We recently released a list 10 Neglected Dividend Stocks Buy Now. In this article, we will look at the position of Cognex Corporation (NASDAQ:CGNX) vs. the position of other overlooked dividend stocks.
Recently, dividend investments (also known as stock income) have failed. Once widely followed and reliable strategies, it gradually became obscured. The strong capital gains from growing stocks seem to keep investors focused on the more stable and stable returns from dividend payments to stocks.
However, the recent market decline, coupled with the economic impact of Trump’s trade policy, has attracted renewed attention and attracted such stocks. The S&P Dividend Noble Index tracks the performance of companies that have gained dividends for at least 25 consecutive years, with its share price down more than 2% since the beginning of 2025, while the broader market has dropped by 6%.
Dividend stocks have different results in different economic cycles, performing well in some downturns and lagging behind in others. They usually outperform the broader market during the recession that began in July 1981, March 2001 and December 2007. However, during the shorter recession in 1980 and 2020, they lagged behind. This is largely due to dividend cuts in major companies, as well as limited exposure to fast-growing technology names. In terms of context, the highest decline in dividends was during the 2008-09 financial crisis, when S&P dividend expenditure fell by 24%, although investors still earned 76% of their revenue.
That is, while the possibility of reducing dividends is an effective problem and potential drawback of the strategy, it should not completely ignore dividend stocks. After careful mergers, they can still play a significant role in a comprehensive portfolio.
M&G Investments notes that dividends are not only revenue, but also a sign of the company's financial status and management's confidence. Although short-term market returns often depend on stock valuation, dividends play a more important role in dividend returns over longer periods, such as 10 or 20 years. The report also mentions Bloomberg data that dividends play a crucial role in long-term returns. Nearly half of total U.S. stock earnings over the past 25 years have come from reinvested dividends and ability to reinvest. During this period, the broader market averaged annual yield of 7.4%, of which 55% were attributed to rising stock prices and the remaining 45% came from dividend income from reinvested.
The fact that dividends are not guaranteed emphasizes the deeper financial story behind company decisions. Companies must carefully weigh the trade-off between returning profits to shareholders and retaining enough revenue to support future expansion. It is a strategic task to correctly achieve this balance.
A particularly high dividend payment ratio (especially above 75%), although this can vary from industry to industry, can cause red flags about sustainability. When excessive profits are paid, there is little room left to increase dividends. Ultimately, this could lead to a company shrinking or even stopping its dividend payments altogether, which could prolong the long-term growth of business growth and stock value. Given this, we'll look at some overlooked stocks that claim dividends.
Cognex Corporation (CGNX): One of the neglected dividend stocks to buy now
Verify workers on discrete projects using vision sensors.
For this list, we thoroughly reviewed well-known resources such as Forbes, Morning Star, Barron and Business Insider and searched for stocks that continue below, but with a strong balance sheet and reasonable financial position. Additionally, these little-known dividend companies have a record of dividend growth, making them a reliable option for income investors. After compiling our data, we selected 10 companies with the largest number of hedge fund investors based on Insider Monkey’s fourth quarter 2024 database.
Why are we interested in stocks that hedge funds to accumulate? The reason is simple: Our research shows that we can beat the market by mimicking the top stocks of the best hedge funds. Our strategy for quarterly newsletters selects 14 small and large stocks every quarter, returning 373.4% since May 2014, beating its benchmark by 218 percentage points (See more details here).
Number of hedge fund holders: 37
Cognex Corporation (NASDAQ:CGNX) focuses on machine vision technology and serves key areas such as automobiles, logistics and consumer electronics. Its latest product introduction, including VisionPro Deep Leach 4.0 and the AI-powered Dataman series, demonstrates its dedication to innovation. The company also strengthens its market position with strategic acquisitions like Moritex, helping to drive growth in established and emerging markets.
In the fourth quarter of 2024, Cognex Corporation (NASDAQ:CGNX) generated $229.7 million in revenue, up 17% from the same period last year. Revenue exceeded analyst estimates to reach $9 million. The company's $31 million operating income increased by 142% year-on-year.
Cognex Corporation (NASDAQ:CGNX) remains in solid financial position, holding $587 million in cash and investment as of the end of December 2024. In the fourth quarter of 2024, the company generated $51 million in cash from operating activities and recorded $49 million in free cash flow, representing age growth, representing age growth, representing $30 million, and correspondingly increasing $30 million. Cognex allocated $43 million for stock buybacks and distributed $14 million in dividends to its shareholders. The company also said it plans to continue to acquire its common stock under the current buyback plan. It currently offers a quarterly dividend of $0.08 per share, with a dividend yield of 1.22% as of April 25.
Overall, CGNX Ranked second On our list of most overlooked dividend stocks. Although we acknowledge the potential of CGNX as an investment, our belief is that some undervalued dividend stocks have greater hope, can offer higher returns, and do so in a shorter time frame. If you are looking for more promising undervalued dividend stocks than CGNX, but earning 10 times each year and growing in double-digit earnings every year, check out our report Dirt cheap dividend stocks.
Read the next article: Buy 20 Best AI Stocks Now and According to the billionaire, there are now 30 best stocks.
Disclosure: None. This article was originally published in Inside monkey.
