[U.S. Stock Trends] 3 High Dividend Stocks Trading Near 1-Year Low Prices | Motley Fool U.S. Stock Information | Moneyクリ MoneyX Securities Investment Information and Financial Media

Motley Fool U.S. Headquarters – August 2, 2025, from a posted article

If you are looking for dividend stocks, it might be a good idea to start with less popular ones.

As of the time of writing this article, the dividend yield of the S&P 500 index is just 1.2%. If you feel that the dividend income is unsatisfactory, you can achieve yields far exceeding 1.2% by investing in unpopular stocks that are near their 52-week lows. By picking up the bottom prices of top-class stocks in each industry, there is a possibility of enjoying high dividend yields that can reach up to 6.4% from businesses with favorable prospects.

1. Merck boasts a solid track record as a dividend stock.

Merck [MRK] has increased its dividend for 15 consecutive years. This is an impressive achievement, but of course, that's not all. In fact, there were periods before the dividend increases when distributions were halted. During that time, even its competitor Pfizer [PFE] was forced to cut its dividend. Annual dividend increases are ideal, but the efforts to avoid cuts are also commendable.

Merck's dividend yield is approximately 3.8%, which is an attractive level compared to the overall market and the average of healthcare stocks, which is around 1.8%. However, Merck is currently facing several challenges, including patent expirations, progress in its new drug pipeline, and changes in the regulatory environment. As a result, the stock price is hovering near its 52-week low, and the dividend yield has increased accordingly.

That said, industry giant Merck has the financial strength to invest in its own business and acquire smaller competitors with attractive products, as well as the means to navigate regulatory changes. In fact, it has achieved all of these in the past, and it is noteworthy that it did not cut its dividend during that time. For long-term dividend-focused investors, this is probably a good buying opportunity.

2. Hormel Foods is overcoming difficult situations.

Hormel Foods [HRL] (hereinafter referred to as Hormel) has been a "Dividend King" that has continued to increase its dividends every year for over 50 years. Currently, the business is not doing well, and due to a waning interest from investors, the stock price has fallen to around its 52-week low.

Compared to the past, the situation is worse, and stock prices are almost at the bottom level over the past 3, 5, and 10 years. On the other hand, the dividend yield at the time of writing this article is at a historically high level of about 4%.

Hormel is a processed food manufacturer centered around protein, and there is no immediate solution to quickly rectify this situation. However, fundamentally, since the Hormel Foundation controls the company, there is room to take sufficient time to address the challenges.

This charity was established by the founder of Hormel. The foundation utilizes the dividends paid by Hormel to conduct its donation activities and, like investors, hopes that the business generates stable dividends.

Hormel is a brand company in the essentials sector. It is innovative and skilled in marketing, working on restructuring its brand portfolio while also focusing on cost management. These are desirable traits, but it takes time for results to materialize. If you are willing to wait while enjoying an attractive dividend yield from increased dividends, Hormel may be a strong choice.

3. United Parcel Service is facing a difficult choice

The last stock mentioned has a dividend yield of 6.4% at the time of writing, which is the highest level among those discussed this time. The annual dividend has increased every year for the past 16 years; however, investors have clear concerns about the business of United Parcel Service [UPS] (hereafter UPS). The current dividend yield is very high compared to past performance, and this is due to the stock price having significantly declined from its 52-week high.

Investors have every reason to be concerned. Following the COVID-19 pandemic, the volume of deliveries has decreased and profit margins have declined, leading to a deterioration in the company's performance. The management quickly began restructuring the business, working on asset sales and cost reductions. During this process, they also had to address high new labor contracts with labor unions. Just as it seemed the company was beginning to recover, the management announced a plan to voluntarily scale back its business with its largest customer, Amazon.com [AMZN].

However, what is important here is to have a broad perspective. Firstly, online shopping continues to experience growth, and the demand for UPS's parcel delivery business may expand over time. Secondly, the company can refocus on its most profitable businesses while accepting short-term pain (business with Amazon has very low profit margins). Thirdly, while streamlining the business comes with short-term costs, it is expected to contribute to the recovery of the company's performance in the long term.

For investors who can tolerate such an investment stance, UPS can be positioned as an attractive and high-dividend yield business turnaround stock.

Picking up at the bottom carries risks, so be cautious.

The United Parcel Service, Hormel Foods, and Merck that have been highlighted are all top-class companies in their respective industries with strong dividend records, and their long-term business outlook is also favorable. If you are looking for undervalued stocks that are at the level of their 52-week lows, any of these stocks would be an interesting option.

It is easy to find high dividend yield stocks that are struggling, but caution is necessary when trying to pick them up at the bottom. This is because companies with equally attractive business prospects are hard to come by.

Disclaimer and Disclosure The article is intended for general informational purposes only and is not investment advice to investors. The original author Reuben Gregg Brewer owns shares in Hormel Foods. The Motley Fool US headquarters owns and recommends shares of Amazon.com, Merck, Pfizer, and United Parcel Service. The Motley Fool US headquarters has established an information disclosure policy.