5 High-Yield Dividend Stocks With Over 20% Upside Potential
With the stock market experiencing a shift due to an AI-led rally, savvy investors are on the lookout for undervalued stocks that offer both a steady income through dividends and the potential for stock price appreciation. The recent first quarter report from the Madison Dividend Income Fund highlighted a growing optimism for dividend stocks. This sentiment is supported by the performance of sectors such as Energy, Industrials, and Financials, which have shown notable gains. Further bolstering confidence is the attractive valuation of dividend stocks, considered “historically cheap” in comparison to the S&P 500, according to Bank of America (BofA) Global Research data.
Wall Street analysts, acknowledging the current volatile market, continue to advocate for dividend stocks. JoAnne Feeney, a Partner and Portfolio Manager at Advisors Capital Management, emphasized to investors the importance of focusing on “good” dividend-paying companies for the long-term, especially for navigating through cyclical volatility.
Let’s dive into top high-yield dividend stocks identified for their substantial upside potential in addition to a minimum 4% dividend yield.
Vale SA (NYSE:VALE)
The Brazilian metals and mining giant Vale SA has emerged as a prime candidate for investors seeking dividend income with growth potential. This year, despite a 28% drop in shares influenced by fluctuating iron and copper prices, the dividend yield reached an impressive 11%. Analysts, including those from UBS who have upgraded the stock, view ESG concerns as diminishing, signaling an improved risk-reward landscape for Vale with a price target suggesting a 40% upside.
BP PLC (NYSE:BP)
BP, the British oil heavyweight, is drawing attention post the European Union parliamentary elections, with a 4.9% dividend yield. Despite a slight anticipated drop in upstream production, the stock carries a 22.35% upside according to Wall Street’s $43.30 price target.
KeyCorp (NYSE:KEY)
The Cleveland-based KeyCorp, with a solid 6% yield and a track record of 14 consecutive years of dividend growth, also presents over 20% upside potential. Despite a hit in the first quarter’s financials, analysts remain optimistic with a 21% upside on its average price target.
Rio Tinto PLC ADR Common Stock (NYSE:RIO)
Rio Tinto, a leading mining entity, offers an attractive semiannual dividend yield of over 6.5%. Despite a Q1 dip in iron-ore shipments, the company’s steadfast annual guidance and a Wall Street prediction of a 23% stock price upside keep it in favorable light.
UGI Corp. (NYSE:UGI)
UGI Corp., known for its 140-year dividend history and a 6.7% current yield, not only surpassed EPS estimates in its recent quarterly report but also confidently reaffirmed its future earnings outlook. With the dividends considered safe, analysts predict a 39% upside in its stock price.
As the pursuit for high yield extends beyond traditional stocks, the real estate private market emerges as an enticing avenue. Instruments like Basecamp Alpine Notes, offering a 9% target APY with remarkable terms, present an ample opportunity for income-focused investors to explore high-yield investments. With the landscape favoring such high returns, now is a promising time for investors to capitalize on these opportunities.
The appeal of these high-yield dividend stocks, coupled with the unique opportunities in the private market real estate investments, underscore the broad spectrum of avenues available for achieving substantial income and growth in the current economic climate.
