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Snapping up stocks near their 52-week lows can produce strong returns at times. After all, the key to stock market investing is buying low and selling high later on.
Here, I’m going to highlight three FTSE dividend stocks currently trading near their lows. Are they shares worth buying today?
When I last covered Aviva (LSE: AV.) in early July, I noted that the company appears to be in solid shape right now. The business is now far more streamlined than it used to be, and recent growth in premiums has been encouraging.
With that in mind, I think the recent drop in the share price here could be an opportunity.
For 2023, Aviva expects to pay out around £915m in dividends. Given that there are around 2.7bn shares in issue, that equates to a payout of around 33.5p per share.
That puts the yield here at a huge 8.7%.
It’s worth noting that Aviva’s dividend track record is a little patchy. So there’s no guarantee investors will continue to receive big payouts in the future.
The company’s share price is also quite volatile (around 1.4 times more than the broader UK market).
All things considered, however, I think the insurer is worth a closer look today.
Another stock that has experienced share price weakness recently is consumer goods powerhouse Reckitt (LSE: RKT). It’s the owner of Dettol, Durex, Vanish, and a stack of other well-known household brands.
I reckon Reckitt shares look quite attractive at their current levels.
This isn’t the kind of stock that’s going to produce explosive returns going forward. However, I think it’s capable of producing very solid returns from here.
Currently, it offers a yield of about 3.4%, which is decent. And the dividend is growing. Last month, Reckitt raised its H1 payout by 5% to 76.6p per share. If it keeps increasing the dividend like this, I would expect the stock to slowly tick higher over time.
Overall, I see it as a solid defensive play.
Finally, we have alcoholic beverages giant Diageo (LSE: DGE), which is the owner of Johnnie Walker, Tanqueray, Smirnoff, and lots of other big brands.
Diageo shares are currently trading for around £3,300p. That’s around 20% below their all-time highs. I think this is a great buying opportunity.
At around 2.5%, the yield here isn’t high. However, I see the potential for solid total returns (share price gains plus dividends) over the long term.
Looking ahead, I expect Diageo to benefit from a number of powerful trends including global population growth, rising wealth in the emerging markets, increased spirits penetration, and premiumisation.
So I think it’s only a matter of time until its share price starts climbing again.
It’s worth pointing out that even after the big pullback here, Diageo isn’t a cheap stock. Currently, it sports a forward-looking price-to-earnings (P/E) ratio of about 20.
This is a high-quality company with an incredible track record however. So I think it deserves to be trading at a premium to the market.