Investing

Sky-High Dividend Stocks With Massive Upside

24/7 Wall St. Staff

Published: March 31, 2024 11:45 am

We’ve found five stocks that pay yields of around 6% or more and that appear to be capable of maintaining those yields for the next 12 months. All depend on a recovering U.S. economy over the longer term, but for now, they offer the returns and level of safety that define value stocks.

Altria Group Inc.

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• Ticker Symbol: NYSE: MO
• Dividend Yield: 8.36%
• Industry: Tobacco

The company recently received FDA approval to sell its heat-not-burn IQOS system, licensed from Philip Morris, in the United States. While tobacco shipments continue to slide, Altria’s ability to raise prices never ceases to amaze.

Annaly Capital Management Inc.

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• Ticker Symbol: NYSE: NLY
• Dividend Yield: 11.8%
• Industry: Banking

Annaly Capital Management Inc. currently trades at a sharp discount to its book value of $8.39. Even though Annaly lowered its dividend from $1.00 annualized to $0.88, analysts at Deutsche Bank raised the stock’s rating from Hold to Buy on July 24 and lifted its price target from $6.75 to $7.75. A week later, the bank affirmed the rating and raised the price target to $8.00.

AT&T Inc.

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• Ticker Symbol: NYSE: T
• Dividend Yield: 7.00%
• Industry: Telecommunications and Media

AT&T is not receiving anticipated revenue for advertising around sports events. The company also expects lower revenue in the current quarter as movie theaters remain closed and new movie releases are delayed. Through it all, though, AT&T has said it expects to maintain a total dividend payout in the 60% range. July’s payout was at the low end of the company’s anticipated range.

Seagate Technology PLC

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• Ticker Symbol: NASDAQ: STX
• Dividend Yield: 5.80%
• Industry: Data Storage & Management

Seagate Technology PLC posted weak fiscal fourth-quarter results last week, and the stock lost close to 10% of its value as a result. Flat revenue guidance also was disappointing. However, annual earnings remain close to $2 per share higher than the company’s payout of $2.60 per share, and its dividend still looks defensible.

Valero Corp.

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• Ticker Symbol: NYSE: VLO
• Dividend Yield: 7.30%
• Industry: Oil and Gas

Valero took a hit during the shutdown as sales of gasoline and other refined products went way south during the various shutdowns in recent memory. With some pricing normalization returning, the company recently reaffirmed its dividend and continues to target a long-term total payout ratio between 40% and 50% of adjusted net cash provided by operating activities. Valero ended its second quarter with $12.7 billion of total debt and finance lease obligations and $2.3 billion of cash and cash equivalents.