Analysts Love These 4 Total Return Stocks That All Yield 5% or More

By Lee Jackson Updated Jan 12, 3:19AM EST · Published Feb 16, 8:45AM EST

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Analysts Love These 4 Total Return Stocks That All Yield 5% or More — © Thinkstock

Up and down, round and round, every day it seems like the stock market has a 500-point move back and forth. One thing seems pretty evident for the rest of this year: stock picking will be at a premium, and the best way to have a good year may be via total return.

We like to remind our readers about the impact total return has on portfolios because it is one of the best ways to help improve the chances for overall investing success. Again total return is the combined increase in a stock’s value plus dividends. For instance, if you buy a stock at $20 that pays a 3% dividend, and it goes up to $22 in a year, your total return is 13% — 10% for the increase in stock price and 3% for the dividends paid.

The following four stocks are rated Buy and all have yields of 5% or more. They could be great total return candidates for the rest of 2018 and beyond.

AT&T

This company has bounced off the lows, but is still down from highs printed in January. AT&T Inc. (NYSE: T) is the world’s largest provider of pay TV, with TV customers in the United States and 11 Latin American countries. In the United States, the AT&T wireless network has the nation’s self-described strongest 4G LTE signal and most reliable 4G LTE. The company also helps businesses worldwide serve their customers better with mobility and highly secure cloud solutions.

With its shares trading at a very cheap 12.8 times estimated 2018 earnings, the company continues to expand its user base, and strong product introductions from smartphone vendors have not only driven traffic but increased device financing plans.

AT&T reported solid wireless, business and international results in the fourth quarter. Highlights include strong postpaid phone gains, record-low fourth-quarter postpaid phone churn and DirecTV Now surpassing 1 million subscribers. Plus the CEO of the company has been consistently buying large blocks of the stock.

AT&T shareholders are paid an outstanding 5.41% dividend. Wells Fargo has a $48 price target, and the Wall Street consensus target is $40.65. The stock closed trading Thursday at $37.00 a share.

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AES

This off-the-radar choice has solid upside potential from current levels and is a top mid-cap pick at SunTrust. AES Corp. (NYSE: AES) owns and operates power plants to generate and sell power to customers, such as utilities, industrial users and other intermediaries. The company also owns and operates utilities to generate or purchase, distribute, transmit and sell electricity to end-user customers in the residential, commercial, industrial and governmental sectors. It also generates and sells electricity to the wholesale market.

AES uses a range of fuels to generate electricity, including natural gas, coal, hydro, wind, energy storage, oil, diesel, petroleum coke, biomass, landfill gas and solar. The company owns and operates a generation portfolio of approximately 29,352 megawatts. It has operations in the United States, Chile, Colombia, Argentina, Brazil, Mexico, Central America, the Caribbean, Europe and Asia.

Shareholders are paid a 5.10% dividend. SunTrust has a $15 price objective, and the consensus target is $12.53. The shares closed on Thursday at $10.52.

Carlyle Group

This limited partnership is a solid holding for investors looking for private equity exposure. Carlyle Group L.P. (NYSE: CG) is a leading global alternative asset manager, providing investment management services across four operating segments, including Corporate Private Equity, Global Market Strategies, Real Assets and Fund of Funds Solutions. Carlyle has offices worldwide and is headquartered in Washington, D.C.

The company recently reported very strong quarterly earnings, and analysts at Merrill Lynch noted the strong performance fees and income from investments as a leading factor.

Investors receive a 5.82% distribution. The $30 Merrill Lynch price target compares with the consensus figure of $28.50. The shares closed trading on Thursday at $23.67.

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Covanta

This company has seen solid insider buying over the past year. Covanta Holding Corp. (NYSE: CVA) is a world leader in providing sustainable waste and energy solutions. Annually, Covanta’s modern energy-from-waste facilities safely convert approximately 20 million tons of waste from municipalities and businesses into clean, renewable electricity to power a million homes and recycle approximately 500,000 tons of metal.

Through a vast network of treatment and recycling facilities, Covanta also provides comprehensive industrial material management services to companies seeking solutions to some of today’s most complex environmental challenges.

Covanta shareholders receive a 6.25% dividend. Baird has set its price target at $19. The consensus target is $18.21, and shares closed Thursday at $16.00.

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Four top companies offering huge dividends and solid growth prospects for 2018. Given the volatile nature of the markets this year, they all make sense for growth accounts looking for total return that have a little risk tolerance.

About the Author Lee Jackson →

Lee Jackson has covered Wall Street analysts' equity and debt research and equity strategy daily for 24/7 Wall St. since 2012. His broad and diverse career, which included a stint as the creative services director at the NBC affiliate in Austin, Texas, gives him unique insight into the financial industry and world.

Lee Jackson's journey in the financial industry spans over 30 years, with nearly two decades as an institutional equity salesperson at Bear Stearns, Lehman Brothers, and Morgan Stanley. His career was marked by his presence on the sell side during pivotal Wall Street events, from the dot.com rise and bubble to the Long Term Capital Management debacle, 9/11, and the Great Recession of 2008. This is a testament to his resilience and adaptability in the face of market volatility.

Lee Jackson’s practical financial industry experience, acquired from a career at some of the biggest banks and brokerage firms, is complemented by a lifetime of writing on various platforms. This unique combination allows him to shed light on the intricacies and workings of Wall Street in a way that only someone with deep insider experience and knowledge can. Moreover, his extensive network across Wall Street continues to provide direct access for him and 24/7 Wall St., a privilege few firms enjoy.

Since 2012, Jackson’s work for 24/7 Wall St. has been featured in Barron’s, Yahoo Finance, MarketWatch, Business Insider, TradingView, Real Money, The Street, Seeking Alpha, Benzinga, and other media outlets. He attended the prestigious Cranbrook Schools in Bloomfield Hills, Michigan, and has a degree in broadcasting from the Specs Howard School of Media Arts.