3 Dividend Stocks Down Between 11% and 16% to Buy in February

Investors seeking high-yielding dividend stocks with significant upside potential should consider the following three companies, which have experienced declines of between 11% and 16% over the past year. Despite their recent struggles, these undervalued dividend stocks offer attractive income and growth prospects.



1. Realty Income (O)
* Realty Income is a leading REIT that focuses on single-tenant, net-leased commercial properties, with a majority in retail and industrial sectors.
* The company's stock has declined by approximately 16% over the past year, primarily due to market pessimism and broader economic concerns.
* Despite the decline, Realty Income's fundamentals remain strong, with TTM revenue increasing from $2.1 billion in 2021 to over $5 billion as of Q3 2024, and EBITDA more than doubling during this period.
* The company's FFO is expected to grow at mid-single digits in the coming years, and its dividend yield of 5.81% remains attractive.
2. Flowers Foods (FLO)
* Flowers Foods is a leading producer and marketer of packaged bakery foods, with a strong presence in the United States.
* The company's stock has declined by around 11% over the past year, primarily due to lackluster growth and market sentiment.
* Despite these near-term challenges, Flowers Foods has a stable foundation and solid cash flow, with a dividend yield of 5.19%.
* The company's acquisition of Simple Mills for $795 million is expected to contribute to its top line in the coming years, and its EPS is projected to start recovering in 2026.
3. Constellation Brands (STZ)
* Constellation Brands is a leading beverage alcohol company with a strong portfolio of premium wine, beer, and spirits brands.
* The company's stock has plunged by approximately 33% in just the past six months, primarily due to near-term trends and market sentiment.
* Despite the decline, Constellation Brands' dividend yield remains relatively low at 2.48%, but its long-term prospects are supported by its strong brand portfolio and the potential for a turnaround in its financial performance.
* Warren Buffett's significant investment in Constellation Brands, adding 5.6 million shares worth $1.24 billion to his portfolio, signals confidence in the company's recovery.

In conclusion, Realty Income, Flowers Foods, and Constellation Brands offer attractive income and growth prospects for investors seeking undervalued dividend stocks. Despite their recent declines, these companies have strong fundamentals and underlying businesses that support their long-term prospects. As the market recovers and interest rates potentially decrease, these undervalued dividend stocks could offer significant upside potential. However, investors should carefully consider the risks associated with each company and diversify their portfolios accordingly.