You can almost feel it in the air. The market is expensive, and while today looks positive, the huge tech selling recently was a sharp reminder that the party may be close to over. The question for long-term investors who want to stay in the market is simple: Where is the value after all of these huge gains over that past eight years? The answer could lie in where the best opportunities for total return are.
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.
We screened our Wall Street research database and found five top stocks that pay at least a 4.9% dividend and could have some outstanding total return potential. All are rated Buy at various firms we cover here at 24/7 Wall St.
This company has been hit hard this year and offers investors solid value. 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 14.4 times estimated 2016 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.
On Tuesday, the company reported first-quarter earnings that met analysts’ expectations, but revenue disappointed. Record-low equipment sales in wireless contributed to a year-over-year drop in revenue.
AT&T investors receive a 5.03% dividend. Merrill Lynch remains positive with a price objective of $46, and the Wall Street consensus target price is $41.77. The shares closed Friday at $38.96.
This top retailer has traded sideways for months but has posted decent 2017 sales. Kohl’s Corp. (NYSE: KSS) operates department stores in the United States that offer private label, exclusive and national brand apparel, footwear, accessories, beauty and home products to children, men and women customers. The company also sells its products online at Kohls.com and through mobile devices.
While retail chains have suffered from internet pressure, Kohl’s has held its own as consumers see the company as a solid discount retailer. Merrill Lynch said this in a recent report:
Corporate Initiatives: new brands, convert loyalty members to credit cardholders, personalization, win market share from store closures. View on store closures is to keep the majority of its fleet open to defend market share/maintain relevance to the customer. Recent launch of Under Armour has exceeded expectations so far.
Shareholders receive a 5.9% dividend. The Merrill Lynch price target is $45, and the consensus target is $42.57. The shares closed Friday at $37.38.