3 Dividend Stocks Down Between 11% and 16% to Buy in February

Core Insights - The S&P 500 has increased by 22.8% over the past year, driven by megacap growth and value stocks, prompting investors to consider out-of-favor companies for new capital allocation [1] - The energy sector presents numerous dividend-paying value stocks, particularly in the upstream segment [1] Occidental Petroleum (OXY) - Occidental Petroleum's share price rose by 4.4% following its Q4 and full-year 2024 results, despite a 15% decline over the past year [3] - The company reported a net loss of $297 million for the quarter but had a solid cash flow with $1.4 billion in free cash flow before working capital [4] - Occidental completed a $4.5 billion debt repayment and announced a $1.2 billion divestiture for Q1 2025, while its $12 billion acquisition of CrownRock is expected to generate $1 billion in free cash flow annually at $70 per barrel WTI [5][6] - The company has increased its quarterly dividend by 9%, raising the payout to $0.24 per share, yielding 1.9% [9] Diamondback Energy (FANG) - Diamondback Energy's stock has decreased by 10.7% over the past year, but oil prices have remained stable between $70 and $80 per barrel [10][11] - The company can sustain its base dividend of $3.60 per share with a break-even price of $37 per barrel, indicating resilience against price fluctuations [11] - Analysts project Diamondback will generate $3.5 billion in free cash flow in 2024 and $5 billion in 2025, which could support significant dividends and share buybacks [13] Devon Energy (DVN) - Devon Energy's stock has dropped over 13% in the past year, presenting a buying opportunity with a forward dividend yield of 4.2% [14] - The decline in stock price is largely due to falling energy prices, with WTI prices down about 9% over the past year [15] - Devon Energy's acquisition of Grayson Mill Energy strengthens its position in the Williston Basin, and the company maintains a conservative leverage approach with a net debt to EBITDA ratio of 1.1 [16][17] - The stock is currently valued at 3.3 times operating cash flow, below its five-year average of 4, indicating potential undervaluation [17]