Toast The New Year With 5 Undervalued Dividend Stocks

This holiday season, with the major-market averages at record highs, I believe that undervalued dividend-paying stocks will be the most memorable–and ultimately profitable–presents found under the tree. There are never any guarantees, as was seen from 2007-09, but value-priced dividend payers have enjoyed particularly strong performance from Halloween until May Day. In fact, the model portfolios in my newsletter have appreciated in 22 out of 24 such periods dating back to 1990, with an average gain of more than 21% for the six-month span.

Considering that the yield on the ten-year U.S. Treasury is just 2.3%, I think dividend stocks that sell at relatively low prices are the way to go. There are currently five on the top of my buy list: commodities titan Freeport-McMoRan (FCX), industrial conglomerate GENERAL ELECTRIC (GE), regional home builder MDC Holdings (MDC), financial services giant PRUDENTIAL (PRU) and French pharmaceutical giant SANOFI. Each of these boasts an inexpensive fundamental valuation relative to the S&P 500 and to where it has traded historically, while also offering a generous dividend yield that ranges from 2.5% for Prudential to 4.7% for Freeport.

Source: Forbes

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