8 Stocks in the Penalty Box That Offer Big Upside and Passive Income Dividends as High as 9%

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Finding stocks that are trading down after the worst first half for the S&P 500 in over 50 years, and a third quarter that is rolling over big time, is not hard these days. Finding the companies that also pay big dividends and are likely to keep them is a different story. Often companies end up in a situation where a one-off event occurs, or a change in the economy that can damage the products or services a company provides puts a big-time hurt on the prices of the stock. That is the time for nimble investors to buy shares.
One big advantage to buying beaten-down stocks with substantial dividends is that investors are paid to wait for the recovery. While that sometimes can be a while, four times a year the dividends will arrive. In addition, selling covered call options also can enhance the income profile.

We screened our 24/7 Wall St. research database looking for well-known stocks that have been hammered, looking for solid ideas for investors. These eight well-known stocks look ripe for the picking, and all are rated Buy on Wall Street.

It is important to remember that no single analyst report should be used as the sole basis for any buying or selling decision.


This maker of tobacco products offers value investors a great entry point now as it has been hit as cigarette sales have slowed. Altria Group Inc. (NYSE: MO) is the parent company of Philip Morris USA (cigarettes), UST (smokeless), John Middleton (cigars), Ste. Michelle Wine Estates and Philip Morris Capital. PMUSA enjoys a 51% share of the U.S. cigarette market, led by its top cigarette brand Marlboro.

Altria also owns over 10% of Anheuser-Busch InBev, the world’s largest brewer. In 2008, it spun off its international cigarette business to shareholders. The stock was pounded recently, as last month the U.S. Food and Drug Administration announced the ban of all sales of Juul vape pens. This decision was made after pleas from government officials and public health institutes.

Last week, Juul Labs agreed to pay $438.5 million to settle claims by 34 U.S. states and territories that it downplayed its products’ risks and targeted underage buyers, several states announced. As part of the settlement, Juul has agreed to refrain from some kinds of marketing, including the use of cartoons, product placement and depictions of users under 35. The deal stems from a two-year investigation led by Connecticut, Texas and Oregon.

Altria already has marked down the investment, and while everything gets sorted out, investors will receive a 9% dividend. Deutsche Bank has a $46 target price on Altria stock, and the consensus target is even higher at $49.28. The shares ended Thursday trading at $42.01 apiece.


The legacy telecommunications company has been going through a long restructuring, has lowered its dividend and has sold off or merged underperforming assets. AT&T Inc. (NYSE: T) provides telecommunications, media and technology services worldwide.
AT&T’s Communications segment offers wireless voice and data communications services and sells handsets, wireless data cards, wireless computing devices with carrying cases and hands-free devices through its own company-owned stores, agents and third-party retail stores.
The company also provides data, voice, security, cloud solutions, outsourcing and managed and professional services, as well as customer premises equipment for multinational corporations, small and midsized businesses, and governmental and wholesale customers. In addition, it offers broadband fiber and legacy telephony voice communication services to residential customers.

The company markets its communications services and products under the AT&T, Cricket, AT&T Prepaid and AT&T Fiber brand names. The company’s Latin America segment provides wireless services in Mexico and video services in Latin America. This segment markets its services and products under the AT&T and Unefon brand names.

AT&T stock investors receive a 6.62% dividend. The Raymond James price objective is $26, while the consensus target is $21.45. The stock closed on Thursday at $16.76.

Best Buy

The need for the electronics and gear to set up a “work from home” office has been a huge tailwind for this leading retailer, and while the holidays are on the way, retailers have been getting hit hard. Best Buy Inc. (NYSE: BBY) is a top specialty retailer of consumer electronics in the United States and Canada. As of January 30, 2022, it had 1,144 stores.

Those stores provide computing products, such as desktops, notebooks and peripherals; mobile phones comprising related mobile network carrier commissions; networking products; tablets covering e-readers; smartwatches; and consumer electronics consisting of digital imaging, health and fitness, home theater, portable audio comprising headphones and portable speakers, and smart home products.

Its stores also offer appliances, such as dishwashers, laundry, ovens, refrigerators, blenders, coffee makers and vacuums; entertainment products consisting of drones, peripherals, movies, music and toys, as well as gaming hardware and software, and virtual reality and other software products; and other products, such as baby, food and beverage, luggage, outdoor living and sporting goods.

In addition, Best Buy provides consultation, delivery, design, health-related, installation, memberships, repair, set-up, technical support and warranty-related services. The company offers its products through stores and websites under the Best Buy, Best Buy Ads, Best Buy Business, Best Buy Health, CST, Current Health, Geek Squad, Lively, Magnolia, Best Buy Mobile, Pacific Kitchen, Home, and Yardbird banners.

Shareholders receive a 4.79% dividend. D.A. Davidson’s price target of $99 is well above the $79.90 consensus target and the most recent close at $72.42.

Franchise Group

This way-off-the-radar idea could be a total return home run for investors. Franchise Group Inc. (NYSE: FRG) owns and operates franchised and franchisable businesses.
The Vitamin Shoppe segment operates as an omnichannel specialty retailer of vitamins, minerals, herbs, specialty supplements, sports nutrition and other health and wellness products under the BodyTech, True Athlete, The Vitamin Shoppe, ProBioCare, Fitfactor Weight Management System and Vthrive The Vitamin Shoppe brands.

The Pet Supplies Plus segment operates as an omnichannel retail chain and franchisor of pet supplies and services that includes premium brands, proprietary private labels and specialty products, as well as offers grooming, pet wash and other services.

The Badcock segment operates as a specialty retailer of furniture, appliances, bedding, electronics, home office equipment, accessories and seasonal items in a showroom format. It offers multiple and flexible payment solutions and credit options through its consumer financing services.

The American Freight segment operates a retail chain that provides in-store and online access to furniture, mattresses, new and out-of-box home appliances, and home accessories. It also serves as a liquidation channel for appliance vendors.

The Buddy’s segment operates as a specialty retailer of consumer electronic, residential furniture, appliances and household accessories through rent-to-own agreements.

The Sylvan segment establishes and grows as a franchisor of supplemental education for Pre-K-12 students and families in the United States and Canada.

Investors receive a 7.50% dividend. The $45 Oppenheimer target price is less than the $48.00 consensus figure. Thursday’s final Franchise Group stock trade came in at $33.08.

Gilead Sciences

This stock is trading at a very reasonable 9.05 times estimated 2022 earnings and has big-time upside potential. Gilead Sciences Inc. (NASDAQ: GILD) is a research-based biopharmaceutical company that discovers, develops and commercializes medicines in the areas of unmet medical need in the United States, Europe and elsewhere.

The company provides Biktarvy, Genvoya, Descovy, Odefsey, Truvada, Complera/Eviplera, Stribild and Atripla products for the treatment of human immunodeficiency virus (HIV) infection; Veklury, an injection for intravenous use, for the treatment of coronavirus disease 2019; and Epclusa, Harvoni, Vosevi, Vemlidy and Viread for the treatment of liver diseases. It also offers Yescarta, Tecartus, Trodelvy and Zydelig products for the treatment of hematology, oncology and cell therapy patients.
In addition, Gilead provides Letairis, an oral formulation for the treatment of pulmonary arterial hypertension; Ranexa, an oral formulation for the treatment of chronic angina; and AmBisome, a liposomal formulation for the treatment of serious invasive fungal infections.
The company has collaboration agreements with Arcus Biosciences, Pionyr, Tizona, Tango Therapeutics, Jounce Therapeutics, Galapagos, Janssen, Japan Tobacco, Gadeta, Bristol-Myers Squibb, Merck and Novo Nordisk.

Gilead Sciences stock comes with a 4.48% dividend. Oppenheimer’s $90 price objective is the highest on Wall Street. The consensus target is $70.78, and Thursday’s closing print was $65.00.

Holly Energy Partners

This limited partnership is owned by HollyFrontier, and it is a solid dividend play but has traded down as crude oil has been hit. Holly Energy Partners L.P. (NYSE: HEP) owns and operates petroleum product and crude pipelines, storage tanks, distribution terminals, loading rack facilities and refinery processing units that support the refining and marketing operations of HollyFrontier in West Texas, New Mexico, Utah, Nevada, Oklahoma, Wyoming, Kansas, Arizona, Idaho and Washington.

The company’s refined product pipelines transport conventional gasolines, reformulated gasolines and low-octane gasolines for oxygenate blending, as well as distillates, such as high- and low-sulfur diesel and jet fuels and liquefied petroleum gases. Its intermediate product pipelines transport intermediate feedstocks and crude oils; and its oil trunk, gathering and connection pipelines deliver crude oil.

It operates 26 main pipelines; crude gathering networks; 10 refined product terminals; a crude terminal; 31,800 track feet of rail storage; seven locations with truck or rail racks; and tankages at six refining facility locations, as well as five refinery processing units.

Investors receive a 7.51% distribution, which appears safe for now. Raymond James has set a $20 price target. Holly Energy Partners stock has an $18 consensus target, and Thursday’s close was at $18.36.

LyondellBasell Industries

This top chemical company with a sterling balance sheet is another solid play for conservative investors, after being hammered over the past three months despite posting solid results. LyondellBasell Industries N.V. (NYSE: LYB) manufactures chemicals and polymers, refines crude oil, produces gasoline blending components and develops and licenses technologies for production of polymers.

Over half of earnings are generated in the company’s Olefins and Polyolefins Americas segment, where costs are linked to the price of cheap natural gas in the United States, while selling prices are correlated with the price of oil. The company has pursued a strategy of low-cost, high return on invested capital debottlenecks coupled with cash returns to shareholders.
Note that debottlenecking is the process of identifying specific areas or equipment in oil and gas facilities that limit the flow of product (known as bottlenecks) and optimizing them so that overall capacity in the plant can be increased.

The dividend yield here is 6.03%. LyondellBasell Industries stock has a $102 price target at Barclays. That compares to the $97.76 consensus target and a closing price of $78.69 a share on Thursday.

New York Community Bancorp

This somewhat off-the-radar company pays a huge dividend and is an attractive idea for investors also looking to own financials now, as they have been hit hard recently. New York Community Bancorp Inc. (NYSE: NYCB) operates as the bank holding company for New York Community Bank, which provides banking products and services in New York, New Jersey, Ohio, Florida and Arizona.

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