It is not often that you find a dividend stock that yields more than 6% and is priced under $10. Such dividend stocks exist, yet the majority have one or several glaring flaws. However, if you dig deep enough, you will find some legitimate prospects that are affordably priced and generate a handsome dividend.
Part of the appeal of investing in a dividend stock around $10 or less is that it has significant upside potential in the sense that retail investors are that much more likely to scoop up shares as the ask is in their price range. So, investors get the best of both worlds, income, and the potential for capital appreciation.
I found three top stocks that offer the potential for price appreciation, high dividend yields, and rate highly in our POWR Ratings system. These include Mobile Telesystems (MBT), Telefonica SA (TEF), and Veon (VEON).
Mobile Telesystems (MBT)
MBT makes integrated mobile communications that help people as well as businesses. MBT has an overall grade of B, which translates into a Buy rating in our POWR Ratings system. The company has a grade of B in the Quality, Value, and Stability components. Click here to find out how MBT fares in the rest of its grades (Growth, Momentum, and Sentiment).
MBT is ranked in the top five of the 50+ stocks in the Telecom – Foreign industry, slotting in at number five. Click here to see other top stocks in this industry. Analysts have high hopes for MBT, setting an average target price of $11.02 for the stock. If MBT hits this price target, it will have increased by more than 17%.
MBT is also attractive as it has a low forward P/E ratio of 12.51. This ratio indicates MBT is underpriced at its current price of $9.50 per share.
Telefonica SA (TEF)
Based in Madrid, Spain, TEF specializes in mobile and fixed communication throughout Europe and South America. TEF has invested a considerable sum of money in enhancing its network for superior connectivity. In addition to mobile phone service, TEF also provides broadband internet, TV, and additional services.
TEF appears undervalued as well at its current price of $5. Its P/E ratio is quite attractive at 10.55. TEF also has a low beta of 0.80, indicating it is less volatile than the market. The company has an overall grade of B and a Buy rating in the POWR Ratings system. The stock has a grade of B in the Sentiment, Value, Stability, and Growth components. You can find out how TEF grades in the Quality and Momentum components by clicking here.
Of the 52 publicly traded companies in the Telecom – Foreign industry, TEF is ranked 21st. Analysts are bullish on TEF, setting an average target price of $5.75 for the stock. This means TEF has a potential 13% upside. The highest analyst target price for TEF is $10.71.
VEON is a telecom and digital services provider that offers data, voice, digital and fixed broadband services. VEON has a low forward P/E ratio of 5.31. This means the stock is underpriced at its current price of $1.72.
VEON has an overall grade of B, translating into a Buy rating in our POWR Ratings system. The stock has grades of B in the Value and Quality components. Investors who would like to learn how VEON grades out in the Growth, Momentum, Stability, and Sentiment components can find out by clicking here.
Of the 52 stocks in the Telecom – Foreign industry, VEON is ranked just outside of the top 10, coming in at number 11.
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MBT shares were unchanged in premarket trading Thursday. Year-to-date, MBT has gained 5.47%, versus a 13.00% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...
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