2, 2023, Hanesbrands announced its fourth quarter results and that it was eliminating the dividend to focus all free cash flow on debt reduction.

Hanesbrands had paid the dividend since 2012.

Shares plunged on the news and are down 14% year-to-date and have fallen 64% over the last year.

Earnings are expected to fall 63% in 2023 to $0.36 from $0.98 last year.

Hanesbrands is a Zacks Rank #4 (Sell).

2.      Intel Corp. INTC

Intel has also been featured on the Value Investor podcast over the last few years as it, too, paid a generous dividend. In 2023, it was yielding 5.6%.

But on Feb 22, 2023, Intel announced that it was going to “reset” its dividend policy. It cut its dividend payout 65% to $0.125 per quarter.

Shares of Intel have fallen 42.7% over the last year. Earnings are expected to decline 68.5% to $0.58 from $1.84 last year.

Is the bad news now priced into Intel?

3.      New York Community Bancorp Inc. NYCB

New York Community Bancorp is the parent of Flagstar Bancorp, which operates Flagstar Mortgage, one of the largest mortgage brokerages in the nation. It has paid a $0.17 per share quarterly dividend every quarter since 2018. It has never raised it, or lowered it, during that time.

Shares of New York Community Bancorp have fallen 21.3% in the last year. It’s dividend is now yielding 7.5%.

Analysts are mixed on the earnings outlook for New York Community Bancorp for 2023. Three estimates have been raised and three have been lowered in the last 30 days. 2023’s earnings are expected to fall 8.9% to $1.12 from $1.23 last year.

Should New York Community Bancorp be on your short list?

4.      Kohl’s Corp. KSS

Kohl’s is a national retailer which operates 1100 stores in 49 states and online. It’s paying a dividend yielding 6.7%.

Like many retailers during the pandemic, Kohl’s suspended its dividend in 2020. But it resumed it in 2021 and 2022, paying a quarterly dividend of $0.50 per share.

Kohl’s earnings are expected to fall 58.5% in Fiscal 2022. It reports fourth quarter and full year results on Mar 1, 2023.

But what about that dividend? On Feb 21, 2023, Kohl’s declared that the board had passed the regular dividend of $0.50 per share payable on Mar 29, 2023 to shareholders of record at the close of business on Mar 15, 2023.

Shares of Kohl’s have fallen 45.4% in the last year. Should Kohl’s be on the short list for those looking for a high dividend yield?

5.      Cal-Maine Foods, Inc. CALM

Cal-Maine Foods is the largest producer and distributor of fresh eggs in the United States. Due to the Avian flu outbreak, eggs have surged to record high prices.

Cal-Maine Foods’ earnings are soaring. They are expected to be up 515% in fiscal 2023 to $16.75 from $2.72 last fiscal year. Cal-Maine Foods has a variable dividend program which pays a dividend equal to one-third of the quarterly income. If it’s not profitable in the quarter, it doesn’t pay a dividend.

Therefore, Cal-Maine Foods did not pay a dividend in 2020, when the pandemic hit. But it’s last dividend payout was the highest since Jan 2019. In Jan 2023, it paid $1.351 per share, up from $0.853 in Oct 2022.

Shares of Cal-Maine Foods are up 9.1% year-to-date. The dividend is currently yielding 5.2% but, again, it’s variable.

Should Cal-Maine Foods be on your short list?

 What Else Do You Need to Know About Dividend Investing in 2023?

Listen to this week’s podcast to find out.


Zacks Names “Single Best Pick to Double”

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.

This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.

Free: See Our Top Stock and 4 Runners Up >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Intel Corporation (INTC) : Free Stock Analysis Report

Kohl’s Corporation (KSS) : Free Stock Analysis Report

Hanesbrands Inc. (HBI) : Free Stock Analysis Report

Cal-Maine Foods, Inc. (CALM) : Free Stock Analysis Report

New York Community Bancorp, Inc. (NYCB) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.