Investing

6 Value Stocks With Massive Dividend Growth Potential

Lee Jackson

Published: January 9, 2024 12:03 pm

For years, analysts and portfolio managers have anticipated the return of value stocks as the market has moved higher, and for years, they have continued to underperform growth stocks. However, that appears to be changing in 2024, as almost every metric, from valuations to earnings for the growth arena, has started to roll over some.

Value stocks are typically defined as shares of a company with solid fundamentals priced below its peers, based on price/earnings ratio analysis, yield, and other factors.

We screened our 24/7 equity research database, looking for actual value stocks rated Buy by top Wall Street firms that pay healthy and growing dividends. Six top companies hit our screens, and all make sense now.

Enterprise Products Partners

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This company is a leading North American provider of midstream energy services to producers and consumers. Enterprise Products Partners L.P. (NYSE: EPD) provides various midstream energy services, including:

• Gathering, processing, transporting, and storing natural gas
• Natural gas liquids (NGL) fractionation
• Import and export terminalling
• Offshore production platform services

The company has four reportable business segments:

• Natural Gas Pipelines and Services,
• NGL Pipelines and Services,
• Petrochemical Services
• Crude Oil Pipelines and Services.

One of the reasons many analysts like the stock might be its distribution coverage ratio. The company’s distribution coverage ratio is well above 1x, making it relatively less risky in the MLP sector.

Enterprise investors are paid a strong 7.49% distribution, which has been increased for the last 24 years.

Equity Residential

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This apartment REIT company owns properties in high-growth U.S. cities and pays a very tempting 4.37% dividend. Equity Residential Inc. (NYSE: EQR) is an S&P 500 company focused on acquiring, developing, and managing high-quality apartment properties.

The company is focused on operating in top U.S. growth markets in and around dynamic cities that attract high-quality, long-term renters.

Equity Residential owns or has investments in 305 properties of 80,683 apartment units in:

• Boston
• New York
• Washington, D.C.
• Seattle
• San Francisco
• Southern California
• Denver

In addition, the company has been expanding its presence in Denver, Atlanta, Dallas, Fort Worth, and Austin.

Exelon

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This top utility stock makes good sense now for conservative accounts and pays a 3.97% dividend. Exelon Corporation (NYSE: EXC) is a utility services holding company that engages in:

• Energy generation
• Delivery
• Marketing businesses in the United States and Canada.

Exelon owns nuclear, fossil, wind, hydroelectric, biomass, and solar facilities.

The company also sells electricity to wholesale and retail customers and sells natural gas, renewable energy, and other energy-related products and services

Additionally, it is involved in purchasing and regulating retail sales of electricity and natural gas, transmission and distribution of electricity, and distribution of natural gas to retail customers

Exelon offers support services, including:

• Legal
• Human resources
• Information technology
• Financial
• Supply management
• Accounting
• Engineering
• Customer operations
• Distribution and transmission planning
• Asset management
• System operations and power procurement services

It serves distribution utilities, municipalities, cooperatives, financial institutions, and commercial, industrial, governmental, and residential customers.

Morgan Stanley

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This is one of Wall Street’s white glove firms and may be among the best buys in the banking and investment arena. It pays a rich 3.65% dividend. Morgan Stanley (NYSE: MS) is a global investment bank with leading positions in:

• Investment banking (M&A and equity underwriting)
• Equity trading and wealth management, contributing nearly 50% of firmwide revenues

The firm also has an asset management business, which adds to the lower-risk business profile the firm has pursued since the financial crisis.

In late 2020, the company completed a $13 billion purchase of the discount brokerage—E-Trade, with 5.2 million customers. Morgan Stanley ushered in a revolutionary platform that helped start a dramatic shift among financial services firms and fueled the rise of indexes and exchange-traded funds, making investing vastly easier for do-it-yourself investors.

Pfizer

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This top pharmaceutical stock was a massive winner in the COVID-19 vaccine sweepstakes but has been crushed as many are not getting boosters. Pfizer Inc. (NYSE: PFE) discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products worldwide and pays a massive 5.70% dividend, which has risen yearly for the last 14 years.

The company offers medicines and vaccines in various therapeutic areas, including:

• Cardiovascular metabolic and women’s health under the Premarin family and Eliquis brands
• Biologics, small molecules, immunotherapies, and biosimilars under the Ibrance, Xtandi, Sutent, Inlyta, Retacrit, Lorbrena, and Braftovi brands
• Sterile injectable and anti-infective medicines, and oral COVID-19 treatment under the Sulperazon, Medrol, Zavicefta, Zithromax, Vfend, Panzyga, and Paxlovid brands

Pfizer also provides medicines and vaccines in various therapeutic areas, such as:

• Pneumococcal disease
• Meningococcal disease
• Tick-borne encephalitis
• COVID-19 under the Comirnaty/BNT162b2, Nimenrix, FSME/IMMUN-TicoVac, Trumenba, and the Prevnar family brands
• Biosimilars for chronic immune and inflammatory diseases under the Xeljanz, Enbrel, Inflectra, Eucrisa/Staquis, and Cibinqo brands
• Amyloidosis, hemophilia, and endocrine diseases under the Vyndaqel/Vyndamax, BeneFIX, and Genotropin brands.

Verizon Communications

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This top telecommunications company currently offers tremendous value and pays a stellar 6.62% dividend. Verizon Communications, Inc. (NYSE: VZ)  provides products and services to consumers, businesses, and governmental entities worldwide.

The company operates in two segments:

• Verizon Consumer Group
• Verizon Business Group

The consumer segment provides

• Wireless services across the wireless networks in the United States under the Verizon and TracFone brands and through wholesale and other arrangements
• Fixed wireless access (FWA) broadband through its wireless networks.

It also offers wireline services in the Mid-Atlantic, Northeastern United States, and Washington D.C. through its fiber-optic network, Verizon Fios product portfolio, and a copper-based network.

The Business segment provides:

• Wireless and wireline communications services and products, including data, video, conferencing
• Corporate networking, security
• Managed network, local and long-distance voice, network access, various IoT services and products, and FWA broadband through its wireless networks