Investing
4 Stocks to Buy Now With Upside Potential That All Yield 5% or More
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It has become difficult to find solid dividend-paying stocks, and with the Federal Reserve unlikely to raise rates next week, it is looking like it will be December before they finally lift rates another one-quarter of 1%, or 25 basis points. Savers have been punished by this unusually long stay at low rates, and one of the few ways to get income is through dividend-paying equities.
At 24/7 Wall St, we constantly run screens looking for dividend-paying stocks that are solid companies and that have some upside potential. While it has become more difficult to find stocks that aren’t terribly overbought, they are out there. We have circled four companies that all yield more than 5%, are rated Buy and may have some room to run. It should be noted that these stocks are suitable for more aggressive income accounts.
GameStop
This top retailer looks to benefit from new releases during the busy holiday shopping season. GameStop Corp. (NYSE: GME) operates as an omnichannel video game retailer. It sells new and pre-owned video game hardware; physical and digital video game software; pre-owned and value video game products; video game accessories, such as controllers, gaming headsets, memory cards and other add-ons for use with video game hardware and software; and digital products, including downloadable content, network points cards, prepaid digital and subscription cards and digitally downloadable software.
The company also sells mobile and consumer electronics, including smartphones, tablets, headphones and accessories, as well as pre-owned smartphones; personal computer (PC) entertainment software in various genres, including sports, action, strategy, adventure/role playing and simulation; and strategy guides, magazines and gaming-related toys. As of January 30, 2016, it operated approximately 7,117 stores in the United States, Australia, Canada and Europe. GameStop primarily offers its products under the GameStop, EB Games and Micromania names.
Leading Wall Street analysts feel that hardware updates and the holiday release slate this year should help the gaming segment. In addition, the second-half hardware refreshes and fourth-quarter high-quality product releases could help drive traffic to the stores.
GameStop investors are paid a large 5.43% dividend. The Merrill Lynch price target for the stock is $37, and the Wall Street consensus price objective is $35. The stock closed most recently at $27.25 per share.
Guess
This stock recently bounced off a 52-week low and could be heading higher. Guess? Inc. (NYSE: GES) designs, markets, distributes and licenses one of the world’s leading lifestyle collections of contemporary apparel and accessories for men, women and children that reflect the American lifestyle and European fashion sensibilities. Its apparel is marketed under numerous trademarks, including Guess and Marciano.
The company’s lines include full collections of clothing, including jeans, pants, skirts, dresses, shorts, blouses, shirts, jackets, knitwear and intimate apparel. It also selectively grant licenses to manufacture and distribute a broad range of products that complement its apparel lines, including eyewear, watches, handbags, footwear, kids’ and infants’ apparel, outerwear, swimwear, fragrance, jewelry and other fashion accessories.
Shareholders are paid a huge 5.9% dividend. Wunderlich has a price target that is posted at a gigantic $27. The consensus target is $17.70, and the shares closed most recently at $15.26 apiece.
Lamar Advertising
This top company flies way under the radar and is offering a very solid entry point for investors. Lamar Advertising Co. (NASDAQ: LAMR) is a publicly owned equity real estate investment trust (REIT). It is one of the largest outdoor advertising companies in North America, with more than 325,000 displays across the United States, Canada and Puerto Rico.
Lamar offers advertisers a variety of billboard, interstate logo and transit advertising formats, helping both local businesses and national brands reach broad audiences every day. In addition to its more traditional out-of-home inventory, Lamar also offers its customers the largest network of digital billboards in the United States, with over 2,500 displays.
Investors are paid an outstanding 5% distribution. While Wells Fargo rates the stock a Buy, its price target was not listed. The consensus price target for the stock is $68.14. The shares closed Thursday at $61.10.
Staples
The company is struggling to regain lost ground after a judge ruled against the mega-merger it had planned with Office Depot. Staples Inc. (NASDAQ: SPLS) is the leading U.S. retailer of office supplies, with a significant presence in Canada and a growing presence in Europe.
The company sells office products, furniture, computers and business machines, and operates in three segments through multiple channels: North American Retail (with approximately 1,600 stores), North American Direct (catalog and contract) and International Operations (nearly 300 retail stores, catalog and internet businesses).
While the disappointment in the failed merger jolted shares somewhat back in the spring, the company has added product lines to compete with Amazon. The company also was one of the earlier e-commerce adopters and doesn’t lag behind Amazon’s capabilities like some of other traditional retailers. For instance, Staples’ same-day delivery option this year will be able to get packages to customers’ doors in two hours.
Staples shareholders are paid a solid 5.6% dividend. The $10 price target Merrill Lynch has on the stock compares with a consensus price objective set at $9.45. The shares closed Thursday at $8.59.
Four top companies paying outstanding dividends, and holding their own in their respective business arenas. Given the volatility in the markets, investors may want to buy partial positions here and see how the third-quarter earnings come in next month.
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