3 Dividend Stocks to Buy on the Dip: February 2024

Buy low and sell high is an old investing adage that every investor aspires to achieve. One of the simplest ways to do that is by stable stocks when they are underpriced. That is precisely what the dividend stocks discussed here are — stable and underpriced.

Of course, stocks only fall when overall market perception is bearish. Thus, investing in these undervalued dividend stocks will require something of a contrarian perspective. However, it bears repeating that these stocks are both reliable and cheap. 

The bullish perspective when the market is bearish is a strategy that has paid dividends millions of times before. It will work again and again in the future. Let’s look at three stocks that fit the bill.

3M (MMM)

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It looks like 3M (NYSE:MMM) has managed to avoid the worst outcomes despite a rash of trouble throughout 2023. Through it all, the stock has fallen but is rebounding and heading in the right direction in 2024.

The company faced multiple large lawsuits in 2023: One was for defective earplugs that led to hearing loss and other injuries for the military members who used them. The other lawsuit stemmed from water contamination with so-called PFAS chemicals. The first was settled in 2023, and the second lawsuit is largely settled as well. 

Investors are entirely within their rights to argue that 3M is a bad corporate actor due to its actions. However, at the same time, 3M has essentially emerged from the woods relatively unscathed. Its dividend is intact, which is one of the most important factors to consider when judging it as an investment. 

It was last reduced over 66 years ago. There were serious doubts about whether it could continue to remain unscathed due to the money required for payouts. However, the firm’s most recent results were encouraging and indicated that 3M is on the other side now.

Realty Income (O)

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Realty Income (NYSE:O) is a monthly dividend stock that is cheaper than it has been in years. It has also fallen by approximately 20% over the past 12 months, causing continued concern. Yet, it pays a monthly dividend of more than 5.5%, a nice chunk of change for income investors.

Fundamentally, Realty Income isn’t currently facing any serious problems. In fact, it largely looks the same as it always has. Occupancy remains strong, and realty income generally deals with a clientele that consists mostly of well-known retail brands. Those firms tend to have steady operations and sign long-term leases that confer protection to the company overall. That protection extends to investors who, again, receive a monthly dividend. That dividend has never been reduced since the company instituted it back in the ’90s. 

Further, Realty Income operates under a triple net lease model that effectively shields it from downside risks. The model shifts operational risks onto lessees, acting to further protect that strong dividend.

NextEra Energy (NEE)

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NextEra Energy (NYSE:NEE) is a unique green energy and utilities firm that has dealt with issues affecting both of its businesses over the last year.

Readers likely remember that utilities firms suffered heavily in the early fourth quarter as bond yields reached historically high levels. The result was that utilities firms had their worst day in three years in early October. 

Florida Power & Light (FPL) comprises half of NextEra Energy’s overall business. FPL is also the largest utility company in the United States. So, when utilities stocks suffer, NextEra Energy plays a leading role. The other half of the business is a green energy giant, NextEra Energy Resources (NEER). Renewable energy is not performing as well as it once was. Investors get the point: NEE stock has gotten hammered on both sides.

Now, the company is starting to rebound. NextEra just released its fourth-quarter earnings, showing rapid improvement from its utilities business with some slight decline from the green energy segment. Still, NextEra Energy remains one of the most reliable dividend stocks with a unique operational mix. 

On the date of publication, Alex Sirois did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.

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