Dividend investing is a robust and stable investment strategy that has helped many investors increase their portfolios over time. Investors are attracted to dividend stocks that are undervalued. This is because they give individuals guaranteed income within an expected time frame. Typically, most investment strategies are ones in which the rate of return for the future is unknown.
One of the most essential rules for investors to follow in dividend investing is not just putting money into a company with a very high dividend. You have to look at a company’s peers to see if that is an average dividend payout for the industry and their payout ratio. This is the percentage of a company’s earnings that they give back to investors as dividend payments. If this number is negative or above 100%, looking at other companies to invest in may be a good idea because they are not typically sustainable.
Some sectors, such as REITs, financial services, and energy companies, offer much higher dividends than others. However, this does come with a trade-off if a company supplies its investors with a very high dividend payout. This means there is less capital to expand the business, which usually results in somewhat diminished returns compared to companies with lower dividend ratios.
Below, I discuss three compasses that pay more than 6% annually, are oversold, and offer investors looking for solid dividend companies a few possible choices.
MidCap Financial Investment (MFIC)
MidCap Financial Investment (NASDAQ:MFIC), located in New York, New York, is a company that provides several loan services, including senior secured loans, mezzanine loans, and unsecured debt. They participate in private equity investments such as acquisitions, refinancing, and leveraged buyouts. MidCap Financial also provides capital for public companies in various industries, including aerospace and defense, telecommunications, financial services, business services, and building materials.
On November 7, MidCap Financial Investment reported third-quarter earnings, and it stated they saw revenue growth of 16% and net income increase of 23% compared to the year before. They announced a dividend payment for the third quarter of 2023 of $0.38 per share, and on an annual basis, investors receive a dividend payout of approximately 11.74%. That is expected to be paid on December 28.
Over the past year, MidCap Financial has risen by 7% due to its very diversified portfolio that has given investors stable returns.
Frontline (FRO)
Frontline (NYSE:FRO) is a crude oil shipping company that engages in the global transport of various oil products.
On August 24, they reported their second-quarter earnings for 2023. These earnings stated revenue growth of 74%. Net income increased by more than four-fold compared to the second-quarter results of 2022. Frontline saw a significant increase in reported spot charters for their vessels. Profit for this quarter is the highest for the second quarter since 2008.
Frontline also provided investors with a dividend payout of $0.80 per share for this quarter. This is a dividend ratio on an annual basis of 12.01%. Year-to-date, Frontline share price has risen by 85%. This one easily earns its spot on our list of dividend stocks that are undervalued.
United Microelectronics (UMC)
United Microelectronics (NYSE:UMC) they are a semiconductor company based in Taiwan. It specializes as a wafer foundry that services producers of integrated devices. They have 12 different semiconductor production facilities located in Asia. United Microelectronics also has offices in Europe, China, Japan and the United States.
On October 25, United Microelectronics reported its third-quarter earnings. The earnings stated total revenue fell by 24% and net income dropped by 41%. They beat Wall Street estimates on profits, but lowered their guidance for the rest of 2023.
United Microelectronics has seen its share price grow by 16% and offers a dividend payout of 7.71% annually. During the second quarter, investors received a dividend of $0.58 per share, payable back in July. If you are looking for dividend stocks that are undervalued, start here.
As of this writing, Noah Bolton did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.