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The market has shaped itself into a completely different machine today, hungry for yield and low-risk assets. Luckily, a list of stocks across other sectors brings you reliable dividends with some available upside equities. Take your pick according to what your portfolio calls for, and enjoy the ride.
Today’s focus is finding stocks that can offer a high dividend yield, preferably above the near 5.0% from the treasury bonds. Ideally, these higher yields still carry some of the low-risk nature of bonds, with a bit of the upside appreciation potential of stocks. Using tools like MarketBeat’s stock screening tool can help you find – and filter – through some of these stocks offering a high yield; however, the homework has been done to bring you a list of stable yields with some added upside on top.
Icahn Enterprises
Everyone knows about Carl Icahn, often called the most feared man on Wall Street because of his ruthless activist strategies. Little do these people know, he runs Icahn Enterprises, a holding company enabling the everyday investor to ride the benefits of his system.
Because the fund’s strategies rely on heavy financing to make its acquisitions, it is negatively correlated (moves in the opposite direction) to bond yields or other interest rate benchmarks. On a year-to-date basis, Icahn has declined by as much as 65.4%, underperforming the market by 78.4%. Understanding that the fund has significant exposure to real estate, the automotive sector, and energy names can make it clear why the fund’s value has declined by so much.
Considering that, as of the second quarter of 2023, the fund counted with $6.5 billion of total liquidity, shareholder benefits seem safer than ever. As the holdings keep pumping out free cash flow to the fund, shareholders will likely keep receiving their quarterly dividend payout of $2.0 a share, making for an annual dividend yield of 22.4%. Analysts share this lack of concern with their $27.0 price target, which requires a rally of up to 51.2%.
Altria Group
If the potential price swings in Icahn are too much for your stomach to handle without reaching for the Tums pack, then this stock may be a better choice for you. With a still highly competitive annual dividend yield of 9.1%, Altria Group is a great way to diversify some of the volatility. Regarding the bottom line, Altria has achieved a steady and impressive net income margin of roughly 25% over the past five years.
With an ROIC (return on invested capital) rate hovering around 25-30%, long-term compounding returns will also be on your side. The catch? There doesn’t seem to be one so far; you could lock in the dividend rate today while still enjoying the extra compounding effects.
Petrobras
Jumping over to international markets, which have by far the least attention drawn in today’s uncertain market conditions, this stock offers all the signs of undervaluation at a mouth-watering dividend yield. Petrobras is a Brazilian energy company, in fact, one of the biggest in the country.
Today’s stock is offering you a 21.8% dividend yield; just how stable and this one is becomes the main question to tackle. Well, the financials again speak for themselves; with a gross margin of 48-50%, this company clearly showcases its entrenched relationships with the government and its pricing power. Net income margins have also shown to be strong industry-leading, with an average rate of 25% over the past five years.
So don’t be fooled by the lack of analyst bullishness; this stock can give you the yield you need alongside the upside to cushion through a domestic market slowdown.
