Investing
5 Hard-Hit Dow Stocks Have Monster Upside and Come With Great Dividends
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It is hard to believe, but after a very positive double-digit year for stocks, only two months remain in 2021. Now is the time when many investors will be reviewing their portfolios and making changes for the final eight weeks of the year and 2022. One thing is for sure: the Federal Reserve will start tapering their $120 billion per month of asset purchases later this month, cutting $15 billion in bond purchasing. While Fed Chair Jay Powell has made the intentions very clear regarding the tapering, that doesn’t mean some added volatility couldn’t be part of the mix as we close out the year.
It makes sense now to move from the momentum and meme stocks to more conservative large-cap stocks that pay dividends. We screened the Dow Jones industrials looking for the high-yielding companies in sectors that look to benefit from the continued reopening of the economy. We also screened for stocks that have traded down this year and are offering some of the best entry points in some time.
While all are rated Buy at major Wall Street firms, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Amgen
This biotech giant remains a top stock for investors to buy and a safer way to play the massive potential growth in biosimilars. Amgen Inc. (NASDAQ: AMGN) discovers, develops, manufactures and delivers human therapeutics worldwide. It focuses on inflammation, oncology/hematology, bone health, cardiovascular disease, nephrology and neuroscience.
The company’s products include the following:
- Enbrel to treat plaque psoriasis, rheumatoid arthritis and psoriatic arthritis
- Neulasta reduces the chance of infection due a low white blood cell count in patients cancer
- Prolia to treat postmenopausal women with osteoporosis
- Xgeva for skeletal-related events prevention
- Otezla for the treatment of adult patients with plaque psoriasis, psoriatic arthritis and oral ulcers associated with Behcet’s disease
- Aranesp to treat a lower-than-normal number of red blood cells and anemia
- Kyprolis to treat patients with relapsed or refractory multiple myeloma
- Repatha, which reduces the risks of myocardial infarction, stroke and coronary revascularization
Amgen also markets Nplate, Vectibix, Mvasi, Parsabiv, Epogen, Kanjinti, Blincyto, Aimovig, Evenity, Amgevitatm, Sensipar/Mimpara, Neupogen, Imlygic, Corlanor and Avsola. The company’s five key marketed products are among the top-selling pharmaceutical products in the world, with the company having expected collective revenues of more than $25 billion in 2021.
Shareholders receive a 3.28% dividend. BMO Capital Markets has a Wall Street high $301 price target on Amgen stock. The consensus target is just $249.38, and the final trade for Thursday came in at $214.93.
24/7 Wall St.Cisco
This mega-cap tech leader is a smart play for more conservative investors looking to own technology. Cisco Systems Inc. (NASDAQ: CSCO) designs, manufactures and sells internet protocol (IP) based networking products and services related to the communications and information technology industry worldwide.
It provides switching products, including fixed-configuration and modular switches, and storage products that provide connectivity to end users, workstations, IP phones, wireless access points and servers, as well as next-generation network routing products that interconnect public and private wireline and mobile networks for mobile, data, voice and video applications.
Cisco’s cybersecurity products give clients the scope, scale and capabilities to keep up with the complexity and volume of threats. Putting security above everything helps corporations innovate while keeping their assets safe.
Cisco Systems stock investors receive a 2.58% dividend. The BofA Securities target price is $64, while the analysts’ consensus target is $62.70. Thursday’s closing share price was $57.12.
24/7 Wall St.Dow
This stock also offers investors growth and income potential. Dow Inc. (NYSE: DOW) is a leading materials science company and was formed from the merger of Dow and DuPont in 2017 and the subsequent spin-off 2019. The company is organized into three principal divisions: Performance Materials & Coatings (23% of EBITDA), Industrial Intermediates & Infrastructure (27%) and Packaging & Specialty Plastics (51%).
Dow’s segments include Agricultural Sciences, which is engaged in providing crop protection and seed/plant biotechnology products and technologies, urban pest management solutions and healthy oils. The Consumer Solutions segment consists of Consumer Care, Dow Automotive Systems, Dow Electronic Materials and Consumer Solutions-Silicones businesses.
The Infrastructure Solutions segment consists of Dow Building & Construction, Dow Coating Materials, Energy & Water Solutions, Performance Monomers and Infrastructure Solutions-Silicones businesses. Performance Materials & Chemicals consists of Chlor-Alkali and Vinyl, Industrial Solutions and Polyurethanes businesses. The Performance Plastics unit consists of Dow Elastomers, Dow Electrical and Telecommunications, Dow Packaging and Specialty Plastics, Energy and Hydrocarbons businesses.
The company has a 4.90% payout. Piper Sandler recently started coverage, and its $78 price objective is well above the $65.65 consensus target. Dow stock closed on Thursday at $57.17.
IBM
This blue chip giant still offers investors an incredibly solid entry point and very good forward earnings potential. International Business Machines Corp. (NYSE: IBM) is a leading provider of enterprise solutions, offering a broad portfolio of information technology (IT) hardware, business and IT services, and a full suite of software solutions. The company integrates its hardware products with its software and services offerings in order to provide high-value solutions.
Analysts have cited the company’s potential in the public cloud as a reason for their positive outlook going forward. The cloud proved to be big in recent earnings reports, as did Red Hat, the software giant the firm bought in 2019. Red Hat’s open hybrid cloud technologies are now paired with the unmatched scale and depth of IBM’s innovation and industry expertise and sales leadership in more than 175 countries.
Investors receive a 5.43% dividend. The huge $172 BofA Securities price target towers over the $150.84 consensus target for IBM stock. Thursday’s closing print was $120.85.
24/7 Wall St.Verizon
Shares of this top telecommunications company offer tremendous value at current levels. Verizon Communications Inc. (NYSE: VZ) is one of the largest U.S. telecom companies. It provides wireless and wireline service to retail, enterprise and wholesale customers.
The company’s wireless network serves approximately 120 million mobile connections with 115 million postpaid subscribers. Verizon’s wireline business has undergone a period of secular decline due to wireless substitution and cable competition.
Verizon acquired AOL and Yahoo to create the Oath digital content platform, which the company recently sold at a sizable loss to Apollo Global Management for $5 billion. The sale allows Verizon to offload properties from the former internet empires, though it will keep a 10% stake in the company and it will be rebranded to just Yahoo.
Verizon also provides converged communications, information and entertainment services over America’s most advanced fiber-optic network, and it delivers integrated business solutions to customers worldwide.
The dividend yield is 4.94%. Goldman Sachs has set a $64 price objective. The consensus target is $60.15, and Verizon Communications stock closed on Thursday at $51.85 a share.
These five outstanding blue chip stocks have been hit hard this year and are offering growth and income investors incredible entry points and some big and, most importantly, reliable dividends. It’s very possible that it will take some time for some of them to get back on track and return to favor across Wall Street. However, in the meantime, the big dividends these blue chip firms pay investors to be patient are well worth it.
For those versed in options trading, these all offer some nice premiums for covered call writing, which also can increase the total return potential, especially for those with a long-term investment horizon.
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