The S&P is Running Hot, But These 5% Dividend Stocks are Still So Cheap

The S&P 500 has been quite a steady rock, demonstrating far more resilience than I would have thought in the face of new tariff threats and rising geopolitical uncertainty. Undoubtedly, it’s a confusing time to be a new investor seeking to put new money to work in stocks. We don’t yet have all too much clarity on what’s to happen with trade going into the second half. And with valuations on a broad range of names getting on the expensive side, it doesn’t seem like the kind of environment that a value investor should be backing up the truck on. In any case, not every stock has been running half as hot as the S&P.

Some names are still unloved and have stayed mostly grounded even amid broad market strength. It’s these types of names that are more appealing to the contrarian crowd. In this piece, we’ll look at a few dividend stocks that I still consider cheap and worth buying up as the bull market pushes market strategists to upgrade their year-end S&P price targets across the board.

Best Buy: 5.6% yield

Shares of electronics retailer Best Buy (NYSE:BBY) have been left behind amid the latest run in the S&P. Year to date, the stock’s slide accelerated, with shares tanking close to 16%. Now down around 47% from all-time highs, expectations have been lowered drastically, and despite the negative momentum, I think it’s about time for income investors to get a bit more constructive on a stock that has a number of underrated drivers for it going into the second half.

The consumer spending slowdown has taken quite a toll on BBY shares for some time now. Indeed, when times are tough and the price of basic necessities is rising, it can be tough to justify buying a new, pricey gadget over at the local Best Buy. Indeed, Best Buy is perhaps one of the most economically sensitive discretionary retailers out there. When times are tough, BBY stock can really go bust. But when the tides turn, shares can come back in a hurry.

With a more cautious guide amid tremendous macro headwinds, I think BBY stock has all the right pieces to bottom out at some point over the next year. Looking into 2026, a new generation of AI-enabled devices (think smartphones, computers, and more) could help drive sales higher. Add the company’s efforts to trim away at costs, and I think Best Buy is shaping up to be one of the best buys in retail for the second half and the new year. At 17.5 times trailing price-to-earnings (P/E), the price of admission is relatively low for the 5.66%-yielder.

Bank of Nova Scotia: 5.8% yield

The bank stocks have really been booming of late. And while the U.S. bank stocks still look like great value buys, their dividend yields are quite lacking compared to their Canadian counterparts. Add the relatively low loonie compared to the U.S. dollar into the equation, and the case for picking up a Canadian bank stock, I think, is strengthened. Indeed, the Canadian banks have far more in the way of regulation (higher capital requirements, for instance) and less in the way of competition, making them “safer” bets for those worried about the risk of a recession.

Today, shares of Bank of Nova Scotia (NYSE:BNS) — or Scotiabank for short — is a $68 billion Canadian bank with a promising, growing Latin American presence, and a whopping 5.8% yield. It’s a safe payout and one that’s well-positioned for further growth, as Mexico and Chile act like more of a growth booster for the firm.

With a nice share buyback program in place and a commitment to keep investing in its financial technology, the Bank of Nova Scotia may very well be a cheaper (shares go for 15.7 times trailing P/E today) and more income-savvy way to bet on the recent strength in the financials. Personally, I find BNS stock to be a hidden value stock worth venturing north of the border for this summer, not just for the value and yield, but for the long-term dividend growth and upside potential in the second half.

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