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Why the Worst-Performing S&P 500 Dividend Stocks Could Explode Higher in 2025
Published:
24/7 Wall St. Insights
Dividend stocks are a favorite among investors for good reason. They provide a steady income stream and offer a promising avenue for total return. Total return, a comprehensive measure of investment performance, encompasses interest, capital gains, dividends, and distributions realized over time.
At 247 Wall St., we consistently highlight the long-term potential of total return to our readers, as it is one of the most effective ways to boost the prospects of overall investing success. Once again, total return is the collective increase in a stock’s value plus dividends.
After a two-year bull market ignited by the promise of artificial intelligence and its possibilities, investors are becoming nervous that it may be time for a severe market correction. Given the potential for a significant pullback, we were intrigued when Wall Street boutique leader BTIG posted the 25 worst-performing S&P 500 stocks from 10/12/2022 to 10/12/2024.
The list featured some blue-chip giants we love. They all pay huge and dependable dividends and might offer contrarian growth and income investors some significant upside for the share prices while mitigating investors’ downside, as they all are down at least 25% over the last two years. We screened the list, which included two Dividend Kings stocks, companies that have raised their dividends for at least the previous 50 years. We found five stocks that nervous investors should consider now. All are rated Buy at top Wall Street firms and pay at least a 3.45% dividend.
Dividend stocks provide investors with reliable streams of passive income. Passive income is characterized by its ability to generate revenue without requiring the earner’s continuous active effort, making it a desirable financial strategy for those seeking to diversify their income streams or achieve financial independence.
This conservative utility stock offers a hefty 3.95% dividend and a significant upside potential. AES Corp. (NYSE: AES) and its subsidiaries operate as a diversified power generation and utility company in the United States and internationally.
The company owns and/or operates power plants to generate and sell power to customers, such as utilities, industrial users, and other intermediaries; owns and/or operates utilities to generate or purchase, distribute, transmit, and sell electricity to end-user customers in the residential, commercial, industrial, and governmental sectors; and generates and sells electricity on the wholesale market.
It uses various fuels and technologies to generate electricity, such as:
The company owns and/or operates a generation portfolio of approximately 34,596 megawatts and distributes power to 2.6 million customers.
This solid Dividend King is an excellent play for volatile markets and offers a very reasonable entry point and a solid 3.45% dividend. Archer Daniels Midland Co. (NYSE: ADM) processes oilseeds, corn, wheat, cocoa, and other agricultural commodities.
The company operates through the following segments:
The Ag Services and Oilseeds segment includes activities related to the origination, merchandising, crushing, and further processing of oilseeds such as soybeans and soft seeds, such as cottonseed, sunflower seed, canola, rapeseed, and flaxseed into vegetable oils and protein meals.
The Carbohydrate Solutions segment engages in corn wet milling and dry milling activities and converts corn into sweeteners, starches, and bioproducts.
Lastly, the Nutrition segment provides customer needs for food, beverages, health and wellness, and more.
This energy company utilizes the variable dividend strategy to pay investors a huge 4.67% dividend. Devon Energy Corp. (NYSE: DVN) is an independent energy company that primarily engages in the exploration, development, and production of oil, natural gas, and natural gas liquids (NGLs) in the United States and Canada. It operates approximately 19,000 wells.
The company also offers midstream energy services, including:
Production is weighted towards crude oil, while growth opportunities are liquids-focused. The Delaware Basin, SCOOP/STACK, Eagle Ford Shale, Canadian Oil Sands, and the Barnett anchors the company. Devon also owns equity in the publicly traded midstream MLP EnLink.
With a dependable 3.62% dividend and a host of well-known products, this Dividend King is another very safe idea for investors now. Hormel Foods Corp. (NYSE: HRL) develops, processes, and distributes various meat, nuts, and other food products to retail, food service, deli, and commercial customers in the United States and internationally.
The company operates in three segments:
Hormel Foods provides various perishable products, including fresh meats, frozen items, refrigerated meal solutions, sausages, hams, guacamoles, and bacon; and shelf-stable products comprising canned luncheon meats, nut butter, snack nuts, chili, shelf-stable microwaveable meals, hash, stews, tortillas, salsas, tortilla chips, nutritional food supplements, and others.
It sells its products under these
brands:
This top pharmaceutical stock was a massive winner in the COVID-19 vaccine sweepstakes but has been beaten down over the past two years as many are not getting boosters. Pfizer Inc. (NYSE: PFE) discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products worldwide and pays a hefty 5.78% dividend, which has risen yearly for the past 14 years.
The company offers medicines and vaccines in various therapeutic areas, including:
Pfizer also provides medicines and vaccines in various therapeutic areas, such as:
Trading not far from its lowest split-adjusted level in 13 years, the stock is an incredible bargain at current levels and pays a massive dividend. Pfizer reported revenues of $13.3 billion in the second quarter, representing 3% year-over-year operational growth, despite an expected decline in COVID revenues and a 14% year-over-year operational increase in revenues from the company’s non-COVID product portfolio.
The pharmaceutical giant raised full-year 2024 revenue guidance to $59.5 to $62.5 billion and lifted adjusted diluted EPS guidance to $2.45 to $2.65. Patient investors will get paid one of the highest blue-chip dividends, and shares trade at a reasonable 9.88 times estimated 2025 earnings.
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