Pay less, get more. That's probably what every shopper this Black Friday wants to do. It's what income investors like, too: Buy an attractively valued stock (pay less) that offers an especially juicy dividend (get more).
There are more stocks that check off these two boxes than you might think. Here are three incredibly cheap dividend stocks you can buy right now.
1. Ares Capital
Ares Capital (ARCC +0.45%) ranks as the largest publicly traded business development company (BDC) on the market. Its assets under management total $395 billion, with roughly two-thirds of that amount going toward credit financing for middle-market businesses.
As a BDC, Ares Capital must return at least 90% of its income to shareholders in the form of dividends. That's one key reason behind the company's sky-high dividend yield of over 9.7%. Ares Capital has paid a stable or increasing dividend for 14 consecutive years.
NASDAQ: ARCC
Key Data Points
The BDC stock is less expensive than most stocks, with a forward earnings multiple of a little over 8.5x. Even better, Ares Capital's earnings continue to grow robustly as more middle-market companies turn to it for raising capital.
Ares Capital's total returns through the years have greatly exceeded those of the S&P 500, as well as other BDCs. I expect this outperformance to continue, thanks to the company's solid risk-management approach.
2. Energy Transfer LP
Energy Transfer LP (ET 0.05%) is a leader in the midstream energy industry. It operates nearly 125,000 miles of pipeline in the U.S. that transport crude oil, natural gas liquids (NGLs), natural gas, and refined products.
The limited-partnership's distribution yield currently tops 9.1%. Energy Transfer expects to grow its distribution by 3% to 5% annually over the long term.
It's in great shape to meet that goal as things stand now. The company's excess cash flow after distributions in the third quarter of 2023 was around $1 billion.
NYSE: ET
Key Data Points
Energy Transfer stock offers an especially attractive valuation. Its forward earnings multiple stands at just over 8x.
The company has completed several acquisitions over the last two years, most recently closing on its purchase of Crestwood. These deals help position Energy Transfer well for future growth.
3. Verizon Communications
Verizon Communications (VZ 0.80%) is no doubt the most well-known of these three dividend stocks. It's a telecommunications giant that provides broadband and wireless services to consumers and businesses around the world.
The stock has been a longtime favorite of many income investors. Verizon continues to offer an attractive dividend yield of 7.1% and has also increased its dividend payout in September for the 17th consecutive year.
NYSE: VZ
Key Data Points
Verizon's shares have bounced back significantly over the last few weeks after sinking more than 20% year to date by early October. Even with this rebound, though, the stock trades at less than 8x forward earnings.
While Verizon has faced some challenges in recent years, its outlook now looks pretty good. The telecom giant is generating more free cash flow and is seeing subscriber growth in the business segment. Verizon has also secured early access to its remaining C-band spectrum -- something that CEO Hans Vestberg referred to as "a game changer for our business" in the company's Q3 conference call.
