5 Out-of-Favor Buy-Rated Stocks Yielding 5% or More
It’s nearly over, the almost 600-day election cycle marathon that every citizen of the country is sick and tired of. With the S&P 500 closing down again on Friday for the ninth straight day, that marks an event that hasn’t happened since December of 1980, which was also just after the completion of an election cycle. Wall Street just wants a decision, and one way or another, we should get it Tuesday night, although it could be late.
One thing the selling has done, and there could be more if Donald Trump ends up the winner, is bring down some top stocks rated Buy, and they are offering investors solid entry points and juicy dividends. Given the potential for volatility, investors may want to buy starting positions of, say, a third of the total to be acquired and see how the election plays out.
We screened our Wall Street research database and found five solid stock, all rated Buy, that are paying dividends near 5% or higher.
This top retailer looks to benefit from new releases. GameStop Corp. (NYSE: GME) operates as an omnichannel video game retailer. It sells new and pre-owned video game hardware; physical and digital video game software; pre-owned and value video game products; video game accessories, such as controllers, gaming headsets, memory cards and other add-ons for use with video game hardware and software; and digital products, including downloadable content, network points cards, prepaid digital and subscription cards and digitally downloadable software.
The company also sells mobile and consumer electronics, including smartphones, tablets, headphones and accessories, as well as pre-owned smartphones; personal computer (PC) entertainment software in various genres, including sports, action, strategy, adventure/role playing and simulation; and strategy guides, magazines and gaming-related toys. As of January 30, 2016, it operated approximately 7,117 stores in the United States, Australia, Canada and Europe. GameStop primarily offers its products under the GameStop, EB Games and Micromania names.
The stock has been crushed since a very negative third-quarter pre-announcement, as well as ongoing difficult trends. Merrill Lynch lowered its price target but kept a Buy rating, given the valuation at current levels is very cheap and noting that the headwinds the company faces are fully disclosed. With a big dividend yield, and the fourth-quarter holiday season underway, a rebound is quite possible.
GameStop investors receive a 7.14% dividend. The Merrill Lynch price target is $25, and the Wall Street consensus target is $27.06. Shares closed Friday at $20.73.
This top global pharmaceutical could offer outstanding total return for investors as solid portfolio holding. GlaxoSmithKline PLC (NYSE: GSK) offers pharmaceutical products in the therapeutic areas, including respiratory, anti-virals, central nervous system, cardiovascular and urogenital, metabolic, anti-bacterials, and emesis, dermatology, rare diseases, immuno-inflammation, vaccines, and HIV. It also provides consumer healthcare products in wellness, oral health, nutrition, and skin health areas.
Last year the company announced that the dividend would stay at its current level through 2017, a solid pledge for those seeking security. Also, the FDA approved the company’s Nucala add-on product for severe asthma with a very broad label. In addition, its ViiV Healthcare unit also reported promising data for its HIV treatments. GlaxoSmithKline plans to submit up to 20 new regulatory filings within the next five years, which confirms a very strong pipeline.
The company posted strong third-quarter results, much of which was attributed to currency tailwinds. Merrill Lynch cited the attractive low-risk profile for investors, diversified growth potential and the above-average dividend.
GlaxoSmithKline investors receive a 5.35% dividend. Merrill Lynch has a $47.50 price target. The consensus price objective is $47.25. Shares closed Friday at $38.63.