Dividend stocks are a safe bet to increase your portfolio value as they provide both steady income and cushion against market risks. However, undervalued dividend stocks also enhances your opportunity to gain from capital appreciation (an increase in share price) over time as well. Today I will share with you my mispriced dividend-paying companies you should be considering for your portfolio.
Secure Trust Bank Plc (LSE:STB)
Secure Trust Bank PLC provides retail banking products and services in the United Kingdom. Started in 1954, and currently headed by CEO Paul Lynam, the company size now stands at 726 people and with the company’s market cap sitting at GBP £297.91M, it falls under the small-cap group.
Over the past 6 years, Secure Trust Bank has been distributing dividends back to its shareholders, with a recent yield of 4.65%. STB’s yield exceeded United Kingdom’s top dividend payer average yield of 3.98%. The company’s payout ratio currently stands at 71.26%, illustrating that its dividend payments are well-covered by its earnings. STB is trading below its intrinsic value by 43.18%, meaning that now is a good time to buy STB at a good price. Interested in Secure Trust Bank? Find out more here.
Lookers plc (LSE:LOOK)
Lookers plc engages in the sale, hire, and maintenance of motor vehicles and motorcycles in the United Kingdom and Ireland. Started in 1908, and currently lead by Andrew Bruce, the company currently employs 7,872 people and with the market cap of GBP £375.74M, it falls under the small-cap category.
Over the past 10 years, Lookers has been distributing dividends back to its shareholders, with a recent yield of 3.85%. LOOK’s upcoming dividend are appropriated covered by its profits over the next three years, according to industry analysts, with a forecasted payout ratio of 29.07%. At the current payout ratio of 31.26%, LOOK’s yield surpasses United Kingdom’s low-risk savings rate of 2.30%. LOOK is also trading beneath its true value by 72.32%, meaning LOOK can be bought at an attractive price right now. Continue research on Lookers here.
Mears Group plc (LSE:MER)
Mears Group PLC, through its subsidiaries, provides a range of outsourced services to the public and private sectors in the United Kingdom. Formed in 1996, and now run by David Miles, the company employs 12,600 people and with the stock’s market cap sitting at GBP £388.38M, it comes under the small-cap stocks category.
Mears Group has been paying dividend over the past 10 years. It currently paid an annual dividend of UK£0.12, resulting in a dividend yield of 3.12%. MER’s dividend per share have been growing over the past 10 years, with a payout ratio of 56.85%, indicating earnings are able to cover the payments. Furthermore, MER’s dividend yield exceed United Kingdom’s low risk savings rate which currently sits at 2.30%. MER is also trading below its intrinsic value by 39.67%, meaning MER can be bought at an attractive price right now. Interested in Mears Group? Find out more here.
For more mispriced dividend stocks to add to your portfolio, explore this interactive list of undervalued dividend payers.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.