Buy low, sell high. Those four words can make fortunes over time. And they work whether we're talking about real estate, stocks, or any other asset.
The great thing about investing in some stocks when they're down is that they pay you to wait for a rebound via dividends. Here are three dividend stocks trading near their 52-week lows.
1. Baxter International
Baxter International (BAX 1.86%) shares aren't just at their 52-week lows; they're at the lowest level in the last six years. The healthcare stock has lost roughly half of its value over the past 12 months.
NYSE: BAX
Key Data Points
The company's acquisition of Hill-Rom in late 2021 hasn't worked out as well as hoped. Baxter recorded an impairment of $3.1 billion related to the purchase in the third quarter of 2022.
Instead of adding new businesses, Baxter is now looking to pare down. It plans to spin off its renal care and acute therapies units into a separate publicly traded company over the next 12 to 18 months. The company is also exploring alternatives, including a sale or spinoff of its biopharma solutions business.
One bright spot for Baxter amid the generally bad news, though, is its dividend. The company has increased its dividend for seven consecutive years. Its dividend yield currently stands at close to 2.6%.
2. CVS Health
CVS Health (CVS +1.02%) fared better than most stocks last year, sliding less than 10%. However, the stock is near its 52-week low now after a big decline that began in December.
NYSE: CVS
Key Data Points
But CVS Health's business continues to perform relatively well. Total revenue in Q3 jumped 10% year over year to $81.2 billion. Although the company posted a net loss in the quarter, the culprits were $5.2 billion in opioid litigation charges and $2.5 billion related to plans to sell the Omnicare long-term care pharmacy business.
Despite the pending sale of Omnicare, CVS Health remains in growth mode. It expects to close on the acquisition of Signify Health, a provider of home health and healthcare technology services, in the first half of 2023. Earlier this month, rumors swirled that CVS could be interested in buying Oak Street Health. Whether a deal actually materializes remains to be seen.
There isn't any uncertainty about CVS Health's dividend, though. The company's dividend yield tops 2.7%. CVS didn't increase its dividend for several years because of its acquisition of Aetna. However, it has increased the dividend payout by 21% since late 2021.
3. L3Harris Technologies
It isn't just healthcare dividend stocks that are languishing these days. Shares of L3Harris Technologies (LHX 2.37%) recently set a 52-week low after beating the S&P 500 in 2022.
NYSE: LHX
Key Data Points
L3Harris faces some macroeconomic challenges, especially with high inflation and supply chain issues. The big aerospace and defense company's Q3 revenue was flat compared to the prior-year period. It also lowered full-year 2022 financial guidance.
Some investors are leery of L3Harris' plans to acquire Aerojet Rocketdyne for $4.7 billion. The valuation is higher than what Lockheed Martin offered to pay in late 2020. L3Harris will probably have to suspend share buybacks to fund the deal.
There hasn't been any talk of disruption to L3Harris' dividend, though. The company's dividend yield currently stands at nearly 2.3%. L3Harris has a great track record of dividend hikes, with its dividend payout nearly doubling over the last five years.
Are they buys?
I think that Baxter could be more appealing to investors after it completes the planned spinoff of the renal care and acute therapies business. For now, though, the stock doesn't provide a compelling reason to jump aboard.
L3Harris' pending acquisition of Aerojet Rocketdyne could be a smart move in retrospect, despite some skepticism. I view the stock as a potentially good pick for long-term investors. However, I'm not so sure L3Harris will be a winner over the near term.
That leaves CVS Health. My view is that the stock should again hold up relatively well if the U.S. economy enters a recession in 2023. Its dividend is dependable. I predict that CVS Health will deliver solid total returns over the long run. So of these three beaten-down stocks, CVS Health ranks as my favorite.
