Investing
3 Out of Favor Stocks With Solid Upside Potential and Big Dividends
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Despite that the fact that the market is struggling to keep its head above the break-even level this year, the S&P 500 is not all that far from the all-time highs printed last year. In fact, after the rally of the past couple of sessions, the index is only about 70 points from those record highs seen in July of last year. Yet, with all the highs being reached then, the market was flat last year, and it is trading that way this year.
What that seems to indicate is that most stocks are very close to being fully valued, and if companies post poor first-quarter results, you can bet that the sellers will be out in full force.
We looked around our 24/7 Wall St. research database for companies that paid solid dividends, but were either out of favor or had been sold off to what seems like a disproportionate level. We found three that may be solid investments for accounts with some risk tolerance.
Caterpillar
This company is still way out of favor, and it now trades at a level at which the dividend is the highest in years. Caterpillar Inc. (NYSE: CAT) is the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. The company principally operates through its three product segments — Construction Industries, Resource Industries and Energy & Transportation — and it also provides financing and related services through its Financial Products segment.
In a huge cost-cutting mode for over a year now, the company recently announced it will consolidate the Electric Power and Marine & Petroleum Power divisions into the new Electric Power, Marine and Oil and Gas Division. Consolidating these energy operations and integrating them within Customer & Dealer Support will bring higher efficiencies and a streamlined leadership team. Last year, Caterpillar further announced plans of consolidation and the layoff of up to 10,000 employees by 2018. At the end of 2015, Caterpillar’s global workforce totaled 105,700 employees, down nearly 11% from 2013.
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