3 Beaten-up Dividend Shares: Are They Bargains?

These beaten up dividend shares have yields of more than 5.5% – But should you buy?

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Falling interest rates has made investing in dividend shares a no-brainer, especially when you think about the high yields on offer and the tax benefits associated with franking credits.

However, a number of dividend shares have taken a beating over recent months and this might have some investors asking if they are now in bargain territory.

Three of these beaten-up shares include:

Retail Food Group Limited (ASX: RFG)

The Retail Food Group share price has fallen around 25% since the start of the year, despite the food retailer recently confirming it remains on track to deliver NPAT growth of around 20%. The company continues to expand its global footprint and just delivered its 21st consecutive dividend increase. I think the shares are currently undervalued as they trade on a very attractive price-to-earnings growth (PEG) ratio of just 0.6 and offer a sizeable dividend yield of 5.6%.

Telstra Corporation Ltd (ASX: TLS)

The Telstra share price hit a low of just $4 earlier this week after TPG Telecom Ltd's (ASX: TPM) decision to enter the mobile market. Unfortunately, the sustainability of Tesltra's dividend was already in question and this latest development just adds further uncertainty to the situation. I don't think investors should expect the current 31 cent dividend to be maintained past the next year and this means the current yield of 7.3% may be misleading. Until the company provides more guidance on its dividend policy, I would be inclined to remain on the sidelines.

RCG Corporation Ltd (ASX: RCG)

The RCG share price has more than halved in value since August last year, with the bulk of the falls coming after a small downgrade to its full year guidance. While this was disappointing, I think the market reaction has been overdone considering the company is still forecasting strong double digit earnings growth on the back of recent acquisitions and new store openings. The athletic clothing and footwear company now trades on a price-to-earnings ratio of less than 11 and offers a forecast fully-franked dividend yield of 6.8%.

Motley Fool contributor Christopher Georges owns shares of RCG Limited, TPG Telecom and Retail Food Group Limited. The Motley Fool Australia owns shares of Retail Food Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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