3 Undervalued Dividend Stocks for Passive Income Investors to Buy in August

Core Viewpoint - Dividend stocks are positioned as attractive investment opportunities amid economic recovery, particularly in key industries like logistics, copper mining, and semiconductors [3][11][17]. Group 1: United Parcel Service (UPS) - UPS stock has declined by 28% since the beginning of the year, contrasting with an 8.3% rise in the S&P 500, presenting a buying opportunity [5][6]. - The decline is attributed to year-over-year decreases in revenue and earnings due to higher costs and uncertainties regarding international trade policies [7]. - Management aims for $3.5 billion in cost reductions in 2025 through network reconfiguration and Efficiency Reimagined initiatives, indicating potential for future growth [8]. - UPS has maintained a 76.9% average payout ratio over the past five years, suggesting a commitment to shareholder returns despite current challenges [9]. Group 2: Freeport-McMoRan - Freeport-McMoRan's stock price fell after the Trump administration exempted refined copper imports from tariffs, impacting the company's market position [11][12]. - Despite the recent downturn, management projects $8.5 billion in operating cash flow at a copper price of $4 per pound, and $11 billion at $5 per pound, indicating strong future cash flow potential [13]. - The current market cap of $56 billion implies a price to operating cash flow of 5.9 times, which is considered cheap historically [14]. - The stock offers a 1.5% yield, making it an attractive value proposition regardless of tariff implications [16]. Group 3: Texas Instruments (TI) - TI experienced a sell-off despite reporting a 16% increase in revenue and earnings per share, primarily due to weakness in key markets like automotive and ongoing tariff risks [18]. - The company is well-positioned for steady growth, producing essential components across various sectors, including automation and medical equipment [19]. - TI's vertically integrated manufacturing approach provides greater control over its supply chain compared to fabless competitors [20]. - With a 2.9% dividend yield, TI stands out in the tech sector, especially when compared to other dividend-paying chip stocks [21]. - The current P/E ratio of 35.8 reflects cyclical valuation, but long-term earnings growth potential remains strong, with consensus estimates suggesting a 28.4 P/E ratio by 2026 [22][23].