Investing
Top High-Yield Analyst Stocks With the Most Upside Potential
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Stocks with solid yields may be a perfect fit for this current market volatility. Dividend-paying stocks are perceived by many as defensive in nature, and many reside in what are considered defensive sectors. With investors nervous about everything from the vote in Crimea this weekend to ongoing geopolitical issues elsewhere in the world, the time to move some capital to these stocks could be now.
24/7 Wall St. reviewed Wall Street’s top research calls over the past week, on the hunt for the best dividend ideas with big upside. Not only did we find some quality blue chip stocks with excellent dividends, we found some names that could provide some outstanding capital gains if the expectations come about.
Here are the top three high-yielding stocks to buy with the biggest upside potential.
Altria Group Inc. (NYSE: MO) was listed as a top stock to buy at J.P. Morgan. The company known for its Marlboro brand of cigarettes also got a boost this past week when Standard & Poor’s lifted its debt credit rating from BBB to BBB+, a sign that its dividend is safe for perhaps years. The venerable consumer discretionary stock pays shareholders a whopping 5.2% dividend. The J.P. Morgan price target is a strong $51. The Thomson/First Call price target is $39.91. With Altria trading just above $36 Friday, a move to the J.P. Morgan target would be a 40% gain.
CenturyLink Inc. (NYSE: CTL) was updated this week as a Buy-rated stock at Merrill Lynch. It is the third largest telecommunications company in the United States and is recognized as a leader in the network services market by technology industry analyst firms. The company is a global leader in cloud infrastructure and hosted-IT solutions for enterprise customers. CenturyLink provides data, voice and managed services in local, national and select international markets through its high-quality advanced fiber optic network and multiple data centers for businesses and consumers. Still, investors should consider that this may have a riskier profile, based on that high-yield compared to the other two selections from this last week. Investors are paid a strong 6.9% dividend. The Merrill Lynch price target is $41. The consensus is $33.21, and CenturyLink was trading Friday just above $30.50. So a move to the target would be almost a 35% gain.
Verizon Communications Inc. (NYSE: VZ) was a top telecom stock to buy at J.P. Morgan. The company added 173,000 FIOS video subscribers in the third quarter and 134,000 in the fourth quarter. Many came at the expense of the cable companies. The company has also expanded its 4g LTE offering, which it trumpets in current television advertising. Verizon trades at a very low 13.5 times forward earnings. Investors are paid a solid 4.5% dividend. The J.P. Morgan price target is $57, and the consensus estimate for the stock is $54. Verizon was trading Friday just above the $46 level, so a move to the J.P. Morgan target would be a 24% gain for investors.
These top-yielding stocks are generally considered to be solid additions to most portfolios, even if they only posted single-digit gains. The combination of the great dividends and some sizable upside capital gains potential could make these companies among the best avenue for smart investors that tend to lean more conservative. One added bonus is investors could also sell covered calls above their purchase price to generate extra income.
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