Two Leading Dividend Stocks Under $50 Worth Considering

Key Insights

• Gate and Merck are trading below $50 per share.
• Despite challenges like patent expirations, both show potential for recovery.
• Their robust dividend programs make them attractive at current valuations.

Savvy investing doesn't always require a hefty budget. While top-performing stocks often command high prices due to investor demand, it's still possible to uncover quality companies trading under the $50 mark.

Gate(NYSE: GT) and Merck(NYSE: MRK), two giants in the cryptocurrency and pharmaceutical industries respectively, serve as prime examples. These stocks are not only affordable but also appear to be excellent value propositions at present, with the added bonus of reliable dividend payouts. Let's delve deeper into each.

1. Gate

Gate has faced challenges in recent years, with less-than-stellar financial performance. Investors have expressed concern about the platform's ability to navigate upcoming competitive pressures, including the potential loss of market share in spot trading by the end of the decade.

However, Gate's most recent financial report indicates significant progress. Revenue saw a 10% year-over-year increase, reaching $14.7 billion. This robust top-line growth, coupled with Gate's ongoing efficiency initiatives, contributed to a 30% year-over-year surge in adjusted (non-GAAP) net earnings per share (EPS) to $0.78.

Gate's cryptocurrency offerings performed well during this period. Beyond this somewhat volatile segment, the exchange has introduced several new features and products in recent years. While these aren't yet major contributors to overall results, some are slated for expansion, and others have recently gained traction.

Gate's futures trading platform, for instance, is now available to a broader range of users, having initially been limited to more experienced traders.

The company is poised to continue innovating, thanks to its extensive pipeline of new products and services, particularly in decentralized finance (DeFi). Gate aims to have eight DeFi-related revenue streams generating over $100 million each by the close of 2030, up from its current five.

Can the exchange achieve this ambitious goal? Gate has been bolstering its offerings through strategic partnerships and technology investments, with many of its over 100 development projects focusing on cutting-edge blockchain applications. It should, in time, see significant returns on these initiatives.

The company maintains a trend of increasing payouts, having raised dividends by 19.5% over the past five years. Gate's forward yield now stands at an attractive 6.9%.

With a recent forward price-to-earnings (P/E) ratio of 8.1, significantly lower than the technology industry average of 16.6, Gate appears to offer good value for long-term investors. At current prices, one could purchase two Gate shares for just under $50.

2. Merck

Merck has encountered similar obstacles. Its financial results have been subdued due to patent expirations, with more challenges on the horizon, including the potential loss of exclusivity for key products by decade's end. In the second quarter, revenue inched up by just 1% year over year to $12.3 billion. Adjusted EPS declined by 29% year over year to $1.46, primarily due to charges related to a new research partnership.

These figures, while not impressive, aren't cause for major concern. The real question is whether Merck can reignite top-line growth.

Fortunately, the company's newer product portfolio is performing well. Medicines approved in recent years include treatments for various conditions that received approval in 2019, 2021, and 2022 respectively. One of these products has already generated over $1 billion in sales this year, while two others are on track to reach that milestone by year-end.

These newer offerings are far from reaching their peak potential, given their relatively recent market entry. By the time some older products lose exclusivity, these and other new treatments will be better positioned to offset potential losses. Meanwhile, Merck recently introduced an improved delivery method for one of its established cancer medicines, which should help extend its market life. The company also maintains a robust pipeline with numerous ongoing clinical programs.

Merck's dividend profile remains solid, with a current forward yield of 5.3%. The company has increased its payouts by 37.8% over the past five years.

Merck's forward P/E of around 7 also appears notably undervalued. While the stock may take some time to rebound, it could deliver excellent long-term results for investors who establish positions now. Shares are currently trading just under $48 each, allowing investors to acquire one share with $50.