With 2020 rapidly and thankfully coming to a close, many investors are evaluating portfolios for 2021. After what was an incredible run off the March and then the September lows, many on Wall Street feel that the stock markets are fully valued, many trades are very crowded and small investor bullish sentiment as reflected by small lot call option trading is flashing a huge warning sign.
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What many on Wall Street feel makes sense for 2021 are dividend-paying stocks with solid growth potential that can deliver solid total return. Total return is the amount of value an investor earns from a security over a specific period, typically one year, when all distributions are reinvested. Total return is expressed as a percentage of the amount invested.
We screened the BofA Securities US 1 list, which contains the firm’s top 37 stock picks, looking for companies that pay a higher dividend the S&P 500 index of 1.62%. Five do, and all make sense for investors looking for great stock ideas and income. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
AES
This off-the-radar choice has solid upside potential from current levels. AES Corp. (NYSE: AES) owns and operates power plants to generate and sell power to customers, such as utilities, industrial users and other intermediaries. The company also owns and operates utilities to generate or purchase, distribute, transmit and sell electricity to end-user customers in the residential, commercial, industrial and governmental sectors. It also generates and sells electricity to the wholesale market.
AES uses a range of fuels to generate electricity, including natural gas, coal, hydro, wind, energy storage, oil, diesel, petroleum coke, biomass, landfill gas and solar. The company owns and operates a generation portfolio of approximately 29,352 megawatts. It has operations in the United States, Chile, Colombia, Argentina, Brazil, Mexico, Central America, the Caribbean, Europe and Asia.
A domestic and global player, 28% of the company’s capacity is derived from South American generation, 26% from North American generation and 19% from North American utilities.
Shareholders receive a 2.83% dividend. The BofA Securities price objective for the shares is $23, and the Wall Street consensus target is $18.11. AES stock closed on Monday at $21.30 per share.
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