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With markets getting dragged down by another financial crisis, investors should seek safety.  In fact, one of the best places for that is in undervalued dividend stocks. Especially those trading at a substantial discount relative to the firm’s underlying sector. That said, using the GuruFocus screener, I’ve curated a list of the best high-yielding stocks (yields over 3%) that are trading at a hefty discount to their 52-week high prices. These stocks are all trading at least 40% lower than their 52-week high prices.

PFE	Pfizer	$39.90
RIO	Rio Tinto	$80.60
NEM	Newmont Corporation	$44.87
VALE	Vale	$15.94
CIO	City Office REIT	$7.24
K	Kellogg	$64.65
MDT	Medtronic	$77.86

Undervalued Dividend Stocks: Pfizer (PFE)

• Dividend Yield: 4%
• Relative % Below 52-week high: 96.3%

Pfizer (NYSE:PFE) played a major role in the fight against COVID-19 with its blockbuster vaccine. Sales from its vaccine helped the firm boast a 95% increase in sales from 2020 to 2021 to a mind-boggling $81.3 billion. The massive growth in its top line helped strengthen its cash balance, which stands at a mighty impressive $22.7 billion. Nevertheless, with Covid-19 cases declining, forward sales estimates for the firm are concerning, leading to the PFE stock sell-off.

However, Pfizer is aware of these concerns and is looking to leverage its robust financial flexibility to pursue a more aggressive mergers and acquisitions policy. Consequently, it has acquired firms like BioHaven Pharma, Reviral, and cancer-drug maker Seagen in the near future. Its management has guided for non-Covid sales of roughly a billion through 2030, representing a 7% CAGR from 2019. Despite the slowdown in sales, Pfizer’s dividend profile remains in excellent shape, with a 4% yield and 12 consecutive years of payout expansion.

Undervalued Dividend Stocks: Rio Tinto (RIO)

• Dividend Yield: 7.2%
• Relative % Below 52-week high: 45.8%

Rio Tinto (NYSE:RIO) is a leading metals and mining player, with an incredible track record of business expansion and shareholder rewards. Its stock has gained over 60% in the past three years, with dividend yields soaring past the 7% mark.

Furthermore, its massive footprint of resources has wide-ranging applications which have resulted in the steady top and bottom-line expansion. Its EBITDA and free cash flow margins have increased by over 45% and 19.6% in the past five years on average.  Moreover, it wrapped up 2022 with a colossal $7.4 billion in free cash flows returning an amazing $10.7 billion of cash as dividends to its stockholders.

The outlook for its business remains rosy, on the back of strong demand for its base metals including copper, lithium, and other base metals. Additionally, its foray into green energy will pay many dividends down the road. For instance, it is poised to become the biggest lithium supplier in the European region over the next 15 years.

Undervalued Dividend Stocks: Newmont Corporation (NEM)

• Dividend Yield: 3.6%
• Relative % Below 52-week high: 84.3%

Newmont Corporation (NYSE:NEM) operates one of the largest gold businesses. In addition to gold, it also produces other industrial and precious metals, including copper, silver, lead, and zinc. Gold futures growth was flat last year, with the yellow metal trending lower for the better part of the year. However, NEM appears more attractive than ever, trading more than 80% lower than its 52-week highs while yielding over 3.5%. Supporting payments is unlikely to be a problem for Newmont, with its cash balance of $3.7 billion.

The dollar will likely weaken significantly in a recessionary scenario, which bodes well for gold. Factors including geopolitical tensions, inflation, and other macro events will support its upside ahead. As gold prices improve substantially, Newmont remains in an excellent position to deliver strong free cash flow numbers. Moreover, with 96 million ounces of proven reserves, the firm has excellent cash flow visibility through the decade.

Vale (VALE)

• Dividend Yield: 4.6%
• Relative % Below 52-week high: 54.5%

Vale (NYSE:VALE) is a leading South American business that looks well-positioned for success ahead. It’s the leading iron ore producer, a key component of steel, which recently reached its highest price since July last year. Steel demand is expected to grow at a healthy pace due to a surge in U.S. infrastructure spending, China’s reopening, the robust demand for automobiles, and the increasing demand for airplanes. Moreover, Russia-Ukraine is raising defense spending, positively impacting the steel demand.

Despite relatively softer prices, the company reported stellar adjusted EBITDA numbers of roughly $4 billion. Moreover, in the current year, it expects an annualized EBITDA of over $20 billion; therefore, cash flows should remain healthy for the foreseeable future. Moreover, its investments in other metals, including copper and nickel, should pay many dividends in a low-carbon economy. Speaking of dividends, the company has an incredible yield of 4.6%, trading more than 50% lower than its 52-week high price.

City Office REIT (CIO)

• Dividend Yield: 10.8%
• Relative % Below 52-week high: 98.7%

City Office REIT (NYSE:CIO) is a leading real-estate-investment trust (REIT) with a portfolio of Class A office buildings in the Sunbelt region. Its portfolio lies in a region that is profiting from population migration. Moreover, Class A office buildings are well-leased and less prone to remote-working headwinds. These newer buildings feature some of the most attractive amenities, including outdoor spaces, fitness centers, and other incentives.

In the past year, CIO has seen its shares decline over 60%, while its shares yield close to 10%. Additionally, its payout ratio is over 400%, indicating that its dividend payments are much higher than its earnings. However, CIOs debt to equity figure has declined by roughly 10% compared to its 10-year median. Therefore, the firm is effectively managing its debt load while increasing its dividend payouts in the process.

Kellogg (K)

• Dividend Yield: 3.6%
• Relative % Below 52-week high: 73.2%

Breakfast food king Kellogg (NYSE:K) ranks among some of the most reliable dividend stocks to buy in its sector with a healthy forward yield of over 3.4%, boasting 18 consecutive years of payout expansion. Its moat-worthy business has held up remarkably well in the current economic environment through its strategic price increases and productivity initiatives.

Additionally, it has a robust portfolio of well-recognized brands that generate incredible profitability for the business. Despite the market headwinds, Kellogg’s EBITDA and net income margins are virtually in line with its historical averages. Also, its return on equity is at a stellar 25%, with its trailing twelve-month cash balance at $1.65 billion, roughly 9% higher than its 5-year average. In a more conducive environment, K stock will likely offer incredible upside for its stockholders.

Medtronic (MDT)

• Dividend Yield: 3.4%
• Relative % Below 52-week high: 94%

Medtronic (NYSE:MDT) is a juggernaut in the medical devices market, having established a leadership position in the space. It’s known for its innovative products, including Minimed, the first portable insulin pump greenlit by the FDA. Moreover, with a penchant for innovation, the firm has been increasing its AI investments to improve patient outcomes.

For instance, its intelligent endoscopy module, called GI Genius, is effectively used for increased adenoma detection. Also, recent studies have shown that it could identify early lesions that can develop into colorectal cancers. The resurgence of the coronavirus in China, slowing ventilator sales, and foreign exchange headwinds have marred its results of late. Despite these troubles, MDT reported 4.1% year-over-year revenue growth on an organic basis, a testament to its business quality. Also, its dividend payouts have grown for almost a decade, with its dividend yield at 3.5%.

On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Companies with high dividend yields can imply relatively high risk. However, companies that grow their dividends over time tend to provide fundamental growth that supports such dividend hikes. That’s the primary reason I have so many dividend-paying growth stocks in my portfolio and on my watch list.

These companies pay steady dividends, providing a regular income stream in good times and bad. Accordingly, during times of market volatility, these stocks pay investors to be patient. Those with strong growth characteristics can deliver long-term capital appreciation as well. That is the mix of total return I like.

Below are three dividend-paying growth stocks worth buying right now.

QSR	Restaurant Brands	$61.16
OXY	Occidental Petroleum	$60.19
FTS	Fortis	$40.44

Restaurant Brands (QSR)

First up on this list of dividend-paying growth stocks is Restaurant Brands (NYSE:QSR). The parent company of Burger King, Tim Hortons coffee chain, Popeyes Louisiana Kitchen and Firehouse Subs recently announced impressive Q4 results.

While earnings per share of 72 cents missed estimates by 2 cents, revenue exceeded expectations, jumping 9% year over year to $1.69 billion. Moreover, Burger King’s same-sales rose by 8.4%, and Tim Hortons’ same-store sales were up 9.4%. On the earnings call accompanying the results, Chairman Patrick Doyle said the company is preparing for an “accelerated pace of growth for the next five to 10 years” with its newly appointed CEO, Joshua Kobza, at the helm.

Restaurant Brands has raised its dividend for the past eight years. The current quarterly dividend of 55 cents a share throws off an impressive 3.6% yield. This is well above the average yield for consumer discretionary stocks of 1.2%.

Investors who purchase QSR before the company’s March 21 ex-dividend date will be entitled to receive the upcoming 55-cent per-share dividend payment. Thus, I think it’s worth considering purchasing shares now. 

Occidental Petroleum (OXY)

Among the top dividend-paying growth stocks I think can’t be ignored right now is Occidental Petroleum (NYSE:OXY), a key holding of Warren Buffett.

Of course, Buffett isn’t the only one bullish on OXY stock. In recent weeks, Occidental Petroleum has benefited from positive analyst coverage, including an upgrade from Goldman Sachs. Goldman’s Neil Mehta raised his opinion on the stock from “neutral” to “buy” and upped his price target slightly to $81. That implies upside of nearly 35% from current levels. 

Although the company has just two years of consecutive dividend increases under its belt, its payout ratio is less than 12%, providing ample room for further increases or special dividends. The current 18-cent quarterly payout delivers a yield of 1.2%. However, the company went ex-dividend earlier this month, meaning investors will likely have to wait until June to collect the next one.

Buffett — one investor who certainly doesn’t mind being patient — recently added to his position in OXY. According to regulatory filings, Berkshire Hathaway (NYSE:BRK-B) bought nearly 5.8 million shares this month, paying between $59.85 and $61.90 a share. This brings Buffett’s stake in the oil company to just over 22%, although he has received the OK from regulators to purchase up to 50% of the company’s stock. This has led to bets that Buffett may buy out the energy giant, which would provide a significant boost to shareholders, to say the least.

Regardless of Buffett’s plans, I think Occidental is among the best operators in its sector, which is why it’s among the top dividend-paying growth stocks on my watch list right now.

Fortis (FTS)

Rounding out this list of dividend-paying growth stocks to buy is one of my personal favorites, Fortis (NYSE:FTS). The Canadian utility company is often overlooked by investors, in large part due to the company’s geographical focus. That said, there are many reasons why long-term investors should consider this company.

Fortis primarily engages in the energy infrastructure business, with approximately 93% of its assets allocated to the transmission and distribution segment, which is considered low-risk. It provides electricity and natural gas services to around 3.4 million customers in Canada, the United States and three Caribbean nations.

The company’s financial performance is relatively stable due to its low-risk, regulated utility business, making it less vulnerable to market fluctuations. This stability allows the company to increase its dividend consistently. In fact, FTS is a Canadian Dividend Aristocrat, having raised its payout for 48 consecutive years. 

In the press release accompanying Fortis’ Q4 and full-year results, CEO David Hutchens said: “2022 was a year of execution with strong financial, operational and sustainability results across our utilities. We invested over $4 billion in capital, delivered strong EPS and rate base growth, and further reduced our carbon emissions… With a focus on organic growth, we also announced our largest five-year capital plan of $22.3 billion representing steady rate base growth of 6% and supporting annual dividend growth guidance of 4-6% through 2027.”

Based on analysts’ consensus price target of $42.82, FTS stock could gain 6% over the next 12 months. Throw in the stock’s 4.3% yield, and you’re looking at a total return north of 10%.

On the date of publication, Chris MacDonald has a position in QSR. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.