Let’s admit it: hunting for bargain stocks is akin to a treasure hunt. You’re constantly on the lookout, hoping to strike gold, but the real challenge lies in pinpointing the right time to make that crucial investment move. Is it the final downward spiral or just the calm before another storm? Fortunately, savvy investors have tools at their disposal to gauge stocks at their exhaustion points. One such tool, the 14-day RSI, offers valuable insights into whether stocks are teetering on the edge of overselling and could be poised for a rebound.
Now, picture combining this technical indicator with high-quality stocks known as Dividend Aristocrats—companies with a long track record of not just paying dividends, but consistently increasing them year after year. The result is a tantalizing combination. Here are three oversold Dividend Aristocrats that should be on every savvy investor’s radar.
C.H. Robinson Worldwide, Inc. (CHRW)
14-day RSI: 29.08
Imagine you’re in dire need of a logistics savior. The first name that pops into your head is likely C.H. Robinson Worldwide, Inc. (CHRW). This global logistics heavyweight offers a spectrum of transportation brokerage and forwarding services, including ocean and air freight services, along with customs brokerage through an extensive international network of offices. Recently, the company unveiled new automation features aimed at streamlining freight shipping operations, a move that is poised to revolutionize the age-old appointment process traditionally handled via emails and phone calls.
While the latest financials reflect a 20.0% year-over-year drop in gross profits, a 34.5% decline in income from operations, and a 400 basis point decrease in adjusted operating margin to 17.4% for the entire year of 2023, there’s certainly more than meets the eye. While short-term challenges have undoubtedly impacted performance, C.H. Robinson still reigns supreme in the asset-light truck market. Moreover, it boasts a robust network of shippers and truckers, positioning itself with an unparalleled competitive edge. CEO Dave Bozeman’s unwavering optimism regarding the future, coupled with a relentless pursuit of operational efficiency, suggests that this downturn may merely be a temporary hiccup, potentially presenting an opportune moment to snap up CHRW shares.
As an added incentive, CHRW recently announced a generous $0.61 dividend payable on April 1, 2024, translating to an enticing dividend yield of 3.30%.
3M Company (MMM)
14-day RSI: 34.44
3M Company stands as a perennial favorite among dividend investors, renowned for its diverse product portfolio encompassing masking tapes, adhesives, face masks, and an array of other essential products. The company’s operations span four pivotal segments: transportation and electronics, catering to automotive, aerospace, and electronic solutions; consumer products designed for home and office improvements; healthcare, with a focus on medical solutions; and safety and industrial products, featuring abrasives, industrial adhesives, and an automotive aftermarket business.
3M’s cutting-edge modal AI-powered technology recently snagged the coveted #1 Best in KLAS award for the third consecutive year, underscoring the company’s unmatched product prowess and a flair for innovation.
Although the company’s recent legal entanglements might cast a shadow over its financials, investors would do well to remember 3M’s sterling track record as a trailblazing innovator, particularly in the realm of research and development. Furthermore, its reputation as a trusted brand affords it the luxury of command premium product pricing, providing vital cushioning against unit costs while funding its operations and dividends.
With an annual dividend rate of $6.00, 3M offers an attractive dividend yield of 6.49%.
Leggett & Platt, Incorporated (LEG)
14-day RSI: 24.85
If a good night’s sleep is high on your agenda, then you’re likely familiar with Leggett & Platt, Incorporated. This company has built a solid reputation for its pioneering ComfortCore® innerspring technology and bedding components. LEG operates across multiple segments, including flooring and textile products catering to both residential and office furniture manufacturing, specialized products such as lumbar support and seat suspension systems, and bedding products encompassing mattresses and bedding brands.
LEG’s Restructuring Plan and Market Response
Leggett & Platt (LEG) recently unveiled a restructuring plan that aims to bolster the company’s profitability. The strategy entails revamping manufacturing and distribution for greater efficiency, as well as expanding product initiatives in the bedding products segment.
Sales for the fourth quarter of 2023 witnessed a 7% year-over-year dip, amounting to $1.10 billion. This decline was compounded by a significant reduction relative to the company’s recent full-year guidance, hinting at a potential further contraction. Forecasts predict earnings to fall within the $1.05-$1.35 range for FY’24, which is lower than the current annual dividend.
Unsurprisingly, this downward trend has sparked apprehension about the company’s capacity to sustain its dividend payouts. However, it’s important to remember that a lot can change within a year. There remains a possibility for LEG to navigate a turnaround, particularly if headwinds in the steel market alleviate or if the macro environment proves more favorable than anticipated.
For investors who maintain an optimistic outlook on LEG, this could present an opportunity to acquire shares at a substantial markdown. Yet, it’s vital to recognize that such a move would carry a high degree of speculation. Those willing to take the risk must have a well-defined exit strategy in place. Leggett & Platt presently offers an annual dividend of $1.82, yielding an impressive 9.14%.
Reflections on the Situation
The current oversold status may create a chance for investors to purchase stocks at deflated prices and maximize the potential for upside and dividend yield. Nevertheless, it’s essential to remember that oversold conditions merely indicate where to look. Engaging in meticulous research and employing precise timing strategies are imperative to mitigate risk for each position taken.
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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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
