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In a market where mega-cap growth and tech stocks continue to dominate headlines and stretch valuations, income-oriented investors may feel sidelined. But for those with a long-term perspective, there's value to be found in high-yield dividend stocks that offer both income and upside potential.
In fact, some of the market’s most well-known names are trading at attractive valuations while still delivering solid payouts. This rare combination could benefit investors seeking stability, compounding, and defensive exposure.
Below are five high-yield dividend stocks that look undervalued today in terms of their price-to-earnings ratio. They all share one thing in common: relatively low earnings valuations, strong yields, and the potential to reward patient investors over time.
Bank of America (NYSE: BAC) is one of the largest banks in the U.S., with a diversified business model that spans consumer banking, wealth management, and investment banking. Despite its longstanding success, scale, and resilience, BAC shares are trading at a P/E ratio of just 14.61 and a forward earnings multiple of 11.5, signaling a potential value opportunity.
The attractive valuation comes notwithstanding the stock's impressive performance YTD. Year-to-date, shares of BAC have risen over 11%, outperforming not only the broader market but also its sector.
Notably, BAC also pays a dividend of just over 2%, with a payout ratio of around 30%. The company has a track record of 11 years of dividend increases. Along with its attractive valuation and income component, the stock also has a favorable technical setup. On a multi-year, weekly timeframe, BAC has just broken above prior significant resistance near $48. From a technical perspective, its current positioning indicates a strong uptrend with considerable momentum behind it.
Ahead of its upcoming Q2 earnings, sentiment for the stock is bullish. Based on 26 analyst ratings, the stock has a consensus rating of Moderate Buy, with a consensus price target that is largely in line with the stock's current price. With the financial sector leading the overall market YTD, BAC is positioning itself as a leader within one of the strongest sectors in 2025 so far, along with possessing an attractive valuation and added income component.
Many investors potentially overlook Ford (NYSE: F) due to the auto industry's cyclical nature. However, with a 5.09% dividend yield, a P/E of 9.46, and a forward P/E of just 8.87, Ford appears extremely compelling from a valuation standpoint. The company has made notable strides in improving profitability, streamlining operations, and investing in its electric vehicle (EV) transition, all while maintaining a commitment to capital returns.
Previously, the company posted Q1 2025 earnings on May 5, 2025, reporting an EPS of 14 cents, which beat the consensus estimate of -2 cents by 16 cents. Quarterly revenue fell 6.2% year-over-year to $40.66 billion, above analysts' expectations of $35.99 billion. Ahead of its upcoming earnings report later this month, analysts aren’t exactly bullish, though.
Based on 17 ratings, the stock has a Reduce rating and a consensus target, implying almost a 15% downside potential. The auto giant is coming off a period of margin compression due to supply chain issues and inflationary pressures. However, signs of stabilization are emerging, and Ford’s recent guidance has indicated improved earnings in the second half of 2025.
For long-term investors, Ford offers a combination of turnaround potential and a compelling yield. There is, however, an elevated risk, given that the turnaround is not yet complete and may be some time off. Still, there's no denying that its low earnings valuation and significant dividend yield make it one worth watching closely at current levels.
Altria Group (NYSE: MO) remains one of the most controversial but consistent dividend payers in the market. The tobacco giant currently offers a substantial dividend yield of 6.8%, supported by a history of over 56 years of consistent dividend payments.
Along with its significant yield, the stock has an attractive valuation. MO closed last week with a P/E of 9.98. Its low P/E ratio places it firmly in value territory, but some investors could be concerned that it might present a value trap. Well, over the course of the year, it's been anything but that. The tobacco giant’s stock has surged over 14% on the year and remains firmly above its 200-day SMA and near-term support of $58. Momentum appears firmly on its side.
While cigarette volumes continue to decline, Altria is actively expanding its smokeless and reduced-risk product categories. It holds a 35% stake in JUUL and owns the on! Nicotine pouch brand, while also developing new smoke-free platforms. These segments won’t replace traditional cigarettes overnight, but they do offer a long-term path for transformation.
Altria’s defensive nature also makes it an attractive holding in volatile or uncertain markets. And with a long history of returning capital to shareholders through both dividends and buybacks, MO remains a classic example of a high-yield value play with cash flow to back it up. Analysts are largely neutral on the name, with a consensus Hold rating based on eight analyst ratings. The consensus price target of $57.71 implies a potential 3.2% downside from its last closing price.
Verizon (NYSE: VZ) has been under pressure in recent years, with its shares stuck in a downtrend amid concerns over rising debt levels, slowing wireless growth, and the capital-intensive nature of its 5G expansion. However, with most of the bad news seemingly priced in, VZ now trades at a P/E of just 10.35, accompanied by a substantial dividend yield of 6.21%. The company has a 20-year track record of dividend increases, with a significant dividend payout ratio of 64.52%.
Despite the headwinds, Verizon remains a dominant player in the U.S. telecom space, with a massive subscriber base and a growing fixed wireless offering. Management has also taken steps to reduce capital expenditures following the 5G buildout and prioritize deleveraging. That shift toward free cash flow preservation bodes well for long-term dividend sustainability. Previously, the company reported Q1 2025 pre-recorded earnings on April 22, 2025, reporting an EPS of $1.19, which beat analysts' consensus estimates of $1.15 by 4 cents. Quarterly revenue was reported to be $33.50 billion, above the consensus estimate of $33.31 billion.
The stock recently reclaimed its 200-day SMA and has been consolidating between $40 and $45 for almost one year. With upcoming catalysts around the corner, such as Q2 earnings later this month, a push above $45, and a multi-year resistance level, it might confirm a break of the downtrend and an upside breakout.
Pfizer (NYSE: PFE) has experienced a sharp decline since the peak of the pandemic, as revenues from its COVID-19 vaccines and treatments have declined from their highs. The pharmaceutical giant’s shares are down significantly from their 2021 peak and now trade at just 8.2 times forward earnings. That’s well below the average valuation for large-cap pharma peers.
However, the story is far from broken. Pfizer offers a staggering dividend yield of 6.76%, supported by a history of previous earnings beats and a diversified product pipeline. On April 29, 2025, Pfizer issued Q1 2025 earnings, reporting an EPS of 92 cents, which beat analysts' consensus estimates of 67 cents by 25 cents. Quarterly revenue fell 7.8% year-over-year to $13.72 billion, below analyst estimates of $14.43 billion.
The company is actively reinvesting in growth areas, including oncology, gene therapy, and mRNA platforms. Recent acquisitions, including Seagen, are aimed at boosting long-term growth.
Additionally, Pfizer has already guided for a bottoming in 2025, with revenue and earnings expected to recover as its new pipeline drugs come online. For investors seeking a beaten-down healthcare name with a strong balance sheet, a high dividend yield, and a low valuation, PFE may be worth a closer look.
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The article "Top 5 Undervalued Dividend Stocks With Strong Payout Potential" first appeared on MarketBeat.
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