The surge in artificial intelligence presents significant opportunities for investors. This trend is expected to continue, offering investors a ripe opportunity to capitalize on the rapidly expanding market. The article discusses two undervalued dividend stocks as part of the AI gold rush, suggesting substantial returns for investors over the next decade.
Firstly, there’s Intel (INTC), a company with a market value of $130 billion, engaged in the design, development, marketing, and sale of computing products and services globally. Despite lagging behind market performance in recent years, especially in comparison to peers like Nvidia and Advanced Micro Devices, Intel presents potential for investment.
Earlier this year, Intel disclosed plans to adopt a new financial reporting structure based on fab-lite operations to drive cost discipline and enhance returns. The company aims to achieve a 60% gross margin and a 30% operating margin by the end of 2030.
Reportedly, Intel is betting on the semiconductor foundry market. Amid soaring GPU demand, the company also plans to invest in chip factories in the United States to expand chip manufacturing capabilities.
By the end of 2028, it is forecasted that adjusted earnings per share for Intel stock will reach $5.80. With a price-to-earnings ratio of 20, this suggests a stock trading price around $116, indicating a potential increase of nearly 300%.
Apart from its attractive valuation, Intel also pays shareholders an annual dividend of $0.50 per share, equivalent to a 1.7% dividend yield.
The second stock mentioned is Brookfield Renewable Partners (TSX: BIP.UN), which operates a portfolio of cash-generating assets in verticals like hydroelectric, solar, wind, storage, and distribution. In the first quarter of 2024, Brookfield Renewable reported revenues of $1.5 billion, a 12% year-over-year increase, surpassing expectations by $60 million. Operating funds grew by 8% to $0.45 per share, higher than the expected $0.42 per share.
Brookfield Renewable announced a partnership with Microsoft when releasing its earnings report. The company noted that there is a growing demand for data centers, expected to accelerate amid the global digitization of economies. For instance, Amazon plans to invest $150 billion in building data centers over the next 15 years, driving up demand for clean energy.
Brookfield Renewable offers an annual dividend of $1.42 per share, resulting in a generous dividend yield of 6%.
