Dividend stocks struggled this year as investors cycled into fixed-income investment opportunities throughout the first half. In the latter half, they surged back into growth and small-cap stocks. In both cases, dividend stocks took a backseat. Most stable dividend stocks couldn’t beat Treasury yields, while they didn’t offer the same capital gains upside as beaten-down growth stocks.
Just look to everyone’s favorite dividend stock ETF, the Schwab U.S. Dividend Equity ETF (NYSEARCA:SCHD), effectively closing 2023 around the same price it started. By comparison, the S&P 500 climbed nearly 25%, and the S&P 600 (small-cap index) jumped 15%.
Next year might not be the year dividend stocks climb back on top, but that doesn’t mean they’re not worth watching. If you want to round out your portfolio with decent dividend stocks, find undervalued companies offering dividend increases. Finding dividend stocks meeting both criteria isn’t easy, but these three undervalued dividend stocks trade below their worth, and each just raised its quarterly dividend.
Regency Centers (REG)
Regency Centers (NASDAQ:REG) is a grocery-centric REIT. The REIT just raised its quarterly dividend to $0.67 per share, up 3% from the preceding quarter, representing a 4.02% forward yield. Since grocery markets tend to be resilient, REG didn’t see as much volatility as the wider REIT industry. Still, its 6% gain since January isn’t close to touching wider market performance. That offers an opportunity as REITs tend to outperform after Federal Reserve clampdowns end.
Regency Centers is a behemoth in shopping center REITs and holds more than 400 properties across the U.S., with many of those centers in high-performing geographic sectors. At the same time, 80% of its properties are grocery-anchored, shielding the REIT from the e-commerce pressure squeezing out other brick-and-mortar establishments.
The company’s recent earnings report points to strength entering 2024. Management raised year-end guidance to $4.15 per share after 3% net operating income growth quarter-over-quarter while increasing total occupancy to 95.4%. Ultimately, REG is on the safer side of REIT plays for those looking to diversify, and its status as an undervalued dividend stock makes it primed to break out.
Tyson Foods (TSN)
Like REG, Tyson Foods (NYSE:TSN) is a consumer staple, food-centric stock. Tyson, though, focuses on meat production rather than grocery properties. And, like REG, Tyson Foods is an undervalued dividend stock. The company just increased its quarterly dividend to $0.49 per share, a 2% increase. That results in a 5.7% total yield accounting for stock buybacks, making this undervalued dividend stock competitive with short-term Treasurys.
Of course, as a consumer staple, Tyson faces little opportunity to increase sales through increased marketing or other competitive action. Meat is meat for many buyers, and few prioritize one brand over another for basic buying. Still, TSN’s price-to-sales ratio stands at a paltry 0.35 and trades at just 1.02x book value. While the stock might not go stratospheric in 2024, those stats point to clear undervaluation. That’s especially true if you look at TSN’s 1-year chart, with shares falling nearly 20% since January. Most of the bearish pressure came on the heels of a summer surprise earnings loss, but the company seems to have changed strategies to address shifting economic winds.
Evergy (EVRG)
Evergy (NASDAQ:EVRG) is a lesser-known undervalued dividend stock, but one important to the changing nature of sustainable energy. A utility serving Kansas and Missouri, Evergy is one of the country’s second-largest wind energy producers. Evergy also increased its quarterly dividend a whopping 5% to $0.6425 per share, offering green energy investors a 5% forward yield.
Like REITs and consumer staples, utilities struggled this year. Price caps and increased energy costs combined to make slim margins even tighter. Since January, utilities as a collective sector lost nearly 10%. EVRG underperformed the broader industry, losing 18%. Still, its position as a sustainable solution leader and dividend increase make it increasingly attractive to income investors.
After battling Kansas regulators over rate changes, Evergy reached a settlement in November. These developments will hopefully put the utility back on the right track and help its competitive advantage. At the same time, utilities are a debt-heavy sector, and wind power is especially expensive to expand. If the Fed rate cut rumors hold, Evergy is set to bounce back when combined with its rate settlement.
On the date of publication, Jeremy Flint held no positions (directly or indirectly) in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.