One of the best ways to build wealth is by investing in down, but not out stocks, which also carry hefty dividends. Not only can you make money as you wait for the stock to recover, but you can also benefit from high dividend returns along the way.
Look at Target, for example.
Target (NYSE: TGT) has been in a steady downtrend thanks to economic uncertainty, supply chain issues, and a series of controversial political issues.
However, despite the pullback, the retailer continues to hike its dividends. With the streak now at 54 years, Target is a Dividend King, with a yield of 5%. The company’s next dividend of $1.14 per share was paid on September 1, marking its 232nd increase.
We also have to consider that Target’s current valuation factors in a great deal of negativity – especially as it traded at 10.5x earnings, as compared to Walmart’s 38.
Also, as noted by Seeking Alpha, “Despite ongoing margin and sales headwinds from tariffs and a cautious consumer environment, management is maintaining full-year guidance and targeting $15 billion in sales growth over the next five years.”
PepsiCo
With a yield of 3.95%, PepsiCo (NASDAQ: PEP) is just starting to pivot higher after dipping to $140 a share. Now at $144.23, we’d like to see PEP retest $155 near-term.
Even better, PEP just declared a quarterly dividend of $1.4225, which is payable on September 30 to shareholders of record as of September 5. This now marks the company’s 53rd consecutive annual dividend increase since 1965.
Helping, analysts at TD Cowen just raised their price target on PEP to $155 after Elliott Management took a $4 billion activist stake in the food and beverage stock.
“PepsiCo today represents a rare chance to revitalize a leading global enterprise and unlock significant shareholder value,” added Elliott Management, as quoted in the firm’s letter to PepsiCo’s board.
United Parcel Service
If you have patience, UPS (NYSE: UPS) is another dividend stock to consider.
Now at $84 a share, with a yield of 7.75%, we can collect its yield while we wait for its eventual recovery. Most recently, UPS declared a $1.64 quarterly dividend, which was payable on September 4 to shareholders of record as of August 18.
We also have to consider that a good deal of negativity has been priced into the stock. And according to Seeking Alpha, “Management reiterated their commitment to cost control, network optimization, and growth in healthcare logistics, positioning UPS for improved long-term competitiveness and shareholder value creation once market conditions stabilize.”
Again, this one will involve a lot of patience. But while you wait, you can at least collect its quarterly payouts.
Southern Co.
With a yield of 3.21%, oversold shares of Southern Co. (NYSE: SO) are also on sale.
Over the last few weeks, SO fell from about $95.64 to a recent low of $90.53. Fueling some of the pullback, analysts at Wolfe Research downgraded the SO stock to peer perform, as it traded at a 25% premium to the utility average 2026 earnings multiple.
With negativity now priced into the SO stock, we’d like to see it rally back to $95 initially.
In addition, with an unstoppable artificial intelligence boom, we’ll see a bigger need for data centers, which will benefit companies like Southern Co.
As noted by Wells Fargo, after years of flat power growth in the U.S., electricity demand could grow as much as 20% by 2030. Again, because of the AI data center demand.
“AI data centers alone are expected to add about 323 terawatt hours of electricity demand in the U.S. by 2030, according to Wells Fargo. The forecast power demand from AI alone is seven times greater than New York City’s current annual electricity consumption of 48 terawatt hours. Goldman Sachs projects that data centers will represent 8% of total U.S. electricity consumption by the end of the decade,” says CNBC.
Amcor
Amcor (NYSE: AMCR) is a global leader in developing and producing consumer packaging and dispensing solutions across a variety of materials for nutrition, health, beauty, and wellness categories.
Most recently, the stock slipped after missing on top and bottom line estimates. Its EPS of 20 cents was missed by two cents. Revenue of $5.08 billion, up 43.5% year over year, missed by $100 million. However, the stock appears to have priced in the miss, catching support at $8.33.
Making it even more attractive, the company will pay a quarterly dividend of $0.1275 on September 25 to shareholders of record as of September 5.
Plus, analysts at Goldman Sachs just initiated coverage of AMCR with a buy rating, noting that “While the company’s demand backdrop remains challenging, Amcor’s valuation at current levels provides support,” as quoted by Tip Ranks.
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