3 DEEPLY Discounted Dividend Stocks To Buy In September 2026 💰

So guys, as of late the market seems to have found itself in a seemingly never-ending game of tug-of-war. One day inflation is running hot, the next day it's not. One day things in the Middle East are pushing oil prices higher, the next day things calm back down. One day growth stocks, or more specifically stocks related to tech, semiconductors, and AI are soaring, then the next day investors are piling into more defensive positions. There seem to be at least a few competing narratives all playing out at the same time, leaving investors understandably with a sense of whiplash. But I think the game plan is still the same. Buy great companies at discounted prices. And in this video, we're going to be talking about three stocks that fit that criteria. I think all three of these look like very solid buying opportunities as we step into September. Before we get into it though, in case you're new to the channel, my name is Ryan and here we talk all about dividend investing and how you can use it to create passive income and reach financial freedom. So if you love dividend investing and if you're on a mission to retire early, then hit that subscribe button. I'd love to have you along as we continue to grow our portfolios and collect that cash flow. All right guys, now the first stock on our list today is none other than Kroger, which is one of the world's largest grocery retailers. And in the past month, there's not been too much action for Kroger. It wasn't up, it wasn't down, it was just right, break even. However, if we zoom out looking at the year-to-date performance, the share price is down about 8.2% going from a peak of about 74, almost $76 per share actually, to where it's at now, $57.80. So that's quite a steep drop and if we look at the performance over the past year, it's down even more. It's actually down closer to 20%. Now I think a lot of the reason Kroger's been struggling really just comes down to the environment that these grocery retailers are having to operate in right now. In a nutshell, consumers are stretched pretty thin and because of that, they're becoming increasingly careful about how they spend their money, even when it comes to necessities like groceries. And this isn't just a Kroger problem either. Walmart just reported its slowest same-store sales growth in almost 6 years with management saying that the consumer environment has noticeably gotten worse over the past quarter and Kroger is seeing much of the same thing. Now, this isn't ideal for any industry, but it makes things particularly tough for the grocery industry where competition is already intense and margins are notoriously thin. Like in Kroger's case, their operating margin tends to hover between 2 and 3% and their free cash flow margin is just slightly south of that. And with transportation costs still high due to higher energy prices, that's going to have a negative impact on margins as well, which makes things increasingly tough for these grocery retailers who have to be extremely competitive on price. Despite all of that though, Kroger's underlying business has actually held up pretty well. I mean, as we can see, earnings per share grew 6% last quarter, customer traffic was up, and Kroger's loyal households have now grown for 17 consecutive quarters. On top of that, Kroger's private label brands are also performing really well, outpacing national brands by almost two percentage points during the quarter. Plus, e-commerce sales grew 19% which is pretty wild and became profitable for the very first time. Now, on the topic of profits, despite the thin margins, Kroger has a tremendous track record of being able to grow its per share profits and free cash flow, which as far as the dividend goes, is exactly what you want to see. And by the way, guys, these charts are coming from Simply Safe Dividends, which I think it is a must-have for dividend investors. If you're trying to analyze dividend stocks or get a better sense of how safe a company's dividend really is, I think this is the best tool out there. They actually publish a public track record of how their dividend safety scores have performed. And since 2015, investors who followed those ratings would have avoided 97% of all dividend cuts. Fortunately for us, Kroger has a dividend safety score of 71, which means that the risk for this company cutting its dividend is pretty low, and we'll take a closer look at that in just a moment. But if you want to check out Simply Safe Dividends for yourself, there's a link to it down in the description of the video where you can try it out for free for a full month. That is a 1-month free trial, which is very generous, and you don't even need to put in a credit card. Just sign up with your email and see what you think. But anyway, getting into Kroger's dividend stats, right now at current prices, you can lock in a 2.7% starting yield. So, pretty moderate yield, but this is considerably higher than the company's 5-year average yield of 2.15%. So, you're getting an above-average cash flow return. And the dividend here is very well covered. Both the earnings payout ratio and the free cash flow payout ratio are there in the 20s. In the trailing 12 months, the earnings payout ratio was only 21%. Free cash flow is just a little bit higher than that. So, and we saw the dividend safety score of 71. So, there doesn't look to be any risk of the company cutting its dividend. And looking at the dividend growth, Kroger has a great track record of increasing their dividend. The last raise, which came a couple of months ago, was 11.4%. Pretty hefty raise, and over the past 5 years, the average growth rate is actually a bit higher at about 14 and 1/2%. And over the past 10 years, they grow this dividend on average by about 13%. So, very juicy growth from top to bottom, and they have a pretty nice dividend growth streak of 19 years. Now, as far as the valuation goes, looking at a few different metrics, the Wall Street analysts have the price target at $70.50. Doing a discounted cash flow calculation, that comes out to $63.06. And based on the company's 5-year average dividend yield, that's going to bring the fair value to $72.56, which is the highest of the three. And if we take an average of all three of these numbers, that's going to give us an average fair value for Kroger of $68.71, which means that at current prices, the stock is about 16% undervalued. I mean, people aren't going to stop eating anytime soon. Over the years, Kroger has been a great grower both in terms of the fundamentals and also the dividend. And I don't know, I think it's a pretty interesting opportunity right now. So, I think it's worth checking out. Now guys, moving on to stock number two, this is one that I have in my portfolio. We're talking about Watsco, who's seen a crazy drop in the past month. The stock is down about $370 per share to now $311.78. With that said, if we look at the year-to-date performance, that's going to leave Watsco down about 10.2% and over the past year it's down about 23%. So, big drops all across the board. Now, I think a lot of Watsco's troubles that we've seen over this past year really just comes down to the broader slowdown that we've seen across the entire residential HVAC industry. They talked about this in the most recent earnings call, but HVAC unit volumes across the industry were down about 17% last year. And Watsco's management believes part of that was essentially a hangover from COVID when a huge wave of HVAC replacements pulled some demand forward and we can actually see that in the charts here. From 2020 to 2022, sales took off like a rocket, but since then have been pretty dormant. We see a similar trend here looking at the earnings per share, but fortunately the free cash flow per share growth still looks to be very much intact. In addition to that though, like we were talking about with Kroger, consumers are still stretched financially and replacing an HVAC unit is not a small expense at all. On top of that, the industry is also spent the past year transitioning to a new generation of HVAC systems that use a different type of refrigerant, which caused a bit of chaos with inventory and contractors having to adjust to the new equipment, which helped to make an already tough environment even more difficult. And then, Watsco's most recent earnings report from a few weeks ago threw another wrench into the mix. For this, revenue only grew 2% while gross margins actually fell from 29.3% to 27 and a half percent, which ultimately caused both the operating income and the earnings per share to drop by about 12%. And on that note, the margin decline here doesn't look great on the surface, but I do want to add a little bit more context here. Last year, Watsco was able to benefit from unusually strong pricing and other benefits related to this A2L refrigerant transition that helped boost their margins a bit. And on the call, management said the margins that they're generating today, even though they're lower than last year, this is much more normal for the company on a historical level. So, it's really not as bad as it seems. Despite all of these challenges though, it does seem like the HVAC industry is kind of starting to turn a corner. Residential HVAC equipment sales were up 5% last quarter, including a 2% increase in unit volumes, which means they're moving more units. And management also said on the call that sales were growing another 4 to 5% through the first 28 days of July. So that's good. And not to mention the company still has no debt on the balance sheet. So overall things look to be on the up and up for Watsco and management actually said that they believe the HVAC industry has finally hit bottom and is beginning to recover. I will say the nice thing about a business like this is that HVAC units aren't exactly optional. I mean, you can get away with putting off, you know, replacing or repairing your air conditioner or your heater for a while, but eventually when these things break, they're going to have to be repaired or replaced. Now looking at the dividend stats, Watsco's yield is coming in super high right now. At current prices, you can lock in a 4.23% yield, which is very juicy and this is quite a bit above the 5-year average of about 2.8%. So that looks good. With that said though, if we scroll down looking at the payout ratios, this is something you'll want to keep an eye on. So over the past few years, we see the trend is not looking favorable. Their earnings payout ratio has been going up and up and up as their earnings per share is kind of leveled off or come down a little bit. And it looks like for now, they're paying out more in dividends than they are earning in net income. So like I said, that's something you'll want to keep an eye on. But the free cash flow payout ratio looks to be in a much better spot. In the last 12 months, it was just less than 70%. So at least based on that, the dividend still looks to be pretty well covered. Plus like I said a moment ago, the company still has no debt on its balance sheet. So at least they're not super over-leveraged and they can still afford to pay this dividend without having to worry about making interest payments or anything like that. Now looking at the dividend growth, it's been pretty fantastic, especially considering how high the starting yield is right now. Their latest raise, which came earlier this year, was exactly 10%. So a nice raise there. Over the past 5 years, the average is a bit higher at 11.1% and it's the highest over the past 10 years at 15.4% and they have a 12-year dividend growth streak. So, this looks pretty good. And also with a dividend safety score of 70, it seems that that dividend will just keep on growing. Anyway, in terms of valuation, the Wall Street analysts give Watsco a fair value of $378.70, which is a bit above the current share price. Based on a discounted cash flow calculation, that's going to bring it to 357.16. And based on the company's 5-year average dividend yield, that's going to give us the highest fair value of these three at $473.12. That's quite a bit up there. And if we take an average of all three of these numbers, that's going to give us an average fair value for Watsco of $402.99, which means that at current prices, it's still about 22% undervalued. All right, guys. Moving on to stock number three. What a surprise, Ryan is talking about Rollins. But how can I not when the share price is down a whopping 16% in the past month? It has just fallen off of a cliff, guys. Terrible month for Rollins. And if we look at the year-to-date performance, that's going to leave the stock down 37.4% and that's going to leave it down about 36% over the past year. Now, the situation with Rollins here is a little bit interesting because while the underlying business has slowed down a little bit, we'll talk more about this in just a moment. I I think the severity of the share price drop has a lot to do with how expensive Rollins was in the first place. Historically, as we can see from the charts here, this has been a very growthy and a very predictable business with a ton of recurring revenue and really strong cash flow generation. And because of that, investors had been willing to pay a huge premium for the stock. Over the past 5 years, Rollins had traded at an average PE ratio of more than 46, which is nuts. The problem with a valuation like that though is that you're basically priced to perfection. So, when a business puts out numbers that are, you know, anything less than perfect, the share price is going to get hit pretty hard. And that's essentially what we're we're right now. Rollins' latest quarter wasn't necessarily bad. I mean, revenue still grew almost 8% and earnings per share grew almost 7%, but both organic growth and profitability came in below the company's expectations. And the biggest issue here was on the residential side of the business, particularly at their main Orkin brand, where Rollins relies pretty heavily on leads actively searching online or calling them for their pest control services. And management said that that lead environment got progressively worse as the quarter went on, and residential organic growth ultimately slowed down 3.6%. And once again, I think some of this probably comes back to the consumer. Management talked a little bit about this on the call, but they also said there wasn't one single explanation for the slowdown. Pest activity was also unusually weak in certain areas, too, and management basically chalked it up to a late start to the peak pest control season. Despite all of that, though, customer retention still looks strong. Growth in their commercial and termite segments were both up 7%, and some of Rollins' other residential brands actually grew at double-digit rates. And probably most importantly, management said that the inbound leads that they were missing started improving toward the end of June and continued improving in July, eventually getting back to where they should be. So, we'll have to see if that continues, but it looked like they just experienced a little blip. Now, getting into Rollins' dividend stats, the yield right now is just below 2%. So, a decent starting yield, kind of on the lower end, but this, like all the other stocks, is way above the company's 5-year average yield of 1 and 1/4%. And the dividend here looks very well covered. Historically, the earnings payout ratio has sat between about 50 and 60% and it is still steadily there. In the past 12 months, it's only 61%, and the free cash flow payout ratio is actually a bit lower, coming in at 56%. And looking at the dividend growth, I mean, Rollins over the years has been a dividend growth monster. This is a great-looking chart right here. Little blip in 2020, but we'll give them a pass for that. Otherwise, great track record of growing the dividend. The latest raise was 10.6% around the same time last year. It looks like they'll be due for another raise in the next month or so. And then over the past 5 years, this is just fantastic. 23.1% on average. Over the past 10 years, they've raised the dividend about 17% on average. And with a dividend safety score of 83, those increases should just keep on rolling in for Rollins. Now, looking at the valuation, the Wall Street analysts have a price target of $45.59 for Rollins, so quite a bit above the current share price. Doing a discounted cash flow calculation, that comes in just a little bit lower than the analysts at $44. and 8 cents. And based on the 5-year average dividend yield, this one's going to be the highest of the three at $58.40, which gives us an average fair value here of $49.36, which means that based on Rollins' current share price, it's still about 25% undervalued. Personally speaking, I think Rollins looks great. I've been adding more shares to my portfolio pretty much every single week for the past couple of months now, and I actually think all three of the stocks that we've talked about today look like pretty interesting buying opportunities. With that said though, these three are not the only ones. There are still a handful of other stocks out there that I think you need to keep your eye on. The first of which is going to be Badger Meter, who's seen a pretty big drop in the past month. The stock is down 9.6%, which is going to leave it down 25.2% so far in 2026. Moving on, Dick's Sporting Goods is another one to keep an eye on. I feel like I never talk about this stock, but it's down 12% in the past month. It's pretty close to its 52-week low, and if we look at the year-to-date performance, that's going to leave the stock down 8.4%. Anyway, moving on, I also think Domino's is a good one to watch. It is up a little bit in the past month, actually pretty solid performance there, but if we look at the year-to-date performance, the stock is still down 20%, so I think it's a good one to watch. And kind of sticking to the restaurant theme for just a moment, McDonald's is still one to keep an eye on. It is up a little bit in the past month, but year-to-date, the stock is still down 10.7%, so keep an eye on McDonald's. Now, moving on, I think McCormick & Company MKC is another one to watch. This one's actually had a pretty solid month. It's up about 6%, but year-to-date, the stock is still down about 18%. So, it's still seen quite a nice pullback. I think it's a good one to watch. And kind of in a similar space as McCormick, I think the Marzetti Company MZTI is another great stock to keep an eye on. This is actually a dividend king. It is up 3% in the past month, but year-to-date the stock is still seen a pretty fantastic pullback. It's still down 32.2%. And like I said, it's a dividend king. The company has no debt, and it also comes with a pretty decent starting yield of around 3 and 1/2%. I think there's a lot to like about this company. Anyway, moving on. I haven't talked about the TJX Companies in I can't tell you how long. I think this is a great business, and it's finally looking like a good one to keep an eye on. It's down 9.2% in the past month, and year-to-date it's seen a pretty decent pullback. It's down 8.8%. So, keep an eye on this one. Let's see if it can go down even more. I'd love to see that. At any rate, next up we have Verisk. Which This one's been kind of a roller coaster. There was a brief moment in time where it popped up to about $213 per share, but now it's back down to $187. It's down 4% in the past month, and it's still down 15.2% year-to-date. Anyway, back over to restaurants. I think Wingstop is a good one to keep an eye on. The drop in this stock share price has just been incredible. It's down 14 and 1/2% in the past month. Year-to-date it's down 55.1%. So, yeah, I think this one's starting to look pretty interesting. And then guys, we've got my beloved ClearSecure, which is down 24% in the past month. I can't tell you why the stock dropped so much. They did put out their quarterly earnings, but their earnings numbers actually looked fantastic. So, I don't know. Pretty weird reaction to their earnings release, but nonetheless, it's down quite a bit. Definitely down from its recent high of almost $60 per share. Year-to-date though, ClearSecure is still up quite a bit. It's up 26%, but I think this is starting to look like an interesting price. And then last but not least, we have Zoetis. Definitely keep an eye on this one. It is up a bit in the past month, up 3.1%, but it's still down 38.3% year-to-date, and still sitting below $80 per share. Now guys, those are all of the stocks that I think are good ones to watch right now. And if you want to hear about a handful of other stocks that I'm most definitely staying away from and suggest you do the same, then check out this next video right over here. In this one, I'm telling you about three stocks that are showing some pretty big red flags that make me think they could be next to cut their dividends. In fact, one of them already has cut its dividend, but nonetheless, click right over here to check those out and I'll see you in the next one.