The 3 Most Undervalued High-Yield Stocks to Buy in September 2023

Stocks to buy

If you’re a cautious investor, you may be concerned about a market correction. An alternative is to consider high-yield stocks to buy.  

Investors are beginning to get spooked about inflation. The latest reading on inflation is expected to show that once prices start to rise, it’s really tough to get them back down. Rising oil prices weren’t fully priced into the inflation readings in August. That’s not expected to be the case when the new numbers are released. 

For some investors who have been reluctantly moving cash off the sidelines, this may be a signal to move back to the relative security of fixed-income investments. You’ll have to make that decision for yourself. However, if you’re looking for stocks to buy, some attractive options exist among high-yield dividend stocks. 

The companies attached to these stocks are in “evergreen” sectors, which means consistent revenue and earnings. That consistency is a key factor in predicting future stock growth. Here are three high-yield stocks to buy in September 2023.  

American Tower (AMT) 

Source: T. Schneider / Shutterstock

Two of the stocks on this list are real estate investment trusts (REITs). These companies are known for offering high-yield dividends. However, that doesn’t always make them a great buy. American Tower (NYSE:AMT) is one exception.  

The company is a leading provider of wireless communication infrastructure and does business in 25 countries on six continents. It is a captain of its industry by utilizing 5G, which will continue to be a catalyst for several years.  

Growth has slowed a little bit as higher interest rates eat into the economics of new tower construction. However, in the company’s second quarter earnings report, it raised its outlook for capital expenditures. American Tower is also starting to generate revenue from its expansion into the data center market.   

Earnings per share are expected to increase by 7.9% in the next 12 months, and analysts give the stock a consensus “Buy” rating with an upside of 30%. Keep in mind that’s on top of a dividend that yields 3.52% and pays out $6.28 per share annually.  

Public Storage (PSA) 

Source: Ken Wolter / Shutterstock.com

Public Storage (NYSE:PSA) is the second REIT to make this list of high-yield stocks to buy. The company’s niche is in self-storage facilities. This was a red-hot sector in 2020 and 2021 when the housing market was on fire.  

Not surprisingly, PSA stock soared approximately 130% between March 2020 and April 2022. Since then, interest in the stock has cooled. PSA stock is down about 19% in the last year which is almost a mirror image of the broader market, which is up 19% in the last year. 

Howeverm that may present a buying opportunity. The company’s revenue and earnings are slowing but still strong. More importantly, they have stabilized at higher levels than pre-2020. That should put a floor on the stock. 

If the Federal Reserve continues to pause on its interest rate campaign, the company should resume its growth path as the housing market recovers. That would allow investors to refocus on a dividend with a 4.4% yield and an annual payout of $12 per share.

Manulife Financial (MFC) 

Source: Shutterstock / chrisdorney

The insurance industry is another area to look for high-yield stocks to buy. Like many sectors, insurance providers are adjusting to a post-Covid normal. In the case of Manulife Financial (NYSE:MFC), that may apply to revenue. That can be explained by the company’s exposure to the commercial real estate market. 

However, even that troubled area showed a bright spot. The company reported a surge in demand as Mainland China reopened. This led to 26% annualized premium equivalent (APE) year-over-year sales growth.  

While revenue is recovering, the company continues to post strong earnings. When you’re looking for high-yield stocks to buy, growing earnings are key. Throughout the next 12 months, earnings are expected to climb 9%, which may justify the 39% projected increase in the MFC stock price. 

Manulife trades at an attractive valuation of just seven times forward earnings with a dividend that yields 5.86%. 

On the date of publication, Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.  

Chris Markoch is a freelance financial copywriter who has been covering the market for over five years. He has been writing for InvestorPlace since 2019.

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