2 Dirt-Cheap Dividend Stocks Just Smashed Earnings—Here’s Why They’re Screaming Buys

Wall Street’s sleeping on these cash-generating machines—time to wake up.

Undervalued & Overdelivering

While the market obsesses over meme stocks and overpriced tech, two dividend dynamos just posted earnings that’d make a growth investor blush. No hype—just cold, hard cash flow.

Why Fundamentals Still Matter

In a world where ‘valuation’ means guessing which NFT floor price will hold, these stocks are throwing off yields like it’s 1999. The kicker? Their P/E ratios look like a Black Friday deal.

The Bottom Line

Forget the Fed pivot drama—these picks prove old-school income investing isn’t dead. It’s just hiding in plain sight while hedge funds chase the next crypto cat video.

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No signs of weak consumer spending here

(SKT -0.99%) is the only pure-play outlet mall REIT in the market, with a portfolio of about 40 outlet properties, primarily located along coastal and tourist-heavy areas.

In the second quarter, Tanger reported stellar 9.4% year-over-year growth in funds from operations (FFO), and all of the major portfolio metrics looked strong. Tanger's portfolio occupancy was 96.6% at the end of the second quarter, an 80-basis-point sequential increase. And if you were worried about the health of the American consumer, it isn't apparent in Tanger's numbers -- the average tenant had $465 per square foot in sales over the past 12 months, $27 more than a year ago.

Impressively, Tanger's spreads on new and renewal leases was 12% during the second quarter, meaning that when a tenant renews their lease or a new tenant moves in, Tanger is making 12% more than it was previously.

In all, this was a fantastic quarter and Tanger raised its full-year FFO guidance on the strength of its results. But even now, Tanger trades for about 14 times FFO and has a 3.7% dividend yield that is nicely covered by its cash flow.

A rock-solid monthly dividend stock

(O 0.69%) has a portfolio of more than 15,000 single-tenant properties, most of which are retail in nature. But it's a different type of retail than Tanger owns. Realty Income chooses tenants that sell non-discretionary products, are service-based, or that are deeply discount-oriented. Their tenants sign long-term lease agreements that require them to cover taxes, insurance, and maintenance -- all Realty Income has to do is get a quality tenant in place and enjoy years of growing income.

Realty Income's results were solid all around. But perhaps the biggest surprise is that Realty Income is still finding plenty of attractive ways to put money to work, despite the unfavorable interest environment. In the second quarter alone, Realty Income invested $1.2 billion in properties at an average initial yield of 7.2%, and meanwhile it issued about $1.3 billion in new debt at an average interest rate of about 3.6%.

In fact, Realty Income raised its full-year investment guidance to $5 billion (previously $4 billion) and increased its full-year FFO guidance midpoint. Shares now trade for just 13.4 times expected FFO, and Realty Income pays a 5.7% dividend yield in monthly installments.

Why they're worth a look now

Both of these REITs are firing on all cylinders, with solid occupancy, leasing activity, and tenant performance. And both are trading for surprisingly low valuations.

One big reason is that we're still in a relatively high interest rate environment, and this is a negative catalyst for REITs. Higher interest rates mean that it costs more to raise growth capital, and they also put pressure on commercial real estate values. But as rates (hopefully) trend lower over the next couple of years, it could produce a positive tailwind for these two excellent businesses. I own both in my portfolio (Realty Income is one of my largest investments), and both look extremely attractive from a long-term perspective right now.