Title: Three Top-Notch S&P 500 Dividend Stocks Worth Snatching at a 35% Discount
The S&P 500 is currently reaching new heights, yet not all stocks within this widely-followed index are seeing similar success. There are several S&P 500 stocks that have failed to reach their peak, but that doesn't mean they lack potential as investment choices. In fact, here are three S&P 500 dividend stocks that have dropped by 35% or more and could be worth holding onto for the long term.
1. Occidental Petroleum
Shares of oil and gas producer Occidental Petroleum have dropped around 47% from their high in late 2022, making it one of the S&P 500's largest losers this year. But is Occidental a stock worth holding onto indefinitely? According to legendary investor Warren Buffett, it is. He mentioned in his shareholder letter this year that Occidental was one of a few select stocks he planned to own "indefinitely."
Buffett's rationale for investing in Occidental is simple: he sees the importance of U.S. oil production for the country's security and economic strength. Additionally, Occidental Petroleum has vast oil and gas holdings in the U.S. and is a leader in carbon capture and storage (CCUS) technology. While Occidental Petroleum's dividend yield may not be jaw-dropping at just 1.85%, Buffett's confidence in the company's long-term potential may make it a solid investment choice.
Enrichment Data: Occidental Petroleum (OXY)
Current Stock Price and Dividend Yield:- Current Stock Price: Around $4.8, which falls within a fair value range[1].- Dividend Yield: The company's three-year median payout ratio is 6.0%, allowing Occidental Petroleum to retain a higher percentage (94%) of its profits, which it reinvests to grow the business[5].
2. Pfizer
Pfizer's share price peaked in late 2021 due to skyrocketing sales of its COVID-19 products. However, its stock has plummeted around 60% since then as those sales tailed off. Pfizer also faces uncertainty with several top-selling products losing patent exclusivity over the next five years.
Despite these challenges, Pfizer's stock's steep decline has brought some positives. Pfizer's forward dividend yield now stands at an ultra-high 6.5%. Additionally, Pfizer trades at a forward price-to-earnings ratio of only 8.6, which is significantly lower than the S&P 500 healthcare sector's average forward earnings multiple of 18.3.
Moreover, Pfizer's prospects aren't as bleak as they might seem. The company has used the proceeds from its COVID-19 vaccine sales to make multiple acquisitions, which have added new drugs and pipeline candidates to its lineup. Pfizer also has the resources and expertise to continue investing in research and development and making strategic acquisitions in the future.
Enrichment Data: Pfizer (PFE)
Long-term Investment Prospects:1. Acquisitions: Pfizer has used its COVID-19 profits to make several acquisitions, bolstering its drug lineup and pipeline[2].2. Research and Development: Pfizer has the resources to continue investing in research and development and making strategic acquisitions in the future[2].
3. United Parcel Service
United Parcel Service (UPS) stock has dropped around 46% from its high in early 2022 due to weaker shipment volumes as the effects of the pandemic have waned. UPS also faced a potential strike by the Teamsters Union in 2023, which was averted when the company signed a five-year deal with increased expenses that weighed on UPS's earnings.
However, UPS could be poised for a comeback. The company has seen two consecutive quarters of shipment volume growth in the U.S. The brunt of the higher costs associated with the Teamsters contract has already been felt, and UPS is focusing on more profitable areas, such as healthcare logistics and meeting the shipping needs of small and medium-sized businesses.
Enrichment Data: United Parcel Service (UPS)
Current Stock Price and Dividend Yield:- Current Stock Price: Not specified, but generally trading at a discount to historical levels[2].- Dividend Yield: 5.2%, which is a healthy dividend yield[2].
In summary, while the market may be celebrating the recent records set by the S&P 500, investors shouldn't overlook the potential value of stocks like Occidental Petroleum, Pfizer, and United Parcel Service, which have suffered considerable losses but still show promise as long-term dividend investment choices.
Investing in Occidental Petroleum could be a long-term strategy, given legendary investor Warren Buffett's plans to hold onto the stock "indefinitely." Buffett is attracted to Occidental due to its significance in U.S. oil production and carbon capture technology.
When it comes to finance and money, the steep drop in Pfizer's share price provides an opportunity for investors, with an ultra-high dividend yield and a lower forward price-to-earnings ratio compared to the sector average.
