3 Dividend Stocks That Are Very Cheap Right Now

The S&P500 remains in bearish territory, with the benchmark down more than 20% so far in 2022, and few sectors of the market have been spared. Even some of the strongest dividend stocks have been taken down, despite strong trading performance and great long-term growth potential.

Here are three dividend-paying stocks that are down at least 35% from their recent highs and look like bargains for patient long-term investors.

Resilient retail with opportunity for growth

Tangier Factory Outlet Centers (SKT 2.25%) owns and operates a portfolio of 36 outlet centers in the United States and Canada. Most are located in major metropolitan areas or tourist destinations in the eastern United States. In the downturn, Tangier has fallen around 35% from its highs and is now yielding 5.4%.

There are legitimate concerns that a tough economy could lead to lower consumer spending and put pressure on retail tenants in Tangier. However, these fears seem exaggerated.

Tangier has a diverse tenant base of mostly high-quality national brands, and the discount-focused nature of the outlets makes them more resilient than most types of retail. Plus, with the stock market down and economic uncertainty rising, you’d never know walking into one of Tangier’s properties. In fact, Tangier’s average tenant sales per square foot in the first quarter were 18% higher than they were before the pandemic began.

Iconic assets that should stay busy, even in a recession

Vail Resorts (MTN 1.46%) is the undisputed leader in ski resorts, operating dozens of the world’s best-known destinations, including its namesake in Colorado. Fears of lower consumer spending and inflationary pressures have sent the stock down more than 40% from its recent highs.

Vail’s business has done quite well, thanks to an easing of COVID-19 restrictions during the recent ski season, compared to the previous year. But more importantly, the company announced very strong season ticket sales for the 2022/23 season. Passes account for nearly three-quarters of Vail visits and, according to the latest revenue report, were 11% higher than the same time a year ago.

Over the past decade, Vail has done a great job of building its brand and monetizing visitors, and the stock has easily beaten the S&P 500 as a result. The recent drop creates a new opportunity for patient investors to buy this industry heavyweight.

This stock is down 40% but could benefit from rising rates

Bank of America (BAC 2.84%) has fallen nearly 40% from its recent high and for good reason. Consumer confidence recently hit a 10-year low, which could translate into lower demand for loans. Additionally, with rising recession fears, this could lead to increased defaults for banks.

However, the decline appears to be mostly priced in after the stock’s decline, and Bank of America may actually end up being a net beneficiary of the rising rate environment. The US labor market is still incredibly strong, which should help keep loan performance at strong levels.

The bank’s loan and deposit portfolios continue to grow and net charges remain very low. Additionally, management estimates that a parallel shift of 100 basis points in the yield curve could generate $5.4 billion per year in additional interest income.

Great total return potential for long-term investors

These three dividend-paying stocks have the potential to produce excellent returns for long-term investors. They all have excellent dividend yields, as well as growth potential, and could generate above-market total returns for patient investors buying at these levels. However, they are all vulnerable to short-term volatility, so approach them with the long term in mind.

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