Finding stocks that are down big with S&P 500 trading in bear market territory is not hard these days. Finding the companies that also pay big dividends and are likely to keep them is a different story. Often, a one-off event occurs or an economic change damages the products or services a company provides, and that puts a big-time hurt on the share price. That is the time for nimble investors to buy the shares.
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One big advantage to buying beaten-down stocks with substantial dividends is that investors are paid to wait for the recovery. While that can sometimes be a lengthy period, four times a year the dividends will arrive. Selling covered call options also can enhance the income profile.
We screened our 24/7 Wall St. research database for well-known stocks that have been hammered for one reason or another, looking for solid ideas for investors. We found seven such companies that look ripe for the picking. Though 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.
Blackstone
Shares of this top money management company make sense for more aggressive growth and income investors. Blackstone Group L.P. (NYSE: BX) is one of the largest global alternative asset managers. Blackstone manages investments and provides services across four operating segments: Private Equity, Real Estate, Credit and Hedge Fund Solutions.
Blackstone launches and manages private equity funds, real estate funds, funds of hedge funds and credit-focused funds for its clients. It invests in private equity, public equity, fixed income and alternative investment markets.
Blackstone stock investors receive a 5.40% distribution. Deutsche Bank has a $153 price target, and the consensus target is just $119.33. The shares closed on Wednesday at $88.77 apiece.
British American Tobacco
This conglomerate got much bigger with the acquisition of Reynolds American in 2017. British American Tobacco PLC (NYSE: BTI) provides tobacco and nicotine products to consumers worldwide. It offers vapor products, tobacco heating products and modern oral products; combustible products; and traditional oral products, such as Swedish-style snus and American moist snuff. The company distributes its products to retail outlets.
The company’s New Categories business, which includes products outside of traditional cigarettes, saw revenues increase solidly over the past two years. It noted recently that non-combustible products, such as its Vuse vaping brand and Glo heated tobacco brand, now make almost 12% of total operations.
Shareholders receive a 7.50% dividend. In U.S. dollars, the Jefferies price target on British American Tobacco is $49.10. The consensus target is higher at $54.70, but the stock was last seen trading at $38.83.
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Coterra Energy
This company was formed by the closing of the $17 billion merger of Cabot Oil & Gas and Cimarex Energy in 2021. Coterra Energy Inc. (NASDAQ: CTRA) is an independent oil and gas company engaged in the development, exploration and production of oil, natural gas and natural gas liquids (NGLs) in the United States. It primarily focuses on the Marcellus Shale, with approximately 177,000 net acres in the dry gas window of the play located in Susquehanna County, Pennsylvania.
The company also holds Permian Basin properties with approximately 306,000 net acres and Anadarko Basin properties located in Oklahoma with approximately 182,000 net acres. In addition, it operates natural gas and saltwater disposal gathering systems in Texas. The company sells its natural gas to industrial customers, local distribution companies, oil and gas marketers, major energy companies, pipeline companies and power generation facilities.
As of December 31, 2021, it had proved reserves of approximately 2,892,582 thousand barrels of oil equivalent, which include 189,429 thousand barrels of oil and other liquid hydrocarbons, 14,895 billion cubic feet of natural gas and 220,615 thousand barrels of natural gas liquids.
The dividend yield is 8.98%. The $46 Wells Fargo target price is a Wall Street high. The consensus target is $37.38, and Coterra Energy stock closed on Wednesday at $28.68.
24/7 Wall St.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.
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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 an 8.23% dividend. B. Riley Securities has set a $49 target price, and the consensus target for Franchise Group stock is $48.00. Wednesday’s last trade came in at $29.81 a share.
FS KKR Capital
This very well-known name on Wall Street is offering a solid entry point at current levels. FS KKR Capital Corp. (NASDAQ: FSK) is a BDC specializing in investments in debt securities. It seeks to purchase interests in loans through secondary market transactions or directly from the target companies as primary market investments.
The company also seeks to invest in first lien senior secured loans, second lien secured loans and, to a lesser extent, subordinated or mezzanine loans. In connection with the debt investments, the firm also receives equity interests, such as warrants or options, as additional consideration. It also seeks to purchase minority interests in the form of common or preferred equity in our target companies, either in conjunction with one of the debt investments or through a co-investment with a financial sponsor.
On an opportunistic basis, the fund may invest in corporate bonds and similar debt securities. The fund does not seek to invest in start-up companies, turnaround situations or companies with speculative business plans. It seeks to invest in small and middle-market companies based in the United States. The fund seeks to invest in firms with annual revenue between $10 million and $2.5 billion. It seeks to exit from securities by selling them in a privately negotiated over-the-counter market.
The company posted stellar results for the most recent quarter, and announced a continuation of a huge stock buyback.
Shareholders are paid a massive 12.04% dividend. FS KKR Capital stock has a $25 price target at Jefferies. The consensus target is $22.81, and Wednesday’s close was at $19.77.
Kohl’s
The big-box discount retailer has had a rough year but may be offering investors some big upside potential, especially with the holiday shopping season on the way. Kohl’s Corp. (NYSE: KSS) operates as a retail company in the United States. It offers branded apparel, footwear, accessories and beauty and home products through its 1,100 stores, as of March 21, 2022, and website.
The company provides its products primarily under the Apt. 9, Croft & Barrow, Jumping Beans, SO, and Sonoma Goods for Life brand names, as well as Food Network, LC Lauren Conrad, Nine West and Simply Vera Vera Wang.
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Recently, several news organizations reported that Oak Street Real Estate Capital made an offer to buy $2 billion worth of its stores and lease them back to Kohl’s.
Kohl’s stock comes with a 7.06% dividend. Baird’s target price of $40 is well above the $31.00 consensus target. Shares closed on Wednesday at $27.90.
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. 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.
The company accepts various deposit products, such as interest-bearing checking and money market, savings, non-interest-bearing and individual retirement accounts, as well as certificates of deposit. Its loan products include multifamily loans; commercial real estate loans; specialty finance loans and leases; and commercial and industrial loans; acquisition, development and construction loans; one-to-four family loans; and consumer loans.
The company also offers annuities, life and long-term care insurance products and mutual funds; cash management products; and online, mobile and phone banking services. It primarily serves individuals, small and midsize businesses, and professional associations through a network of 237 community bank branches and 340 ATM locations.
Shareholders receive a 7.20% dividend. The BofA Securities price target is $11. That is shy of the $11.36 consensus target. New York Community Bancorp stock ended Wednesday trading at $9.36.
While a few of these top companies are somewhat off the radar, they all have a reasonably strong moat around their businesses. These seven stocks offer investors outstanding entry points and some of the biggest dividends, and they are Buy-rated at top Wall Street firms.
We are in one of the worst economic periods in America in decades. Profligate government spending combined with a Federal Reserve that never saw the wave of inflation coming until it was too late (and even admitted it) and now is likely forced to throw the economy in a deep recession. Given that, buying stocks that will pay dependable dividends until this mess is sorted out makes total sense now.
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