- Video return
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Recommendations
Entry is the asset's closing price on the publication date. Current is the last close on record.
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Entry $21.43 26 Aug 2026Current $21.43 26 Aug 2026Result +$0.00
His dividend picks were Energy Transfer, Equity Residential, Sun Communities, and Portland General Electric.
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Entry $68.14 26 Aug 2026Current $68.14 24 Aug 2026Result +$0.00
His dividend picks were Energy Transfer, Equity Residential, Sun Communities, and Portland General Electric.
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Entry $125.24 26 Aug 2026Current $125.24 26 Aug 2026Result +$0.00
His dividend picks were Energy Transfer, Equity Residential, Sun Communities, and Portland General Electric.
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Entry $50.19 26 Aug 2026Current $50.19 26 Aug 2026Result +$0.00
His dividend picks were Energy Transfer, Equity Residential, Sun Communities, and Portland General Electric.
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Entry $62.26 26 Aug 2026Current $62.26 26 Aug 2026Result +$0.00
The first undervalued high income investment we like is Realty Income.
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Entry $104.23 26 Aug 2026Current $104.23 26 Aug 2026Result +$0.00
The next income investment we like is Clorox.
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Entry $142.19 26 Aug 2026Current $142.19 26 Aug 2026Result +$0.00
The final reliable dividend stock that looks like a bargain is Pepsi.
Full Transcript
I'm Susan Jabinski, co-host of the Morning Filter podcast. On a recent episode, we talked about several income investments that Morningstar Chief US Market Strategist Dave Sekera likes today. His dividend picks were Energy Transfer, Equity Residential, Sun Communities, and Portland General Electric. Today, we're taking a look at a few more undervalued income investments with attractive yields. The first undervalued high income investment we like is Realty Income. Now, as a REIT, Realty Income is required to pay out 90% of its income as dividends to shareholders. Its long-term leases provide a reliable stream of rental income, which we think makes its dividend one of the most stable sources of income for investors. Realty Income pays dividends monthly and has raised its payout for more than 25 consecutive years, which qualifies it as a dividend aristocrat. This REIT has averaged a dividend payout ratio of 80% of adjusted funds from operations during the past several years. We expect Realty Income to continue to grow the dividend each year while maintaining this payout ratio. Realty Income trades below our $72 fair value estimate. The next income investment we like is Clorox. This wide moat company has faced several challenges during the past few years, including post-pandemic volume fatigue, cost inflation, and a cybersecurity breach. Yet, through it all, the company has supported its competitive edge by continuing to invest in innovation, advertising, and its capabilities. Plus, Clorox has raised its dividend annually despite those challenges. In fact, Clorox is also a dividend aristocrat. Morningstar expects mid-single-digit annual dividend growth over the next decade, resulting in a payout ratio of around 60% in the longer term. Clorox stock looks significantly undervalued relative to our $154 fair value estimate. The final reliable dividend stock that looks like a bargain is Pepsi. This wide moat company's portfolio of beverage and snack brands has faced headwinds thanks to consumer belt-tightening and changing tastes toward healthier fare. But, Morningstar thinks the company's efforts to improve its value proposition are starting to bear fruit. Pepsi is a dividend king, which means it's raised its dividend for at least 50 consecutive years. And Morningstar expects the company's payout ratio to stabilize in the low 70s over the next decade with the dividend payment growing at a mid-single-digit pace annually. We think Pepsi stock is worth $169. For more stock ideas, be sure to tune into the Morning Filter each week wherever you get your podcasts and visit morningstar.com too.
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