A great investment for income investors with a long time horizon is in dividend-paying companies such as Mears Group. Dividend stocks are a safe bet to increase your portfolio value as they provide both steady income and cushion against market risks. Furthermore, Mears Group is considered undervalued, which means investors will benefit from both dividend income and capital gains over time. Here are three undervalued dividend stocks that could be valuable additions to your current holdings.
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. Established in 1996, and now run by David Miles, the company currently employs 12,000 people and with the stock’s market cap sitting at GBP £345.05M, it comes under the small-cap stocks category.
Over the past 10 years, Mears Group has been distributing dividends back to its shareholders, with a recent yield of 3.60%. MER’s dividend per share have been growing over the past 10 years, with a payout ratio of 59.18%, 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 1.64%. In addition to this, MER is also trading below its intrinsic value by 42.05%, which makes for an attractive investment. More detail on Mears Group here. LSE:MER Historical Dividend Yield Apr 16th 18
McCarthy & Stone plc (LSE:MCS)
McCarthy & Stone plc, together with its subsidiaries, operates as a retirement housing market in the United Kingdom. Started in 1977, and run by CEO Clive Fenton, the company employs 2,264 people and has a market cap of GBP £716.26M, putting it in the small-cap group.
Over the past 2 years, McCarthy & Stone has been distributing dividends back to its shareholders, with a recent yield of 4.05%. MCS’s yield exceeded United Kingdom’s top dividend payer average yield of 4.03%. The company’s payout ratio currently stands at 45.82%, illustrating that its dividend payments are well-covered by its earnings. MCS is also trading below its intrinsic value by 70.79%, which means MCS is currently an attractive buy for those looking for dividend and capital gains. Continue research on McCarthy & Stone here. LSE:MCS Historical Dividend Yield Apr 16th 18
Pets at Home Group Plc (LSE:PETS)
Pets at Home Group Plc, through its subsidiaries, operates as a specialist retailer of pet food, pet related products, and pet accessories in the United Kingdom. Started in 1991, and run by CEO Ian Kellett, the company size now stands at 6,811 people and with the market cap of GBP £784.00M, it falls under the small-cap group.
at Home Group has been paying dividend over the past 3 years. It currently paid an annual dividend of UK£0.075, resulting in a dividend yield of 4.78%. In addition to PETS’s dividend yield surpassing United Kingdom’s low risk savings rate of 1.64%, it also exceeds the best-in-class dividend payer average yield of 4.03%. The company’s payout ratio currently stands at 52.31%, indicating that net income properly covers dividend payments. In addition to this, PETS is also trading below its intrinsic value by 27.62%, meaning PETS can potentially bring about strong capital gains through mispricing. Continue research on at Home Group here. LSE:PETS Historical Dividend Yield Apr 16th 18
For more mispriced dividend stocks to add to your portfolio, explore this interactive list of undervalued dividend payers.
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