24/7 Wall St.

Investors love companies that pay strong dividends. And companies that have high dividend yields and can keep growing their dividends are even better. The problem is that these higher dividends are not all created equal. Some companies are in trouble, or they may have a hard time keeping their payouts so high.

24/7 Wall St. has screened the various sectors in the S&P 500 Index and pulled out six companies that offer several things many income-seeking investors would love to see. First is that they have a yield of 5% or higher. Second is that they are large companies that can keep growing their payouts for the coming years, even if they have experienced (or are expected to) some recent trouble in their business. And each stock needs to come with an expected upside in the share price ahead.

To qualify as a 5% or higher yield for dividend and share price growth, several conditions had to be present. These S&P 500 companies had to have a current share price under the Thomson Reuters consensus analyst price target. The companies also had to have either an expected higher dividend estimate from Thomson Reuters analysts or enough in earnings per share ahead to support a higher payout and its current debt, even if that was not officially expected.

24/7 Wall St. also eliminated the nontraditional structures, wherein the dividends and distributions may come from cash flows or one-time events, and also those distributions that are considered a return of capital rather than coming from traditional operational metrics. For instance, real estate investment trusts (REITs) pay out under their funds from operations.

As a reminder, many investors generate half of their total returns over time from dividends. Still, there can never be any certainties that dividends will grow or that price target and earnings assumptions will always live up to expectations. We also limited each pick to one per specific sector.

Here are six stocks in the S&P 500 with 5% yields that fit our screened criteria.

AT&T
> Yield: 5.5%

AT&T Inc. (NYSE: T) needs little introduction, but it has been stuck while it pursues its acquisition of Time Warner. AT&T has a 5.5% yield, and the $36.15 share price compares with a consensus analyst target price of $40.71. The $2.00 forward dividend is expected to rise to $2.09 by 2020. It has a whopping $222 billion market cap, before considering what it might be if the merger is finally approved by regulators.

Guggenheim recently started AT&T coverage with a Buy rating and a $42 price target. Unfortunately for AT&T, its stock has been largely range-bound while it awaits an outcome of its challenged acquisition of Time Warner, after it had already acquired DirecTV.

Ford
> Yield: 5.4%

Ford Motor Co. (NYSE: F) has had to endure peak-auto issues for some time, and the stock hasn’t been what it was a few years ago. That said, it’s $11.07 share price and $44 billion market cap come with a 5.4% yield. The $0.60 current annualized dividend is also expected to be up at $0.66 in 2019, but it may not grow after that even though the earnings per share estimate is closer to $1.60.

Ford recently was given a rare two-notch upgrade to Overweight at Morgan Stanley, and the firm outlined why the stock could rise to $15 in its call.

Kimco Realty Corp. (NYSE: KIM) is a shopping center REIT that was supposed to have about a 1% exposure to Toys “R” Us, and that has allowed its shares to slide from about $18 since the start of 2018. Kimco has a yield of 7.9%, and its current share price of $14.12 is less than the consensus target price of $18.05. Its $1.12 annualized dividend is expected to rise to $1.18 in 2020.

Kimco may have Toys “R” Us exposure, but it is making the pop-up shops easier to accommodate, and the company has outlined that its Toys “R” US exposure is just 1% and that those leases at risk are at sub-market rates that could bring upside.

L Brands
> Yield: 6%

L Brands Inc. (NYSE: LB) has been a poor performer in retail, with Victoria’s Secret, Bath & Body Works and others with 3,000 or so stores in North America. Its products are under names like Victoria’s Secret, PINK, Bath & Body Works, La Senza, Henri Bendel, C.O. Bigelow, White Barn and others. The slide of mall-based and shopping-center-based retail has taken a toll, with a current share price of $39.75 down from about $60 at the start of 2018. If analysts are right with the $48.60 consensus target, it may be too much of a drop. The $2.40 annualized payout generates a high 6% yields, and Thomson Reuters sees that dividend at $2.51 per share in 2020.

Despite the bashing and dismal stock performance, L Brands did beat earnings estimates, it did show some same-store sales growth and it has a share buyback. Investors just need to be reminded that it is sometimes painful trying to catch falling knives.

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PPL
> Yield: 6.0%

PPL Corp. (NYSE: PPL) shares have fallen about 10% since the start of 2018, and it has regulated utility operations in Pennsylvania, Kentucky, the United Kingdom and other areas. At $27.45 a share, it has a yield of 6%, based on the annualized $1.64 dividend. That is well under its expected earnings per share, and the dividend is expected to rise to $1.75 per share in 2020. PPL has a consensus target price of $32.65 and a $19 billion market cap.

PPL was a $40 stock last summer, and its attempts to recover in 2018 have disappointed, with shares down about 15% from the 2018 highs. That said, RBC did raise its rating to Outperform from Sector Perform in early March, and the firm assigned a $33 price target.

Welltower
> Yield: 6.5%

Welltower Inc. (NYSE: WELL) is also a REIT, but it invests in senior housing operators, post-acute providers and health systems. With a $19.6 billion market cap and a $52.85 share price, Welltower has a 6.5% yield, and analysts expect the annualized dividend of $3.48 to grow to $3.74 in 2020. This was a $60 stock as recently as January.

Welltower used to be Health Care REIT, with the former HCN ticker, and investors frequently hate name and ticker changes. It also has operations in Canada and the United Kingdom. JPMorgan maintained a Neutral rating on Welltower in mid-March, but cutting the target to $67 from $71 still implies a lot of upside if this has become oversold.