One way to spot a good deal in the markets is by looking at stocks that are trading below their book values. It can be a sign that investors are concerned about possible risks associated with the companies. But for the following dividend stocks, there's more potential than there is risk.
Viatris (VTRS -0.18%), Citigroup (C 2.02%), and Paramount Global (PARA 3.64%) all pay dividend yields of at least 2.8%, which is double the S&P 500's average payout. And these high-yielding stocks are also incredibly cheap right now.
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1. Viatris
Healthcare company Viatris currently pays investors a dividend yield of 3.9%. It's an attractive payout that can go a long way in boosting your investment returns from owning the stock. The generic drug manufacturer has been relatively resilient amid what's been a challenging time in the world.
In its most recent quarterly results, the company's net sales of $4.2 billion for the first three months of the year were down 1% on an operational basis (excluding the impact of foreign exchange). The company has also been shedding costs, and operating expenses were down 24%. As a result, the company was able to post a strong profit that was nearly 10% of sales vs. a loss in the prior-year period. And its free cash flow of $1.1 billion was 34% higher than it was a year ago.
Viatris' fundamentals look strong, yet the stock is trading at a price-to-book (P/B) multiple of just 0.73. For value and dividend investors, this could be a solid addition to your portfolio right now.
2. Citigroup
Top bank Citigroup trades at an even lower P/B ratio of 0.58. Concerns about the economy in the wake of inflation and rising interest rates are a key reason bank stocks haven't been flying high of late. Another reason Citigroup in particular may seem risky is that the business is in the midst of a turnaround that has involved exiting non-core businesses and markets.
Generally, focusing on core businesses can simplify a company's operations and improve its financials. And today, Citigroup is doing just fine with its revenue through the first three months of the year totaling $19.2 billion, down a modest 2.4% year-over-year. Citigroup's net income of $4.3 billion was down 46% from the prior-year period, but that is largely due to a large release of credit reserves a year ago to adjust for a more favorable outlook for the economy vs. the initial panic of the pandemic.
Citigroup still felt strongly enough about its recent performance to return $4 billion back to its shareholders in Q1 through a combination of share buybacks and dividend payments. The company has strong fundamentals, and its cheap valuation makes it little wonder why Warren Buffett's Berkshire Hathaway decided to add the bank stock to its portfolio. Citigroup pays a yield of 3.8% today.
3. Paramount Global
Another stock that Berkshire recently bought was entertainment company Paramount Global. Shares of Paramount got a boost on the news, and now the stock is trading ever so slightly below its book value, at a P/B multiple of 0.97.
Although this isn't as cheap of a buy as the other stocks on this list, Paramount still offers some great value to investors in the way of growth. The company doesn't have as many subscribers as other big-name streaming stocks, but its business is also a bit more diverse.
Paramount's TV media business accounts for the bulk of its top line (77% of revenue). For the first quarter (ended March 31), that area of its business generated $5.6 billion in revenue, or a year-over-year decline of 6%. Its direct-to-consumer segment, which includes streaming services Paramount+ and plutoTV, reported revenue growth of 82% as sales came in at just under $1.1 billion. The company's flagship streaming service, Paramount+, also added 6.8 million subscribers during the period, putting its total at nearly 40 million. By comparison, HBO and HBO Max have nearly 77 million subscribers, while Disney+ is at around 138 million.
Paramount's 2.8% dividend yield is the lowest on this list, but it can still offer investors an above-average payout. And with the stock rising of late thanks to both its positive earnings numbers and news of Berkshire getting behind the company, now could be an optimal time to buy the stock before its price goes even higher.
