Most stocks are priced appropriately -- most of the time. The so-called efficient market hypothesis says all relevant information regarding a company is always quickly disseminated and then factored in. There are no surprises waiting in the wings that will dramatically alter a stock's perceived value.
Sometimes, though, Wall Street doesn't know how to interpret the information it has at its fingertips.
That might well be the case for a trio of dividend stocks right now. These three names have either underperformed their peers in recent weeks, or outright lost ground. But this weakness overlooks a bunch of bullish tailwinds Wall Street just doesn't appear to have a firm grip on.
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1. Western Union
Yes, Western Union (WU 1.42%) is still around, though it's well removed from its telecom roots established way back in the 1800s. These days, the organization's focus is on sending money from one place to another, from one person to another.
That business feels a bit antiquated, too, in an era when we have self-service options like PayPal Holdings and Zelle. But that feeling is based on the flawed assumption that the majority of the world has or even wants access to a digital payment platform. Lots of people don't. Plenty of people are still fans of cash, or in many cases, have no means of delivering money across borders that forbid such digital transactions.
To this end, Western Union's 600,000 global agents are in more than 200 different nations, with most of those agents outside the United States. Each time the company sends money within this network, of course, it keeps a little bit for itself. That's why it's well suited for paying dividends: It has reliably recurring revenue.
To this end, Western Union has not only paid a dividend in every single quarter for the past 10 years, but it has also raised its annual payout in each of those years. That's what makes the stock's 30% pullback from April's peak so surprising.
Don't look a gift horse in the mouth, though. That selling has pumped up the stock's dividend yield to a healthy 5.2%.
2. Duke Energy
Duke Energy (DUK 0.77%) hasn't exactly been tossed aside like Western Union; shares of the utility giant have priced right around where they were trading in the middle of last year. Given how much better most other large-cap utility stocks have performed during that time, though, it's not out of line to suggest Wall Street is indeed sleeping on this solid player.
If you're not familiar with it, Duke Energy provides electricity to 7.8 million customers in six different states, mostly in the Midwest and South; it's also in the natural gas business. These businesses are even better suited to support dividends than the money transfer industry is. That's because consumers may be willing to postpone a vacation or skip a trip to the mall, but they're typically going to do whatever it takes to keep the lights on.
It doesn't hurt that regulators rarely say no to a utility company's request to raise rates. That's how Duke Energy has been able to pay some sort of dividend every single year for the past 96 years, and it has raised its payout every year for over a decade. That doesn't yet qualify the stock as a Dividend Aristocrat, but Duke is certainly moving in that direction.
In the meantime, the stock's moving in a bullish direction again. Shares are back within sight of record highs hit in August, with investors recognizing the current dividend yield of just under 3.8% is just too good to pass up.
3. New York Community Bancorp
Lastly, add New York Community Bancorp (NYCB -3.77%) to your list of dividend stocks you should consider for your portfolio even if most other investors have lost interest. The stock's pullback from its mid-January high has dragged it back to price levels seen in the first half of last year, pumping up the well-protected dividend yield to just under 6%.
As far as banks go, it's not one of the big boys. The $5.3 billion regional banking company only has a little less than $60 billion worth of assets, which is a fraction of the size of megabanks like JPMorgan Chase and Bank of America. Don't let its smaller size fool you, though. New York Community Bancorp still packs quite a punch! While the per-share quarterly dividend is stagnant at $0.17, it's been paid without fail since the beginning of 2016. Last year's full-year earnings of $1.20 per share -- and even 2020's crimped earnings of $1.02 per share -- are more than enough to cover the payment.
Here's the kicker: Rising interest rates can dampen demand for new loans, but assuming that the rate hikes looming for this year are eased into effect rather than crammed down the economy's throat, higher rates should make New York Community Bancorp's loan business even more profitable.
Just bear in mind that there's no dividend increase on the horizon for this stock; it's a lot like owning a bond, albeit a high-yield bond. It may not necessarily be a long-term holding, but rather a temporary holding meant to capitalize on the above-average yield you're not going to find in many other places at this time.
