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10 Undervalued Dividend Stocks with Over 10% Yield

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·11 min read
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In this article, we discuss 10 undervalued dividend stocks with over 10% yield. If you want to look at more high-yield undervalued stocks, click 5 Undervalued Dividend Stocks with Over 10% Yield.

The prospects for global dividend growth brightened in 2021, and experts projected dividend payments for the year to reach $1.4 trillion. In 2022, the macroeconomic uncertainties threw the stock market in a turbulent bind, with major driving forces being the Fed’s tightened rising rates policy, the Russia-Ukraine war, the onslaught of COVID-19 in China and consequent broken global supply chains, the raging inflation, and ongoing fears of a recession.

Goldman Sachs expects dividends in 2022 to grow by 10%, with the energy sector leading the charge as these companies were the biggest gainers from high oil prices and resultantly had heavy influx of cash. In this uncertain stock market, investors have massively disposed of growth stocks and are shifting to value plays, since they have historically performed better during volatile macro backdrops.

Value stocks paired with high dividend yields are some of the most feasible hedges against inflation. While the most well-known dividend names include Johnson & Johnson (NYSE:JNJ), The Coca-Cola Company (NYSE:KO), and Altria Group, Inc. (NYSE:MO), we discuss undervalued dividend stocks with over 10% yield in this article.

Our Methodology

We selected securities with a P/E ratio of under 15, with a dividend yield of more than 10% as of May 13. We have mentioned metrics like the latest dividend payouts, number of hedge fund holders, Q1 earnings, and analyst ratings for the stocks, where available.

Data from more than 900 elite hedge funds tracked by Insider Monkey in Q4 2021 was used to identify the number of hedge funds that hold stakes in each company.

10 Undervalued Dividend Stocks with Over 10% Yield
10 Undervalued Dividend Stocks with Over 10% Yield

Photo by Dan Dennis on Unsplash

Undervalued Dividend Stocks with Over 10% Yield

10. AllianceBernstein Holding L.P. (NYSE:AB)

Dividend Yield as of May 13: 12.53%

Number of Hedge Fund Holders: 5

P/E Ratio as of May 13: 9.73

AllianceBernstein Holding L.P. (NYSE:AB) is a New York-based investment manager that employs long/short investment strategies, investing primarily in the global public equity, fixed income, and alternative investment markets. AllianceBernstein Holding L.P. (NYSE:AB)’s dividend yield on May 13 came in at 12.53%.

On May 5, AllianceBernstein Holding L.P. (NYSE:AB) declared a $0.90 per share quarterly dividend. The dividend is payable on May 26, to shareholders of the company as of May 9. AllianceBernstein Holding L.P. (NYSE:AB) on April 29 posted earnings per share of $0.90 for Q1 2022, beating consensus estimates by $0.06. The EPS also increased from $0.81 in the same quarter last year. The company announced net inflows of $11.4 billion in Q1, representing 6% annualized organic growth.

For a purchase price of $750 million, AllianceBernstein Holding L.P. (NYSE:AB) announced on March 17 that it will acquire CarVal Investors. CarVal is a global private alternative investment manager, with about $14.3 billion in assets under management. The firm invests in opportunistic and distressed credit, renewable energy infrastructure, specialty finance, and transportation. Adding CarVal to its operations enhances AllianceBernstein Holding L.P. (NYSE:AB)’s Private Alternatives platform. AB’s investment expertise in opportunistic and private credit can now expand to North America, Europe, Latin America, and Asia.

According to Insider Monkey’s fourth quarter database, 5 hedge funds were bullish on AllianceBernstein Holding L.P. (NYSE:AB), with combined stakes worth $32.3 million. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is the biggest shareholder of the company, with 285,457 shares valued at almost $14 million.

In addition to Johnson & Johnson (NYSE:JNJ), The Coca-Cola Company (NYSE:KO), and Altria Group, Inc. (NYSE:MO), AllianceBernstein Holding L.P. (NYSE:AB) is one of the notable income stocks on the radar of institutional investors.

9. Star Bulk Carriers Corp. (NASDAQ:SBLK)

Dividend Yield as of May 13: 26.74%

Number of Hedge Fund Holders: 20

P/E Ratio as of May 13: 4.49

Star Bulk Carriers Corp. (NASDAQ:SBLK) was incorporated in 2006 and is based in Marousi, Greece. The company specializes in ocean transportation of dry bulk cargoes worldwide. Star Bulk Carriers Corp. (NASDAQ:SBLK) is a notable undervalued dividend stock to consider, with a price to earnings ratio of 4.49 and a dividend yield of 26.74% as of May 13.

On February 16, Star Bulk Carriers Corp. (NASDAQ:SBLK) declared a $2.00 per share quarterly dividend, a 60% increase from its prior dividend of $1.25. The dividend was distributed to shareholders on March 15.

Jefferies analyst Christopher Robertson on April 27 reinstated coverage of Star Bulk Carriers Corp. (NASDAQ:SBLK) with a Buy rating and a $36 price target. The analyst observed that rates across many maritime industry sub-sectors went through normal seasonal pressures during the first quarter of 2022, but rates and asset values are now rising and the Jefferies shipping index has gained about 25% year-to-date, mostly owing to recent equity performance in the dry bulk and tanker space. The analyst remains positive on supply side fundamentals of the maritime shipping group.

According to Insider Monkey’s Q4 data, Star Bulk Carriers Corp. (NASDAQ:SBLK) was found in the public stock portfolios of 20 hedge funds, who collectively held stakes worth over $733 million. Howard Marks’ Oaktree Capital Management is the leading shareholder of the company, with approximately 26 million shares valued at $589.2 million.

Here is what Massif Capital has to say about Star Bulk Carriers Corp. (NASDAQ:SBLK) in its Q3 2021 investor letter:

“We initiated one long position, one short position and exited one position during the third quarter. Our new long position was in Star Bulk Carriers (SBLK), a pure-play dry bulk operator with roughly 120 controlled vessels and 14 million tons of combined cargo capacity globally.

SBLK has one of the better management teams in the maritime shipping industry and the lowest cost structure among all dry bulk names. After announcing their new dividend policy in May, SBLK now has one of the best payout structures in shipping. The firm has paid out $0.3 and $0.7 per share in dividends for the first and second quarters of 2021. SBLK will most likely announce a dividend for the third quarter somewhere in the $1.15-$1.25 per share range, depending on movement in net working capital.

We believe the best way to look at this business is through cash generation potential and how much is returned to investors. The current equity valuation does not reflect current rates for shipping (earnings), partly because of the velocity of the move in rates and because shipping cycles turn, and it’s not clear whether this is a local top or the early innings of a multi-year cycle. Our belief is the latter. Part of our catalyst is the market re-rating the stock higher once the length of the increased earnings power becomes understood. It is a relatively strong catalyst in the sense that with a strong dividend policy, we can be patient for the market to underwrite this story as the cash is either returned to us via a high dividend yield if the market is either slow or chooses not to join our side of the trade.

Our estimates suggest a time-charter equivalent rate (net profit or loss of operating a vessel daily) of at least $30,000 for SBLK in Q4, with the firm earning a potential annual average of $26,000. Our base case is that this is a strong floor going into next year, with little need to articulate much more upside. If rates hold, which we expect them to do, we could see a 20+% annual dividend next year for SBLK. If the market priced the equity such that the dividend yield was 8%, that implies a $62 stock. Today our base case target for the firm is $37 per share. This is likely conservative as we know that third-quarter rates are higher than the second quarter, and third-quarter dividends will most likely reflect that. We are cautious about diving too deep into the sensitivities to the upside with this position as we are arriving at some pretty remunerative torque using current contracted values and seemingly conservative forecasts…” (Click here to see the full text)

8. AFC Gamma, Inc. (NASDAQ:AFCG)

Dividend Yield as of May 13: 12.28%

Number of Hedge Fund Holders: 4

P/E Ratio as of May 13: 10.29

AFC Gamma, Inc. (NASDAQ:AFCG) is a Florida-based company that underwrites and invests in senior secured loans and debt securities for stable companies in the legalized cannabis industry. AFC Gamma, Inc. (NASDAQ:AFCG) is qualified to be taxed as a real estate investment trust for income tax purposes.

On May 10, AFC Gamma, Inc. (NASDAQ:AFCG) reported a Q1 non-GAAP EPS of $0.62, beating market estimates by $0.08. The net interest income of $16.9 million climbed 259.6% year-over-year, outperforming analysts’ predictions by $0.71 million. AFC Gamma, Inc. (NASDAQ:AFCG)’s book value on March 31 stood at $17.04 per share, an increase of 2.6% compared to December 31, 2021.

AFC Gamma, Inc. (NASDAQ:AFCG) announced on May 2 that it has entered into a senior secured revolving credit facility worth $60 million with two FDIC-insured banks. The company can extend the facility to $100 million. This money will finance commitments under loans to AFC Gamma, Inc. (NASDAQ:AFCG)’s existing borrowers, originate commercial loans to cannabis operators that are in-line with its investment strategy, and other general corporate purposes.

AFC Gamma, Inc. (NASDAQ:AFCG) declared on March 11 a $0.55 per share quarterly dividend, a 10% increase from its earlier dividend of $0.50. The dividend was distributed to shareholders on April 15. AFC Gamma, Inc. (NASDAQ:AFCG)’s dividend yield as of May 13 stood at 12.28%.

According to Insider Monkey’s Q4 data, 4 hedge funds placed long calls on AFC Gamma, Inc. (NASDAQ:AFCG), with combined stakes valued at $8.50 million. Jim Simons’ Renaissance Technologies is the leading shareholder of the company, with a position worth $3.2 million.

7. Great Ajax Corp. (NYSE:AJX)

Dividend Yield as of May 13: 11.94%

Number of Hedge Fund Holders: 9

P/E Ratio as of May 13: 8.38

Great Ajax Corp. (NYSE:AJX) is an American real estate investment trust managing a portfolio of residential mortgage and small balance commercial mortgage loans. Great Ajax Corp. (NYSE:AJX) declared on May 5 a $0.26 per share quarterly dividend, in line with previous. The dividend is distributable on May 31, to shareholders of the company as of May 6.

On April 26, JMP Securities analyst Trevor Cranston maintained an Outperform rating on Great Ajax Corp. (NYSE:AJX) but lowered the price target on the shares to $11 from $15 as part of his broader thesis previewing Q1 performance for the Residential Mortgage REIT sector. The analyst cited sharp moves in interest rates as Fed policy expectations "shifted dramatically" and the geopolitical instability for his price target drop.

Among the hedge funds tracked by Insider Monkey, 9 funds were long Great Ajax Corp. (NYSE:AJX) at the end of Q4 2021, with combined stakes of $17.2 million, compared to the same number of funds in Q3, holding stakes in the company valued at about $13 million. Michael Platt and William Reeves’ BlueCrest Capital Mgmt is a significant shareholder of Great Ajax Corp. (NYSE:AJX), with 206,890 shares worth $5.3 million.

6. Broadmark Realty Capital Inc. (NYSE:BRMK)

Dividend Yield as of May 13: 11.43%

Number of Hedge Fund Holders: 11

P/E Ratio as of May 13: 12.17

Broadmark Realty Capital Inc. (NYSE:BRMK) is a Seattle-based commercial real estate finance company that offers underwriting and funding, in addition to managing a portfolio of short-term trust loans to finance the construction, development, or investment in residential and commercial properties.

Broadmark Realty Capital Inc. (NYSE:BRMK) announced on April 18 a $0.07 per share monthly dividend, in line with previous. The dividend is payable on May 16, to shareholders of record on April 29. Broadmark Realty Capital Inc. (NYSE:BRMK)’s dividend yield of 11.43% is notably higher than the average real estate yield of 4.46%. On May 13, the stock’s price to earnings ratio came in at 12.17.

Among the hedge funds tracked by Insider Monkey, 11 funds reported owning stakes in Broadmark Realty Capital Inc. (NYSE:BRMK) at the end of December 2021, with total stakes worth approximately $60 million. Thomas Steyer’s Farallon Capital is the largest shareholder of the company, with 4.85 million shares valued at $45.7 million.

Like Johnson & Johnson (NYSE:JNJ), The Coca-Cola Company (NYSE:KO), and Altria Group, Inc. (NYSE:MO), elite hedge funds are flocking to Broadmark Realty Capital Inc. (NYSE:BRMK) for dividend income.

Click to continue reading and see 5 Undervalued Dividend Stocks with Over 10% Yield.

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Disclosure: None. 10 Undervalued Dividend Stocks with Over 10% Yield is originally published on Insider Monkey.