When dividend-paying companies are undervalued, investors stand to gain a constant stream of dividend income on top of capital gains, as over time, the company market value move towards what it is intrinsically worth. If you’re a buy and hold investor, these undervalued dividend stocks can generously contribute to your portfolio value.
Xenith IP Group Limited (ASX:XIP)
Xenith IP Group Limited provides intellectual property (IP) services and advice relating to the identification, registration, management, commercialization, and enforcement of IP rights in Australia, New Zealand, and internationally. Started in 1859, and currently run by Craig Dower, the company employs 100 people and with the market cap of AUD A$109.12M, it falls under the small-cap category.
Over the past 2 years, Xenith IP Group has been distributing dividends back to its shareholders, with a recent yield of 5.20%. According to industry analysts, its future payout ratio should still allow this yield to hold. Its dividend yield exceeds the top dividend-paying companies in Australia, with the average dividend yield of 5.16%. Furthermore, analysts expect future earnings to maintain this level of payout moving forward. XIP is also trading below its intrinsic value by 41.06%, which makes for an attractive investment. Interested in Xenith IP Group? Find out more here.
Collection House Limited (ASX:CLH)
Collection House Limited provides debt collection and receivables management services in Australia and New Zealand. Established in 1992, and run by CEO Anthony Rivas, the company currently employs 797 people and with the company’s market cap sitting at AUD A$203.76M, it falls under the small-cap category.
Collection House has been paying dividend over the past 10 years. It currently paid an annual dividend of AU$0.078, resulting in a dividend yield of 5.24%. Best dividend payers in Australia, on average, yield 5.16%. CLH exceeds this by 0.075%, and according to industry analysts, its future payout ratio should still allow this yield to hold. This is consistent with the growing dividend trend we’ve observed from CLH over time. CLH is trading below its intrinsic value by 83.89%, meaning that now is a good time to buy CLH at a good price. Dig deeper into Collection House here.
Harvey Norman Holdings Limited (ASX:HVN)
Harvey Norman Holdings Limited grants franchises to independent business proprietors. Founded in 1982, and currently lead by Kay Lesley Page, the company employs 5,200 people and with the stock’s market cap sitting at AUD A$3.87B, it comes under the mid-cap category.
Over the past 10 years, Harvey Norman Holdings has been distributing dividends back to its shareholders, with a recent yield of 6.92%. Its dividend yield exceeds the top dividend-paying companies in Australia, with the average dividend yield of 5.16%. Furthermore, its dividend payment has been increasing over time, and analysts expect future earnings to cover this payout moving forward. In addition to this, HVN is also trading below its intrinsic value by 31.88%, which means HVN is currently an attractive buy for those looking for dividend and capital gains. More on Harvey Norman Holdings here.
For more mispriced dividend stocks to add to your portfolio, explore this interactive list of undervalued dividend payers.