3 Highly-Rated Dividend Stocks To Buy on the Dip

21 dic 202400:00 UTC

Election years are almost always volatile, at least they've always been in my trading career - and we’ve certainly seen some shaky trading sessions in the past few weeks. The Federal Red announced fewer rate cuts in 2025 than its previous forecast and expressed a more cautious stance for the year ahead. As a result, the S&P 500 is down 3.04% over the past five trading sessions, while the Dow Jones Industrial Average plunged by 1,100 points on Wednesday and registered its first 10-day loss streak in 50 years.

While many investors will be running for the hills with their cash, I see it as an excellent opportunity to pick up struggling income stocks with excellent long-term value. Let me show you how to find stocks to help you with that goal.

How I Came Up With The Following Stocks

First, I went to Barchart’s Stock Screener and used the following filters to get my list of stocks:

Dividend Payout Ratio: 1 to 40%. The dividend payout ratio measures how much the company spends on dividends against its after-tax earnings. The “healthy” range is 35% to 50%, but for now, I want the safer end of that range, so I set the maximum to 40% only.
Market Sectors: Medical, Consumer Staples, and Utilities. These are non-cyclical sectors and, therefore, more resistant to market volatility than more discretionary industries like tech and transportation.
Annual Dividend Yield: Left blank so it appears on the screen results.
Current Analysts Rating: 4.5 to 5 (Strong Buy). I only considered stocks analysts strongly believed would perform well in the next 12 months.
Number of Analysts: 8 or more. More data points indicating a positive outcome means more conviction in the results, so I chose well-covered stocks.

With these filters, I ran the screen and got thirteen results.

I then arranged the list from highest to lowest dividend yields and took the top three. Now let’s discuss them, starting with the top one:

The Cigna Group CI

Dividend Payout Ratio: 19.63%

The recent incident with UnitedHealthcare has sent shockwaves through the health insurance industry. The Cigna Group was one such affected. Cigna offers various products and services, including medical, dental, disability, life, and accident insurance, primarily through employers and other groups.

With the negative press on health insurance stocks and bad news from the Fed, CI stock dropped 14.79% over the last month despite posting a 30% improvement in revenue and exceeding analyst expectations by 4.02% in the bottom line for Q3 2024.

Investors might want to take this opportunity to buy CI at a steep discount. The company pays $1.40 quarterly in dividends, bringing its annual payout to $5.60, which translates to a 2.03% yield. Meanwhile, analysts peg the stock with high price target of $438, offering a significant earning potential for those willing to buy the stock now.

Elevance Health Inc ELV

Dividend Payout Ratio: 18.20%

Elevance Health is another health insurance provider whose stock hasn’t had a great couple of months. Previously Anthem, Elevance offers a comprehensive range of services, including medical, pharmaceutical, dental, behavioral health, long-term care, and disability plans. Aside from market and economic factors, its Q3 2024 report missed bottom-line estimates, and the company cut full-year guidance of net income per diluted share from $34.05 to $26.50.

Still, Elevance Health has some positives. With the steep discount, ELV stock now has an 11.11 forward P/E, a significant bargain from the healthcare sector’s 32.30 P/E. Meanwhile, it retains a strong buy rating with a high target price of $625.00.

Becton Dickinson and Company BDX

Dividend Payout Ratio: 28.72%

Becton, Dickinson and Company, or BD for short, is one of the world's largest global medical technology companies. The company develops, manufactures, and sells medical devices, laboratory equipment, and diagnostic products.

BD had a run-in with the SEC involving its BD Alaris Infusion System line and how it was presented to investors through its filings from 2020. Without admitting or denying fault, the company has resolved the issue with the SEC for $175 million. Though significant, the amount was already considered in its cash flow for the year and will require no re-statement or re-filing.

With the issue priced in, analysts continue to be optimistic about the stock. BDX stock is rated as a strong buy with a $312.00 high target price.

Final Thoughts

Buying the dip is a time-tested method for building long-term wealth—but it still requires careful consideration. The companies on this list have low payout ratios, discounted stock prices, and high analyst scores. As a result, I think these stocks present a great opportunity to surge over the long term.

On the date of publication, Rick Orford did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

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