Undervalued companies don’t receive as much attention as they deserve. Most investors hope to capture momentum on stocks performing very well, but they are overvalued, which can lead to losses. When completely missing the advantage of investing in undervalued stocks, such as consistent growth over the long term and dividend increases, which will assist in compounding an investor’s portfolio.
Here are three companies within the NASDAQ 100 that offer investors a high likelihood of profitability in the long term and consistent dividend income.
PepsiCo (PEP)
PepsiCo (NASDAQ:PEP) manufactures and distributes various beverages and snack foods globally under various brands, including Pepsi, Lay’s Doritos, Mountain Dew, 7Up, and Dr. Pepper.
Over this past year, its share price has remained fairly unchanged, only dropping by about 5%. On Feb. 9, Pepsi announced its earnings for the fourth quarter of the full year 2023, in which it stated that total revenue slightly dipped by about 1% and net income increased by nearly 150% compared to the year before. In 2024, Pepsi anticipates a 4% revenue growth and plans for stock buybacks totaling up to $1 billion.
Pepsi raised its dividend payment to investors by 7% in the fourth quarter, which shows its continued confidence in profitability. Pepsi Now offers a dividend ratio of 2.89% on an annual basis. Pepsi has also increased its dividend for over 50 consecutive years.
PEP recently added new terms to its deal with Celsius Holdings (NASDAQ:CELH), a primary energy drink manufacturer for which PepsiCo is a primary distributor. The agreement includes an incentive program to increase Pepsi’s average margins selling licensed products.
Pepsi is a fantastic company for investors seeking stable growth and income generation, as it is a strong dividend-yielding stock.
Comcast (CMCSA)
Comcast (NASDAQ:CMCSA) is primarily a media and technology company that provides broadband and wireless services to both residential and business customers. It also owns NBC Universal and the streaming service Peacock, as well as several Universal theme parks in the U.S., China, and Japan.
On Jan. 25, Comcast released its results for the fourth quarter of the full year 2023, in which it stated that revenue increased by approximately 2%, net income fell by 3%, and free cash flow grew by 29% compared to the year before.
Over this past year, its share price has increased by 11%. Similar to PepsiCo, it offers a very strong and stable dividend payout to investors. It has seen six consecutive years of dividend growth, with it now sitting at an annual basis of 2.95%.
Comcast is an undervalued company at this time. It saw improved revenue growth and, most notably, a large shift in free cash flow, which represents Comcast’s overall profitability, which should be a great sign for investors going forward.
Analog Devices (ADI)
Analog Devices (NASDAQ:ADI) is a semiconductor company that produces integrated circuits for a number of different industries, including automation, manufacturing, aerospace and defense, industrials, and communications.
Over this past year, its share price has remained unchanged, which is out of the ordinary for semiconductor stocks that have experienced tremendous growth, such as Nvidia (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD).
On Feb. 24, ADI reported earnings for the first fiscal quarter of 2024, stating that total revenue declined by 23% and net income fell by 51% year-over-year. However, it did happen to beat analyst estimates on reported revenue and earnings per share.
Along with the theme of undervalued dividend stocks, ADI recently increased its dividend by 7%. It has now seen 12 consecutive years of dividend increases and offers investors a dividend ratio of 1.87%. ADI expects revenue to be roughly $2.1 billion for the second quarter of 2024.
Analog Devices offers a solid dividend yield, and over the past six months, its share price has increased by approximately 12%, which could be a sign in the near term that ADI is experiencing somewhat of a rebound. And with expected earnings growth, ADI could shape up to be a real winner for investors.
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.
