1 Oversold Dividend Growth Stock to Buy Before It Rebounds

Given the market's recent volatility, many investors are likely looking for stock ideas -- and some may even be aiming to bolster their portfolios with more dividend income amid heightened market uncertainty. One stock that has been hammered over the last year and looks like an attractive opportunity to consider today is Intuit (NASDAQ: INTU). The financial technology software specialist, which operates TurboTax, CreditKarma, QuickBooks, and more, has seen its stock sell off by nearly 50% from its 52-week high. This beating comes even as it grows both revenue and dividend at robust double-digit rates.

Further, the extent of this steep drop in Intuit's stock price is particularly surprising given the company's entrenched market position and long history of delivering value for shareholders.

Here's why I think this massive sell-off is overdone.

Image source: Getty Images.

AI-fueled growth

Intuit's fundamental business has great momentum right now. Revenue rose 17% year over year to $4.7 billion in the company's fiscal second quarter -- comfortably outpacing management's forecast for 14% to 15% year-over-year growth for the period.

"We delivered a very strong second quarter of fiscal 2026, reflecting our continued business momentum across the big bets and our disciplined approach to managing the business," said chief financial officer Sandeep Aujla in the company's fiscal second-quarter earnings release.

More importantly, Aujla was upbeat about the company's ongoing potential, noting that it has "high confidence" in delivering double-digit top-line growth this year. Specifically, the company reiterated its full-year guidance of 12% to 13% year-over-year revenue growth and 13% to 15% year-over-year earnings-per-share growth.

Helping fuel its growth, the company is seeing strong adoption of its newer artificial intelligence (AI) platform. Intuit recently expanded Intuit Assist (the company's generative AI experience), introducing a virtual team of AI agents that can help automate complex tasks for small businesses. Intuit noted during its fiscal second-quarter earnings call that over 3 million customers are already leveraging its AI agents to streamline their operations.

Why has the stock been crushed?

It's worth noting that while the tech stock's recent sharp decline may have gone too far, at least a portion of this pullback was probably justified. The stock's decline from its 52-week high is likely primarily a reflection of both genuine market fears about the potential for AI to be somewhat of a disruptor to software and a valuation rerating of software stocks following a multi-decade period of valuation multiple expansion for this corner of the market.

Underneath the surface, however, the underlying business continues to perform very well, growing its top-line at a rapid rate while generating substantial cash flow -- enough to return capital to shareholders through both dividends and repurchases.

Intuit pays a growing dividend. The company's board recently approved a quarterly dividend of $1.20 per share, a 15% increase from the year-ago period. This new dividend rate gives the stock a dividend yield of about 1.1%. While this may seem small, investors should note that not only does Intuit have a fast-growing dividend, but its payout ratio -- the percent of its earnings it pays out in dividends -- is very low at about 30%. This means the company has significant wiggle room for further increases over time.

Additionally, the company is aggressively buying back its stock. It spent $961 million on repurchases in fiscal Q2 alone -- a good amount for a company with a market capitalization of about $119 billion as of this writing.

Fortunately, this sell-off has left shares trading at an appealing valuation. The stock trades at just 18 times the midpoint of its full-year fiscal 2026 non-GAAP earnings-per-share guidance.

Overall, I think Intuit stock is a buy on this dip. But investors should view the stock as somewhat risky. While it does boast a strong balance sheet, impressive cash flow, and a shareholder-friendly capital return program, it's still a software company -- and things can change quickly in software -- especially with the advent of AI. For this reason, investors should consider keeping any position in the stock small.

Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intuit. The Motley Fool has a disclosure policy.