3 Underrated Dividend Stocks Worth Your Attention — 'Unknown' But High Yield Potential

High-profile dividend stocks like Microsoft and Johnson & Johnson often grab headlines. Yet, smaller ones with high yields and strong returns deserve a look. Let’s focus on three lesser-known ones: Interpublic Group of Companies, Perrigo, and Flowers Foods. They offer strong profits and high dividends.

The Interpublic Group of Companies

The Interpublic Group of Companies Inc IPG provides advertising and marketing services globally, generating nearly $11 billion in sales annually.

In the first quarter of 2024, Interpublic reported a 0.3% increase in net revenues, reaching $2.18 billion. 

The shift in revenues and types of revenue suggests the business is at an equilibrium. It has 1.3% organic growth and a 0.1% boost from currency translation. But, this is partly offset by a 1.1% decline from net dispositions.

Interpublic CEO Philippe Krakowsky stated, "The firm is off to a "solid start to the year," with net revenues holding steady at $2.2 billion, aligning with 2024 financial targets." However, operating income declined by 2.2% to $184.2 million.

The company repurchased $62.4 million worth of stock during the quarter, slightly boosting EPS, which fell from $0.33 to $0.29. Management is confident in the company’s strengths. They expect revenue to grow 1% to 2% in 2024 and target an adjusted EBITA margin of 16.6%. "Our data and tech-driven media offerings, health care marketing, and PR capabilities continued to perform strongly, driving our growth," the CEO added.

IPG has raised its dividend for 13 years in a row. Its projected 2024 dividend payout ratio of 46% shows a secure payout.

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Perrigo

Perrigo Company PLC PRGO, founded in 1887 by Luther Perrigo, initially packaged and distributed patented medicines and household items. Today, the company generates approximately $4.7 billion in annual revenue.

In the first quarter of 2024, Perrigo reported an 8.4% decrease in revenue to $1.08 billion. Adjusted EPS dropped from $0.45 to $0.29 compared to the previous year but surpassed estimates by $0.06. Organic revenue declined by 7%, primarily in the Consumer Self-Care Americas segment, which experienced a 14.6% decrease in sales. 

While future revenue growth is anticipated to be modest, margin expansion is poised to bolster EPS growth. The company launched "Project Energize," a cost-saving plan, in Q4 2023. and is projected to save $140 million to $170 million before taxes by 2026, with $17 million saved by the end of Q1.

Perrigo reaffirmed its 2024 outlook, forecasting 1% to 3% organic revenue growth and adjusted EPS of $2.50 to $2.65 per share.

Perrigo (PRGO) has increased its dividend for 22 consecutive years and currently offers a yield of 3.9%.

Flowers Foods

Flowers Foods Inc FLO, established its first bakery in 1919, has evolved into one of the largest producers of packaged bakery foods in the United States. It operates 46 bakeries across 18 states, boasting a market cap of $5.2 billion.

According to Benzinga Flowers Foods’ Q4 Earnings report, revenue rose 2.8% to $1.58 billion, aligning with estimates. Adjusted EPS was $0.38, matching the previous year’s result. 

 Ryals McMullian, Chairman and Chief Executive Officer of Flower Foods, commented, "Full-year results are also expected to benefit from an expansion of our savings initiatives and new business wins. Looking ahead, we remain focused on building continued momentum while capitalizing on more favorable trends in the bread category."

For the full year, Flowers Foods anticipates revenue between $5.091 billion and $5.172 billion, with adjusted EPS expected to range from $1.20 to $1.30. Over the past decade, the company has grown its EPS by 3.2% annually, albeit with some fluctuations.

This stability has enabled FLO to increase its dividend consistently annually for many years. In 2023, Flowers Foods increased its quarterly dividend by 4.5% to $0.23, marking 21 consecutive years of dividend growth. The stock currently yields 3.9%.

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