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There is no shortage of dividend stock lists out there. But what sets good dividend stocks apart isn't simply the dividend payment. If you are going to invest in dividend stocks, they should be a worthy investing proposition, period. Payout or no payout. This means that the business is going on the right track, and the fundamentals are looking strong.
Plus dividend stocks are perfect for the current bout of market volatility. "Dividends may help to mitigate portfolio losses when stock prices decline, and over long time horizons, stocks with a history of increasing their dividend each year have also produced higher returns with considerably less risk than non-dividend-paying stocks" says Bank of America .
So with that in mind, I used TipRanks' revamped stock screener to source seven high-yield dividend stocks. Here high-yield means a dividend yield above 2.5%. As you'll see, all seven of these stocks also score a "Strong Buy" consensus rating from the Street's top analysts. And that's with sizable upside potential to boot. Let's take a closer look now at what makes these high-yield dividend stocks so special now:
High-Yield Dividend Stock: CVS Health (CVS)
Source: Mike Mozart via Flickr
Dividend yield: 2.66%
Pharmacy chain CVS Health Corp (NYSE: CVS ) is a key dividend stock to watch right now.
Top Argus Research analyst Chris Graja ( Track Record & Ratings ) has just bumped up his price target from $88 to $100. The new price target suggests shares can surge 33% from current levels. Following a Q3 earnings beat, Graja is "bullish on the management's ability to find innovative and profitable ways to reduce healthcare costs and deliver better care".
And of course there is also the massive Aetna deal completed yesterday . That's because CVS won U.S. antitrust approval for its $69 billion acquisition of health insurer Aetna back in October.
Graja is predicting "significant upside for the shares if the company can close acquisition of Aetna (AET) and deliver on its financial targets". This includes beating the initially estimated $750M in 2-year synergy benefits.
Encouragingly, Cowen's Charles Rhyee makes a similar point, writing: "We continue to believe shares currently under-appreciate the strategic value of CVS-AET. We also see upside to our estimates from greater than expected synergies." As a result he has a $103 CVS price target.
Overall this 'Strong Buy' stock scores 7 top analyst buy ratings vs 2 hold ratings. Interested in CVS stock? Get a free CVS Stock Research Report.
High-Yield Dividend Stock: Kla-Tencor (KLAC)
Dividend yield: 3.18%
Based in California, KLA-Tencor Corp (NASDAQ: KLAC ) is a global capital equipment company. This includes supplying process control and yield management systems for the semiconductor industry.
The stock has the thumbs up from Top 50 analyst B Riley FBR's Craig Ellis ( Track Record & Ratings ). He reiterated his Buy rating following stellar Q3 results. "On higher estimates, our PT ticks up from $120 to $123 and we retain a Buy rating on shares which yield 3.2% and offer deal accretion catalysts" Ellis wrote.
"Yet again, GM [gross margins], OM [operating margins], and EPS quality were high, contributing to robust free cash flow" cheers Ellis.
This drove the conclusion: "Overall, we believe KLAC is executing well with new products, regional China growth and solid services gains."
Indeed, he believes the stock's 'robust' dividend yield provides strong downside support- and with the stock currently trading at 'very compelling' levels, his price target indicates upside of over 30%.
Out of 8 analysts polled on the stock, only 1 is staying on the sidelines. This is with a $130 average analyst price target (38% upside potential). Get the KLAC Stock Research Report.
High-Yield Dividend Stock: Restaurant Brands International (QSR)
Dividend yield: 3.25%
Burgers may be juicy but this dividend stock is even juicier. Restaurant Brands International Inc (NYSE: QSR ) is one of the largest quick-service restaurants in the world. Burger King, Tim Horton's and Popeye's Louisiana Kitchen brands all fall under the QSR umbrella.
What's telling is that five-star Oppenheimer analyst Brian Bittner ( Track Record & Ratings ) has just selected QSR as his top stock pick for November-December.
"We are attracted to QSR's risk/reward" the analyst writes.
"Its system-wide sales algorithm is high-singles and only lags DPZ [Domino's Pizza]. But despite this, and its unique ability to accelerate unit growth and optionality for another accretive deal, we believe valuation remains attractive off our '19 estimates" he explains.
Likewise, UBS analyst Dennis Geiger continues to favor QSR out of the larger US burger brands.
He calls the stock's risk/ reward compelling, and cites a slew of reasons in the stock's favor. This covers everything from its attractive free cash flow yield, same-store systems sales growth, underappreciated unit expansion, to its strategic optionality.
Given all this, it's not surprising the stock boasts only buy ratings in the last three months. Plus the $72 average analyst price target works out at 30% upside potential. Get the QSR Stock Research Report.
High-Yield Dividend Stock: Marathon Petroleum (MPC)
Dividend yield: 2.98%
Marathon Petroleum Corp (NYSE: MPC ) is trading at bargain levels right now. This energy stock is currently down 10% in the last month (and 6% year-to-date). As a result the $108 average analyst price target suggests major upside potential of over 75%.
The company recently snapped up Andeavor, making it the largest US refiner, with 16 refineries and a daily refining capacity of 3.04 M barrels.
Top RBC Capital analyst Brad Heffern ( Track Record & Ratings ) gives the deal his seal of approval. Achieving the $1 billion synergy target would be a 'major catalyst' for shares forecasts Heffern.
"MPC is confident on the achievability of both the ramp and total synergies, but commentary has suggested that there could be additional synergy upside" he writes.
Promisingly, MPC has noted that it will "put to rest" any doubt about the $1 billion synergy target at its analyst day on December 4.
Plus the stock has another string to its bow: Speedway. "Marathon's retail business, Speedway, is the most attractive retail franchise in our coverage universe, and the extension of the Speedway model to the acquired ANDV stores could provide meaningful upside" cheers Heffern.
In total, 9 analysts have published buy ratings on MPC in the last three months. So no hold or sell ratings here. Get the MPC Stock Research Report.
High-Yield Dividend Stock: Royal Caribbean (RCL)
Dividend yield: 2.54%
Royal Caribbean Cruises (NYSE: RCL ) stock is certainly worth a closer look - especially for dividend-seeking investors.
Deutsche Bank's Chris Woronka ( Track Record & Ratings ) is upbeat on RCL stock's outlook. He notes that the company's 2019 booked position is ahead of the same time last year on both rate and volume for all core products. According to management, this points to another year of robust yield and EPS growth. "Over the next 12 months, RCL's yields are currently up in rate and volume every quarter" Woronka writes.
Furthermore, he still detects a net positive sentiment for the stock, especially after the recent selloff.
"While it sounds like expenses (including some below the line, such as D&A) might ding 2019 EPS a touch more than previously anticipated, we come down on the side of RCL representing among the best risk-reward proposition in the broader hospitality and leisure space at current levels (~11x forward P/E)" says the analyst.
He believes consumer discretionary investors will continue to favor high quality "growthy" names, even if some re-rating does occur within the broader market. With this in mind, he labels RCL as 'a high conviction Buy.'
The Street agrees: this 'Strong Buy' stock has received 4 buy ratings vs just 1 hold rating. This is with a $142 average analyst price target (26% upside potential). Get the RCL Stock Research Report.
High-Yield Dividend Stock: American Eagle (AEO)
Source: Mike Mozart via Flickr (Modified)
Dividend yield: 2.81%
From cruise operators, let's turn to the world of retail. Because this fashion outlet is buzzing right now. In fact American Eagle Outfitters (NYSE: AEO ) is one of the Street's favorite trending stocks.
The company has received no less than three upgrades in just one month! So what's swinging analyst sentiment to the bull side?
Deutsche Bank's Tiffany Kanaga ( Track Record & Ratings ) is the most recent analyst to bump AEO to Buy. She sees the stock's current valuation as undemanding, presenting a sweet buying opportunity. Better weather and strong Black Friday channel checks gives her confidence that AEO can both beat Q3 guidance and cycle a tough Q4 compare.
Meanwhile Citigroup's Paul Lejuez cites AEO's Aerie brand as the company's secret sauce, with a whopping $2 billion valuation.
"AEO is down ~30% since reporting 2Q earnings on 8/29, and has recently been painted with the same brush as most stocks within our universe. But AEO has something that others don't - one of the most attractive growth concepts in retail (Aerie)."
Not only is Aerie is taking market share in the lingerie market with consistent double-digit comps but it also has significant growth potential. And with the recent selloff, he believes the market is not giving AEO the credit it deserves for Aerie.
Seven analysts have published Buy ratings on AEO in the last three months. With a $29 average analyst price target, upside stands at close to 42%. Get the AEO Stock Research Report.
High-Yield Dividend Stock: Blackstone Group (BSX)
Dividend yield: 7.72%
'Firing on all cylinders' is how Oppenheimer's Allison Taylor ( Track Record & Ratings ) describes this finance stock. And excitingly for investors this all comes at an 'awfully cheap' price, with very little to dislike.
Blackstone Group LP (NYSE: BX ) is the largest alternative investment firm in the world, with a focus on private equity, credit and hedge fund investment strategies.
Following the company's Investor Day, it struck Taylor that overall, there are real and tangible reasons to be optimistic about every area of Blackstone over the next three years.
First, the fundraising outlook remains remarkably robust which translates over time into meaningful fee related earnings growth.
Second, performance remains strong across the platform.
And third, investments are being made now in new lines of business-like life sciences, which is why she believes we will still be discussing the superior growth of BX five years from now.
Net-net this is a stock with excellent growth prospects, trading on the cheap: "Despite its premium valuation, we believe BX's future cash earnings prospects are strong and that the stock is a compelling value at this price."
Eight analysts have published recent BX buy ratings. Their average price target, now at $44, sees shares surging 29%. Get the BX Stock Research Report.
TipRanks.com offers exclusive insights for investors by focusing on the moves of experts: Analysts, Insiders, Bloggers, Hedge Fund Managers and more. See what the experts are saying about your stocks now at TipRanks.com . As of this writing, Harriet Lefton did not hold a position in any of the aforementioned securities.
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