The old rules of investing may have gone out the window.

But there’s one thing that hasn’t changed.

Some of the market’s best opportunities can still be found in value stocks, especially those with respectable dividend yields.

To date, the S&P 500 is down 18%. The Dow Jones is down about 14%. Inflation is at 40-year highs. There are fears of a recession. War continues to rage in Ukraine, upending the energy markets. Plus, we have significant changes in interest-rate policy.

However, that chaos is creating opportunity, especially in roughed up dividend-paying value stocks that may still offer a good deal of long-term upside.

It’s just one of the reasons investors are flocking to value.

In fact, according to US News & World Report, “Thus far in 2022, Wall Street has decidedly shifted from preferring growth stocks to value stocks – a category that’s lived in growth’s shadow for much of the past decade. Rapidly rising interest rates are a major factor behind this recent shift, with some economists expecting as many as seven interest rate hikes this year.”

And, according to Institutional Asset Manager, “As investors have increasingly shifted to more defensive plays – spooked by rising rates, spiking inflation, supply chain disruption, and the war in Ukraine – sentiment towards value stocks has undergone a major shift, with companies in beaten-down sectors like energy, resources, pharma, and banks heavily outperforming their counterparts in tech and other growth sectors that have been battered.”

With that, investors may want to consider these three dividend-paying value stocks.

Target Corp. (TGT)
Dividend Yield: 2.8%

Target was a trainwreck for most of 2022.

Unfortunately, that’ll happen when Americans are forced to live paycheck to paycheck, with sky-high inflation. Fears of recession didn’t really help much either. As a result, the company missed EPS targets. Margins took a hit. Operating income fell about 50%, and the stock fell from about $210 to about $154 a share. However, the pullback may be an opportunity.

For one, according to Raymond James analyst Bobby Griffin, “We continue to be buyers on the pullback, and see Target as a long-term winner in today’s retail landscape and believe the company can sustain its recent market share gains across multiple product categories due to its customer loyalty (i.e., F1Q traffic gains), strong brand partnerships (AAPL, ULTA, LEVI etc.), and growing private label penetration,” as noted by The analyst has a strong buy rating with a target of $205.

Two, Piper Sandler just upgraded the TGT stock to overweight with a price target of $200. Analyst Edward Yruma said, “Target is rapidly shifting inventory composition away from discretionary categories as the consumer continues to shift away from those key categories.” He also believes Target will be able to regain 50% of its gross margin compression, as noted by Yahoo Finance.

Also, while 2022 profits may be weaker than expected, there’s still a good deal of value here. Inflation, supply chain issues, and higher freight costs for example should be temporary. In addition, the stock is fundamentally undervalued, with a price to sales ratio of 0.67 and a forward P/E of just 15.5.

Realty Income (O)
Dividend Yield: 4.75%

If you’re looking for healthy, passive income, keep an eye on Realty Income (O), which refers to itself as “The Monthly Dividend Company.” At the moment, the REIT (real estate investment trust, carries a yield of 4.73%. Better, the REIT currently owns more than 11,7000 properties, considered net lease. That means the tenant is fully responsible for taxes, property maintenance fees, and insurance costs.

To date, the company has declared 629 consecutive common stock monthly dividends throughout its 53-year operating history. Just recently, it increased its monthly dividend to $0.248, or $2.976 annualized. That will be payable on Dec. 15 to shareholders of record as of Dec. 1. Also, some of its tenants include 7-Eleven, Dollar General, Dollar Tree, Walmart, FedEx, and BJ’s Wholesale Club. In its last quarter, Realty Income posted an occupancy rate of 98.9%, which is a 10-year high.

In addition, according to President and CEO Sumit Roy: “During the quarter, we invested approximately $1.9 billion in real estate at a cash cap rate of 6.1%, bringing our total to $5.1 billion year to date. Additionally, we enhanced our financial flexibility by raising over $2.0 billion of equity during the quarter, $1.3 billion of which we intend to settle in the fourth quarter at $66.70 per share. Finally, the operating fundamentals of our business remain healthy as we finished the quarter with occupancy of 98.9% while registering a rent recapture rate of 108.5% on properties re-leased”

Coca-Cola (KO)
Dividend Yield: 2.77%

Coca-Cola (KO) is one of the safest dividend stocks on the market. Not only is there strong demand, with dependable dividends, it’s one of Warren Buffett’s favorite stocks. In fact, the billionaire, who owned about 400 million shares of KO as of July 2022, considers it to be a “forever” stock because of its outstanding management and because it’s a Dividend King. In October, the company announced another dividend of 44 cents. It’s payable December 15 to shareholders of record as of December 1.

Earnings growth has been solid, too. In its third quarter, Coca-Cola beat with EPS of 69 cents on sales of $11.1 billion, up from the 65 cents on sales of $10 billion a year earlier. Analysts were only looking for 65 cents on $10.5 billion in sales for the latest quarter. Better, the company expects to see sales growth of between 14% and 15%, which is higher than initial forecasts for between 12% and 13%. Adjusted EPS is now expected to fall in a range of 6% to 7%, instead of 5% to 6%.

“Given the stronger than expected result for Coca-Cola across the board and raised guidance, despite increased foreign-exchange headwinds, we believe the result should increase investors’ confidence surrounding the momentum of the beverage category,” Truist Securities analyst Bill Chappell said, as quoted by Barron’s. He also has a buy rating on KO, with a price target of $75.

Deutsche Bank also just raised its price target on KO to $62 from $59. That’s thanks in part to lower inflation in November, news the Federal Reserve could slow rate hikes, and signs that China may be moving away from its zero COVID policies.