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Dividend stocks are a vital component of any investment portfolio, ensuring a solid source of passive income.
But buyer beware. Investing in a company mindlessly due to a ridiculously high dividend can lead to disaster. If a dividend payout for a company is much higher than others within the same industry, it could signal a bad sign. Investors should think twice before sinking their funds into such a company.
Undervalued stocks that also offer a solid dividend yield are the best of both worlds. These investments take advantage of the potential for growth in the share price and dividend yield.
Yet, when it comes to undervalued companies, it’s important to tread with caution. Investors should proceed cautiously and use wisdom. Understanding if a company is oversold or headed toward financial trouble is of primary importance.
Let’s look at three oversold stocks to buy now, ones that could yield healthy dividends to your financial future.
Black Stone Minerals L.P. (BSM)
Black Stone Minerals L.P. (NYSE:BSM) is an established oil and natural gas powerhouse. The company owns royalty interests in over 40 states and 60 productive basins, totaling approximately 20 million acres. Because Black Stone earns royalties in resource-bearing properties, it doesn’t have to front any operational costs for resource production. And, since they own the land, it gives them the right to a percentage of the revenue that’s produced.
The company has a dividend yield of 11.08% on an annual basis. They recently announced a dividend of $0.48 for the second quarter of 2023. On July 31, BSM reported Q2 earnings results, with total revenue dropping by 35%, and their net loss shanked by 71% compared to last year.
In short, Black Stone Minerals is an energy company that has a solid dividend yield and isn’t subject to as much validity as other stocks within the oil and natural gas industry because it is a company that derives its revenue from royalty interest.
WhiteHorse Finance (WHF)
Miami, Florida-headquartered WhiteHorse Finance (NASDAQ:WHF) is an asset management company laser focusing on business development. They are an externally managed, non-diversified, closed-end management investment corporation.
The company offers an 11.56% dividend yield on an annual basis. They recently announced for the second quarter of 2023 a dividend of $0.37 per share. They released their second-quarter earnings on August 8, with a total interest income increase of 28% and earnings per share that fell by 47% from $0.32 per share in the second quarter of 2022 to $0.17 per share for Q2 2023.
Over the last few years, the company’s share price has been practically unchanged. Also, they have distributed a consistent dividend payout that has held consistent or increased since the company started publicly trading back in 2012.
If you’re looking for a low-volatility stock with a fantastic dividend yield of nearly 12%, WhiteHorse Finance is one to add to your portfolio.
Innovative Industrial Properties (IIPR)
Innovative Industrial Properties (NYSE:IIPR) Located in Park City, Utah, it’s an industrial REIT that acquires, develops, and manages specialized facilities focused on the regulated cannabis industry.
The company has 108 different properties situated in 19 states. Innovative Industrial Properties is the first and only publicly traded company on the New York Stock Exchange to supply the cannabis industry with capital regarding real estate.
Innovative Industrial Properties offers a dividend yield of 9.44% annually. The company recently announced a second-quarter dividend of $1.80 per share. On August 2, they reported Q2 earnings results, with net income growing by 3% and total revenue increasing by 8% compared to last year.
Over the past year, the company’s share price has fallen by 25%, due partly to the overall cannabis industry struggling with regulatory issues. The company saw a high of over $275 per share back in 2021. The stock has a solid financial potential being a REIT that supplies real estate capital for the cannabis industry. With positive news relating to beneficial legislation and further legalization a likelihood in the future, this could be promising news for the company’s future.
As of this writing, Noah Bolton did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.