Here’s 3 dividend stocks in the bargain bucket

Most investors group shares into two different categories, they’re either growth stocks or dividend stocks.

Dividend stocks are obviously classified as such because they have a good dividend yield. This is normally achieved with having either a low price/earnings ratio, a high payout ratio or both.

The following three shares all have big dividend yields:

Telstra Corporation Ltd (ASX: TLS)

The telecommunications giant has seen its share price fall a long way. Telstra is now trading at 12x FY18’s estimated earnings and 10x FY19’s estimated earnings. With the shares at such a cheap price it means that the proposed grossed-up dividend yield is sitting at 8.59%.

Telstra’s share price isn’t going to rocket back to $6 over the next couple of years, but the dividend returns could be helpful with the share price at around $3.50.

Dicker Data Ltd (ASX: DDR)

Dicker Data is a hardware distributor that sells exclusively to over 5,000 resellers. The business has grown strongly over the past five years as Australian businesses upgrade their computers, servers and other technology to suit the technological needs of today.

I’m not sure how much further the business can grow its profit at the strong rate it has, but the current grossed-up dividend yield of 7.81% is pleasing for income-seekers.

G8 Education Ltd (ASX: GEM)  

G8 is one of the largest childcare centre operators in Australia with over 500 centres. Childcare is a growing sector, but there are reportedly oversupply issues in some areas of Australia.

G8 has used a roll-up strategy effectively to grow its business and is transitioning to a more sustainable dividend strategy. It is going to pay 10 cents per share in March and September 2018, meaning it’s currently trading on an expected grossed-up dividend yield of 8.3%.

Foolish takeaway

I’m hesitant to say any of the three are clear buys today due to the unique problems which face each other them. If I had to list them in order of preference at today’s prices it would be G8, then Telstra and finally Dicker Data.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited and Telstra Limited. The Motley Fool Australia has recommended G8 Education 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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