3 Blue-Chip Dividend Stocks Trading at Multiyear Lows

Core Viewpoint - Buying dividend stocks at a cheap valuation can be advantageous, especially if the underlying business remains strong despite a price decline, allowing investors to benefit from higher yields and potential price rebounds [1]. Group 1: PepsiCo - PepsiCo's shares are currently at their lowest price since 2021, with a low price-to-earnings (P/E) ratio observed only a few times in the past five years [3]. - The company has faced slowing growth rates and consumer pushback against price hikes, leading to decreased investor enthusiasm [4]. - In Q4 2024, PepsiCo's revenue was $27.8 billion, nearly flat compared to Q4 2023, but profits increased by 16% to over $1.5 billion. The stock has declined approximately 14% over the past year, with a current dividend yield of 3.6% [5]. Group 2: United Parcel Service (UPS) - UPS shares dropped over 16% following earnings release and a strategic shift away from reliance on Amazon, which will reduce Amazon delivery volumes to less than half by the second half of 2026 [6]. - CEO Carol Tome indicated that this strategy may enhance overall profitability despite lower revenue, focusing on better margins rather than just sales growth [7]. - UPS projects $89 billion in revenue for the current year, down from $91.1 billion in 2024, but the stock offers a high yield of 4.9%, significantly above the S&P 500 average of 1.2% [8]. Group 3: Merck - Merck's current dividend yield is 3.3%, with shares trading at their lowest since late 2022 [9]. - The company has paused shipments of its Gardasil vaccine to China due to weak demand, raising concerns about future sales amid potential trade tensions [10]. - There are worries about significant sales declines for Merck's top-selling cancer drug, Keytruda, as biosimilars may enter the market as early as 2028 [11]. - Despite current challenges, Merck's stock is trading at less than 10 times estimated future earnings, making it a potentially attractive long-term investment [12]. - Investors are advised to remain patient with Merck, as it continues to work on new product developments [13].