Investing

The Market Is Pricey, but These 4 Dividend Stocks Are Still Dirt Cheap

Kohl’s

This top retailer has rallied recently but still offers investors a solid entry point. Kohl’s Corp. (NYSE: KSS) operates department stores in the United States. It offers private label, exclusive and national brand apparel, footwear, accessories, beauty and home products to children, men and women customers. The company also sells its products online at Kohls.com and through mobile devices. As of March 3, 2015, it operated 1,162 department stores in 49 states.

The company reported much better-than-expected second-quarter profit, helped by better control over inventories and warm weather that boosted sales of summer clothes and accessories. But the company lowered its earnings guidance for the year ending January 2017.

Kohl’s shareholders receive a 4.5% dividend. The $50 Merrill Lynch price target compares with the consensus price target of $47.10 and the most recent close at $44.54.

Qualcomm

This top technology has performed very well this summer. Qualcomm Inc. (NASDAQ: QCOM) is a world leader in 3G, 4G and next-generation wireless technologies. The company includes the licensing business, QTL, and the vast majority of its patent portfolio. Its subsidiary Qualcomm Technologies operates substantially all of Qualcomm’s engineering, research and development functions, as well as substantially all of its products and services businesses, including its semiconductor business, QCT.

The growth of 3G mobile technologies in emerging markets, like China and India, has had a positive impact on Qualcomm and could be a difference maker going forward. Qualcomm is and has been for years a market leader in the development of 3G CDMA (Code Division Multiple Access) technologies. The company recently developed an LTE chipset that supports SCDMA (Synchronous Code Division Multiple Access) technology. China’s mobile network runs on this, and it could provide the company with a huge leg up in years to come.

Qualcomm reported third-quarter revenue and earnings that beat Wall Street estimates. Fourth-quarter guidance was also better than expected. In China, new semiconductor products are gaining share and management is making better progress with royalty collections.

Qualcomm investors are paid a 3.38% dividend. The Merrill Lynch price objective is $65. The consensus target is $62.27. Shares traded at $62.77 Monday morning.

In an expensive market, it makes sense to stick with companies that are trading at a discount to their historical averages. While these stocks are not suited for more conservative accounts, they make good addition to growth and income portfolios with a higher risk tolerance.