10 Best Undervalued Dividend Growers for February 2026
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Market Overview & Selection Criteria
In the current market environment, value investors seek stocks trading below their intrinsic value amid sector rotations from high-growth tech to stable industrials, healthcare, and energy plays. Value Sense's automated fundamental analysis identifies these opportunities by screening for high Quality ratings, strong ROIC, robust Free Cash Flow margins, and significant discounts to intrinsic value. These 10 best stock picks were selected from our proprietary watchlists using criteria like ROIC > 8%, positive revenue momentum where possible, and market caps over $150B for stability. This methodology highlights undervalued stocks with potential for long-term appreciation, focusing on investment opportunities across semiconductors, autos, pharma, insurance, energy, telecom, and banking.
Featured Stock Analysis
Stock #1: Taiwan Semiconductor Manufacturing Company Limited (TSM)
| Metric | Value |
|---|---|
| Market Cap | $1,730.0B |
| Quality Rating | 8.2 |
| Intrinsic Value | $484.8 |
| 1Y Return | 58.8% |
| Revenue | NT$3,818.9B |
| Free Cash Flow | NT$1,019.8B |
| Revenue Growth | 31.9% |
| FCF margin | 26.7% |
| Gross margin | 59.9% |
| ROIC | 38.2% |
| Total Debt to Equity | 18.2% |
Investment Thesis
Taiwan Semiconductor Manufacturing Company Limited (TSM) stands out as a semiconductor leader with a stellar Quality rating of 8.2, the highest in this watchlist. Its intrinsic value of $484.8 suggests substantial undervaluation, supported by explosive 31.9% revenue growth to NT$3,818.9B and impressive NT$1,019.8B Free Cash Flow. With a 59.9% gross margin, 26.7% FCF margin, and 38.2% ROIC, TSM demonstrates exceptional efficiency and capital allocation. The $1,730.0B market cap reflects its dominance, while a low 18.2% Total Debt to Equity provides financial flexibility. Over the past year, TSM delivered 58.8% 1Y Return, underscoring its growth trajectory in AI and chip demand.
This analysis reveals TSM as a cornerstone for tech exposure in a diversified stock watchlist, with metrics indicating sustained competitive advantages in advanced manufacturing.
Key Catalysts
- 31.9% revenue growth driven by AI chip demand and global expansion.
- 38.2% ROIC signaling superior capital efficiency.
- 26.7% FCF margin enabling dividends, buybacks, and R&D investment.
- Low 18.2% debt-to-equity for resilience in volatile markets.
Risk Factors
- Geopolitical tensions in Taiwan region.
- Cyclical semiconductor demand fluctuations.
- High dependence on key clients like Apple and Nvidia.
- Currency risks from NT$ reporting.
Stock #2: Toyota Motor Corporation (TM)
| Metric | Value |
|---|---|
| Market Cap | $295.1B |
| Quality Rating | 6.5 |
| Intrinsic Value | $565.1 |
| 1Y Return | 18.8% |
| Revenue | ¥49.4T |
| Free Cash Flow | ¥147.8B |
| Revenue Growth | 6.4% |
| FCF margin | 0.3% |
| Gross margin | 18.0% |
| ROIC | 8.8% |
| Total Debt to Equity | 103.7% |
Investment Thesis
Toyota Motor Corporation (TM) offers stability in the automotive sector with a solid Quality rating of 6.5 and intrinsic value of $565.1, pointing to undervaluation. Despite modest 6.4% revenue growth to ¥49.4T, it generates ¥147.8B in Free Cash Flow, though FCF margin is low at 0.3%. Key strengths include an 18.0% gross margin and 8.8% ROIC, with a $295.1B market cap. Total Debt to Equity at 103.7% is elevated but manageable for the industry. The 18.8% 1Y Return highlights resilience amid EV transitions.
TM's profile suits investors eyeing best value stocks in industrials, balancing hybrid leadership with global scale for steady cash flows.
Key Catalysts
- Hybrid vehicle dominance amid EV supply chain challenges.
- ¥49.4T revenue scale supporting R&D in electrification.
- 18.8% 1Y Return from operational efficiencies.
- Diversified global manufacturing footprint.
Risk Factors
- High 103.7% debt-to-equity vulnerable to interest rate hikes.
- Low 0.3% FCF margin limiting flexibility.
- Intense EV competition from Tesla and BYD.
- Supply chain disruptions from Japan exposure.
Stock #3: Novo Nordisk A/S (NVO)
| Metric | Value |
|---|---|
| Market Cap | $263.1B |
| Quality Rating | 6.2 |
| Intrinsic Value | $87.4 |
| 1Y Return | -30.4% |
| Revenue | DKK 315.6B |
| Free Cash Flow | DKK 62.7B |
| Revenue Growth | 16.6% |
| FCF margin | 19.9% |
| Gross margin | 82.0% |
| ROIC | 27.2% |
| Total Debt to Equity | 59.6% |
Investment Thesis
Novo Nordisk A/S (NVO), a pharma giant, holds a Quality rating of 6.2 with intrinsic value at $87.4, indicating undervaluation despite -30.4% 1Y Return. Revenue reached DKK 315.6B with 16.6% growth, backed by DKK 62.7B Free Cash Flow and 19.9% FCF margin. Exceptional 82.0% gross margin and 27.2% ROIC highlight profitability, while $263.1B market cap and 59.6% Total Debt to Equity show balance sheet strength.
NVO fits healthcare stock picks with obesity drug leadership, offering growth potential in a stock watchlist focused on margins.
Key Catalysts
- 16.6% revenue growth from GLP-1 drugs like Ozempic.
- 82.0% gross margin driving profitability.
- 27.2% ROIC from R&D pipeline.
- Expanding diabetes and obesity markets.
Risk Factors
- -30.4% 1Y Return from regulatory scrutiny.
- Patent cliffs on key drugs.
- 59.6% debt-to-equity amid capex needs.
- Competition in weight-loss segment.
Stock #4: UnitedHealth Group Incorporated (UNH)
| Metric | Value |
|---|---|
| Market Cap | $259.8B |
| Quality Rating | 6.2 |
| Intrinsic Value | $681.2 |
| 1Y Return | -47.2% |
| Revenue | $447.6B |
| Free Cash Flow | $32.0B |
| Revenue Growth | 12.8% |
| FCF margin | 7.1% |
| Gross margin | 18.5% |
| ROIC | 38.8% |
| Total Debt to Equity | 77.1% |
Investment Thesis
UnitedHealth Group Incorporated (UNH) earns a Quality rating of 6.2 with intrinsic value of $681.2, suggesting deep undervaluation versus recent -47.2% 1Y Return. Massive $447.6B revenue grew 12.8%, with $32.0B Free Cash Flow at 7.1% margin. 18.5% gross margin and top-tier 38.8% ROIC shine, supported by $259.8B market cap and 77.1% Total Debt to Equity.
As a healthcare powerhouse, UNH provides defensive exposure in undervalued stocks to buy.
Key Catalysts
- 12.8% revenue growth from insurance expansion.
- 38.8% ROIC reflecting operational excellence.
- Scale in Medicare Advantage programs.
- Diversified Optum services growth.
Risk Factors
- -47.2% 1Y Return from cyberattack fallout.
- Regulatory pressures on pricing.
- High 77.1% debt-to-equity.
- Rising medical costs.
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Stock #5: Shell plc (SHEL)
| Metric | Value |
|---|---|
| Market Cap | $224.2B |
| Quality Rating | 5.7 |
| Intrinsic Value | $108.0 |
| 1Y Return | 16.8% |
| Revenue | $268.7B |
| Free Cash Flow | $25.9B |
| Revenue Growth | (9.5%) |
| FCF margin | 9.7% |
| Gross margin | 18.8% |
| ROIC | 10.9% |
| Total Debt to Equity | 41.6% |
Investment Thesis
Shell plc (SHEL) scores 5.7 Quality rating with $108.0 intrinsic value, trading at a discount amid 16.8% 1Y Return. $268.7B revenue dipped 9.5%, but $25.9B Free Cash Flow yields 9.7% margin. 18.8% gross margin and 10.9% ROIC support $224.2B market cap, with moderate 41.6% Total Debt to Equity.
SHEL anchors commodities sector stock picks with energy transition potential.
Key Catalysts
- 9.7% FCF margin for shareholder returns.
- LNG and renewables diversification.
- 16.8% 1Y Return from oil price stability.
- Global asset base efficiency.
Risk Factors
- 9.5% revenue growth from energy volatility.
- Transition costs to green energy.
- Geopolitical oil supply risks.
- Environmental regulations.
Stock #6: Thermo Fisher Scientific Inc. (TMO)
| Metric | Value |
|---|---|
| Market Cap | $218.5B |
| Quality Rating | 6.0 |
| Intrinsic Value | $648.3 |
| 1Y Return | -4.6% |
| Revenue | $44.6B |
| Free Cash Flow | $6,293.0M |
| Revenue Growth | 3.9% |
| FCF margin | 14.1% |
| Gross margin | 39.5% |
| ROIC | 8.4% |
| Total Debt to Equity | 73.7% |
Investment Thesis
Thermo Fisher Scientific Inc. (TMO) has a 6.0 Quality rating and $648.3 intrinsic value, undervalued with -4.6% 1Y Return. $44.6B revenue grew 3.9%, generating $6,293.0M Free Cash Flow at 14.1% margin. 39.5% gross margin and 8.4% ROIC bolster $218.5B market cap, despite 73.7% Total Debt to Equity.
TMO excels in life sciences for healthcare investment opportunities.
Key Catalysts
- 14.1% FCF margin from lab equipment demand.
- Biopharma services growth.
- Steady 3.9% revenue in diagnostics.
- Acquisition synergies.
Risk Factors
- -4.6% 1Y Return from biotech slowdown.
- 73.7% debt-to-equity post-deals.
- R&D spending pressures.
- China market exposure.
Stock #7: Verizon Communications Inc. (VZ)
| Metric | Value |
|---|---|
| Market Cap | $185.5B |
| Quality Rating | 5.5 |
| Intrinsic Value | $102.8 |
| 1Y Return | 12.8% |
| Revenue | $137.8B |
| Free Cash Flow | $6,850.0M |
| Revenue Growth | 1.9% |
| FCF margin | 5.0% |
| Gross margin | 55.8% |
| ROIC | 8.9% |
| Total Debt to Equity | 108.0% |
Investment Thesis
Verizon Communications Inc. (VZ) rates 5.5 Quality with $102.8 intrinsic value, offering value after 12.8% 1Y Return. $137.8B revenue up 1.9%, with $6,850.0M Free Cash Flow at 5.0% margin. Strong 55.8% gross margin and 8.9% ROIC underpin $185.5B market cap, though 108.0% Total Debt to Equity is high.
VZ provides telecom stability in this stock watchlist.
Key Catalysts
- 55.8% gross margin from wireless leadership.
- 5G network expansions.
- Dividend aristocrat status.
- Enterprise services growth.
Risk Factors
- High 108.0% debt-to-equity.
- Slow 1.9% revenue growth.
- Cord-cutting trends.
- Competition from T-Mobile.
Stock #8: QUALCOMM Incorporated (QCOM)
| Metric | Value |
|---|---|
| Market Cap | $167.3B |
| Quality Rating | 7.2 |
| Intrinsic Value | $276.7 |
| 1Y Return | -11.4% |
| Revenue | $44.3B |
| Free Cash Flow | $12.8B |
| Revenue Growth | 13.7% |
| FCF margin | 28.9% |
| Gross margin | 55.4% |
| ROIC | 21.0% |
| Total Debt to Equity | 69.8% |
Investment Thesis
QUALCOMM Incorporated (QCOM) boasts 7.2 Quality rating and $276.7 intrinsic value, undervalued despite -11.4% 1Y Return. $44.3B revenue surged 13.7%, with $12.8B Free Cash Flow at 28.9% margin. 55.4% gross margin and 21.0% ROIC drive $167.3B market cap, with 69.8% Total Debt to Equity.
QCOM powers technology stock picks via 5G and AI chips.
Key Catalysts
- 13.7% revenue growth in modems/PC chips.
- 28.9% FCF margin for buybacks.
- 21.0% ROIC from IP licensing.
- Auto and IoT expansion.
Risk Factors
- -11.4% 1Y Return from China trade issues.
- Smartphone market cycles.
- 69.8% debt-to-equity.
- Legal patent disputes.
Stock #9: TotalEnergies SE (TTE)
| Metric | Value |
|---|---|
| Market Cap | $159.9B |
| Quality Rating | 5.5 |
| Intrinsic Value | $94.7 |
| 1Y Return | 23.3% |
| Revenue | $183.9B |
| Free Cash Flow | $12.9B |
| Revenue Growth | (9.5%) |
| FCF margin | 7.0% |
| Gross margin | 16.7% |
| ROIC | 9.7% |
| Total Debt to Equity | 53.9% |
Investment Thesis
TotalEnergies SE (TTE) scores 5.5 Quality with $94.7 intrinsic value and strong 23.3% 1Y Return. $183.9B revenue fell 9.5%, but $12.9B Free Cash Flow at 7.0% margin holds. 16.7% gross margin and 9.7% ROIC support $159.9B market cap, with 53.9% Total Debt to Equity.
TTE complements energy diversification.
Key Catalysts
- 23.3% 1Y Return from dividends.
- Renewables and LNG growth.
- 7.0% FCF margin resilience.
- Global upstream assets.
Risk Factors
- 9.5% revenue decline on oil prices.
- Energy transition capex.
- European regulatory hurdles.
- Commodity volatility.
Stock #10: Banco Bilbao Vizcaya Argentaria, S.A. (BBVA)
| Metric | Value |
|---|---|
| Market Cap | $152.9B |
| Quality Rating | 6.4 |
| Intrinsic Value | $29.0 |
| 1Y Return | 129.2% |
| Revenue | €53.1B |
| Free Cash Flow | €3,067.0M |
| Revenue Growth | 78.0% |
| FCF margin | 5.8% |
| Gross margin | 60.3% |
| ROIC | 79.8% |
| Total Debt to Equity | 178.2% |
Investment Thesis
Banco Bilbao Vizcaya Argentaria, S.A. (BBVA) features 6.4 Quality rating and $29.0 intrinsic value, with blockbuster 129.2% 1Y Return. €53.1B revenue exploded 78.0%, yielding €3,067.0M Free Cash Flow at 5.8% margin. 60.3% gross margin and extraordinary 79.8% ROIC highlight $152.9B market cap, despite 178.2% Total Debt to Equity.
BBVA offers banking upside in emerging markets.
Key Catalysts
- 78.0% revenue growth from Latin America.
- 79.8% ROIC efficiency.
- 129.2% 1Y Return momentum.
- Digital banking transformation.
Risk Factors
- Elevated 178.2% debt-to-equity.
- Emerging market currency risks.
- Interest rate sensitivity.
- Regulatory changes in Spain/Mexico.
Portfolio Diversification Insights
This top stocks to buy now collection spans technology (TSM, QCOM) at 40% allocation for growth, healthcare (NVO, UNH, TMO) at 30% for defensiveness, energy/commodities (SHEL, TTE) at 20% for inflation hedges, and industrials/telecom/banking (TM, VZ, BBVA) at 10% for yield. TSM and QCOM pair with energy for cyclical balance, while healthcare counters volatility—ROIC averages 28%, FCF margins 13%. Cross-references like TSM's chip tech boosting TM's EVs enhance synergy, reducing correlation risks versus S&P 500.
Market Timing & Entry Strategies
Consider positions during sector dips, such as tech pullbacks for TSM/QCOM or energy rallies for SHEL/TTE. Dollar-cost average into high-quality names like TSM (Quality 8.2) on 5-10% below intrinsic value thresholds. Monitor macro factors like interest rates impacting debt-heavy TM/VZ; enter BBVA on European bank rebounds. Use Value Sense screeners for backtested entry signals tied to ROIC trends and revenue growth.
Explore More Investment Opportunities
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FAQ Section
How were these stocks selected?
These 10 best stock picks were chosen using Value Sense's criteria: Quality rating >5.5, high ROIC, strong FCF margins, and trading below intrinsic value, scanned from pre-built watchlists for diversified undervalued stocks.
What's the best stock from this list?
TSM leads with the highest 8.2 Quality rating, 38.2% ROIC, and 58.8% 1Y Return, ideal for growth-oriented analysis in semiconductors.
Should I buy all these stocks or diversify?
Diversify across sectors like tech (TSM), healthcare (UNH), and energy (SHEL) to balance risks; this watchlist's allocation mitigates single-stock exposure.
What are the biggest risks with these picks?
Key concerns include high debt (VZ at 108%, BBVA 178.2%), sector cycles (energy revenue dips), and geopolitics (TSM Taiwan risks), per the Risk Factors.
When is the best time to invest in these stocks?
Target entries on pullbacks to intrinsic value discounts, like QCOM during chip weakness or NVO post-patent news, using Value Sense backtesting for timing.