Are These 3 Beaten-Down Dividend Stocks Ready to Turn It Around in 2022?

Last year was tough for some really popular dividend stocks. Established businesses struggled with everything from supply chain issues to labor shortages to hedge fund margin calls. Whatever plagued a company, the books on 2021 are now closed and it’s time to look forward to new opportunities. These three dividend stocks are looking to bounce back after a tough year.

1. Verizon

Verizon (NYSE:VZ) didn’t bring anything to the table to excite investors in 2021, and the stock fell 11.5% in 2021. It was a slow and steady decline that began in June, and it wasn’t really driven by any specific bad news. The company didn’t always impress relative to Wall Street’s expectations, but its sales are growing more than 5% and its operating profits are rising even faster.

Verizon’s tumble looks like a lack of interest from the market, rather than a breakdown in fundamentals. Its forward P/E fell from 11 to 9.6 during 2021, while its dividend yield rose from 4.2% to 4.85%.

VZ PE Ratio (Forward) Chart

Diversified telecom leaders enjoy wide economic moats and low cyclicality, but other aspects of the business are less appealing to investors. Verizon is never going to be a high-growth company in its current state. Wireless networks require substantial capital investments in physical infrastructure as well as radio spectrum rights. It faces intensifying competition in the short term from AT&T and T-Mobile, and ambitious tech giants like Alphabet in the long term. This limits the number of investors who get excited about Verizon’s stock.

With that said, any bounce back for Verizon in 2022 will have to come from shifting market dynamics. Fed tapering is causing some rotation away from growth stocks and into value stocks, which is a good sign for Verizon. Its 9.9 forward P/E and 7.9 enterprise-value-to-EBITDA ratio are both really cheap for a stable company. Its 4.8% dividend yield is just about double the level for most blue chip stocks. Verizon’s payout ratio is only 47%, and it produces more than enough cash to sustain those dividends.

Don’t expect anything explosive from Verizon stock, but there’s definitely an opportunity to rebound this year.

2. ViacomCBS

ViacomCBS (NASDAQ:VIAC) endured a very strange year. The stock delivered enormous returns in January and February after the company announced its streaming platform Paramount+. The stock slowly and steadily declined for years without a streaming product as its competitors pulled away. The new announcement was a lifeline for investors, and the stock climbed 75% over two months.

Those gains were completely wiped out by a strange set of events in March. ViacomCBS announced a secondary offering that diluted shareholders about 5%. Multiple analysts also downgraded the stock because its valuation increased so rapidly. Those drags would have been OK on their own, but they contributed to a margin call that forced Archegos Capital to sell a massive number of shares in short order. At a time with limited buyer momentum, that supply surge sent shares into free fall.

Even though these losses occurred under strange circumstances, the stock never recovered. Its price slowly decayed over the course of the year. Analysts are predicting low-single-digit growth moving forward. That’s nothing spectacular, but it’s certainly better than shrinking, so value investors should consider it.

ViacomCBS’ valuation leaves plenty of room for growth. Its 7.4 enterprise-value-to-EBITDA ratio and 10 forward P/E ratio are both cheap. The stock’s dividend yield sits at 2.6%, which is solid in today’s market. That yield isn’t quite as exciting as the valuation ratios, but a 20% payout ratio suggests that this dividend could be substantially higher in the future.

3. VF Corporation

VF Corporation (NYSE:VFC) is a global apparel and footwear company with a portfolio of brands including Vans, The North Face, Dickies, and Timberland. This is a diversified business that’s relatively non-cyclical, but the stock still endured a volatile year and wound up falling 14.3%.

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