Motley Fool flags Energy Transfer, Pfizer and UPS as undervalued dividend plays

The Motley Fool published an analysis on 26 July 2026 recommending Energy Transfer, Pfizer and United Parcel Service as undervalued dividend stocks, arguing that these equities offer strong value and are not yield traps despite recent market challenges. The report contends that while numerous high-yield stocks exist, many carry risks of dividend cuts or price declines that outweigh quarterly payouts, making selective filtering essential for quality.

Energy Transfer, a master limited partnership focused on midstream energy assets, was highlighted for its 6.6 per cent forward yield. The analysis links the company’s growth potential to indirect exposure to the artificial intelligence megatrend, specifically the energy demand from data centres. The firm targets 3 per cent to 5 per cent annualised distribution growth, building on a history of steadily increasing payouts by an average of 2 per cent to 4 per cent annually.

Pfizer was identified as trading at a low valuation of approximately 8.5 times forward earnings with a nearly 7 per cent forward dividend yield. The report acknowledges significant headwinds, including dwindling demand for COVID-19 products and a patent cliff in 2028 for its flagship drug, Eliquis. However, it notes that Pfizer expects 4 per cent sales growth in its non-COVID product lines in 2026, with a forward payout ratio estimated at around 59 per cent based on $2.94 earnings per share and $1.72 in annual dividends.

United Parcel Service was cited for its 5.7 per cent forward dividend yield and a 16-year track record of annual dividend increases. Despite concerns regarding a high payout ratio and competition from Amazon’s logistics expansion, the analysis points to improving freight rates and earnings forecasts as supportive factors. Analysts anticipate flat earnings growth for the current year, with consensus estimates calling for earnings to rise from $7.13 to $8.02 per share in 2027.

The Motley Fool disclosure notes that the publication has positions in and recommends Amazon, Pfizer and United Parcel Service. The author of the analysis, Thomas Niel, has no position in any of the stocks mentioned. The recommendation comes against a broader market backdrop where US stock markets have risen on news of the SpaceX IPO debut and Iran-US peace hopes.