Investing in stocks that are down but not out can be a lucrative strategy for those looking to build wealth, especially when these stocks also offer substantial dividends. This approach not only allows investors to profit from potential stock recovery but also provides income through high dividend returns.
One notable example of this trend is Target (NYSE: TGT), which has faced challenges due to economic uncertainties, supply chain issues, and various political controversies. Despite these setbacks, Target has maintained its status as a Dividend King, increasing its dividend for an impressive 54 consecutive years. The company recently paid a dividend of $1.14 per share—its 232nd increase—yielding approximately 5%. Analysts suggest that Target’s current valuation reflects a considerable amount of pessimism, trading at only 10.5 times earnings, especially when compared to Walmart’s multiple of 38. Despite ongoing hurdles, Target is targeting $15 billion in sales growth over the next five years, as noted by Seeking Alpha.
Similarly, PepsiCo (NASDAQ: PEP) has shown resilience in the face of market fluctuations. After a dip to $140 per share, its stock has recently risen to $144.23. The company declared a quarterly dividend of $1.4225, payable on September 30, which marks its 53rd consecutive annual dividend increase since 1965. Analysts have raised their price target for PepsiCo to $155, particularly following activist involvement from Elliott Management, which has taken a $4 billion stake in the company.
UPS (NYSE: UPS) presents another opportunity for patient investors. Currently trading at $84 per share with a yield of 7.75%, UPS declared a quarterly dividend of $1.64, payable on September 4. Market analysts suggest that significant negativity has already been priced into the stock, and UPS’s management is focused on cost control and network optimization to enhance competitiveness and shareholder value when market conditions stabilize.
Southern Co. (NYSE: SO) is also worth monitoring, especially after experiencing a decline from roughly $95.64 to a recent low of $90.53. Analysts downgraded the stock, but the energy sector is poised for growth due to the increasing demand for electricity driven by the artificial intelligence boom. Wells Fargo projects that U.S. electricity demand could rise by 20% by 2030, primarily due to AI data centers—a potential boon for Southern Co.
Finally, Amcor (NYSE: AMCR), a leader in consumer packaging solutions, has seen its stock price slip after missing earnings expectations. The recent stock price support at around $8.33 makes it an intriguing option. Amcor is set to pay a quarterly dividend of $0.1275 on September 25, and analysts at Goldman Sachs have initiated coverage with a buy rating, suggesting that the stock remains attractively valued despite the challenges it faces.
With these options, investors have the chance to navigate current market volatility and set the stage for potential long-term growth.
