Dividend stocks are out of favor, but here are 19 that Wall Street loves


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With the S&P 500 Index hitting a new record on April 9, investors are very concerned that stock-to-earnings valuations have become too rich. Even high dividend yielding stocks are mostly out of favor with analysts.

But there are a handful that stand out. Nineteen stocks with high yields and majority support among analysts are listed below.

Wall Street analysts – that is, those who work for brokerage firms – are known as “selling” analysts in the securities industry. Brokerage firms not only help their clients to invest, but they also guarantee the issuance of shares by the companies, which means that the brokers have to sell those shares to their clients.

So any sell-side analyst likely knows their industry group inside out and uses a methodical process to estimate profits, set price targets, and assign buy, sell, or neutrality ratings. But as a group, analysts’ ratings are quite positive. Among the constituents of the S&P 500 benchmark, there is a majority of “buy” or equivalent ratings for 281 companies among the selling analysts surveyed by FactSet.

There is a majority of “sell” ratings for just two companies: American Airlines Group Inc. and Lumen Technologies Inc. which was previously known as CenturyLink before changing its name in October.

Lumen actually has a very high dividend yield of 7.75%. The stock has fallen 35% (with dividends reinvested) so far in 2021. But even after that gain, the stock’s five-year total return has been -35% and its 10-year return has was -28%. The company reduced its quarterly dividend to one dollar per share from $ 2.16 in February 2019.

High yield stocks preferred by analysts

Among the S&P 500, 55 stocks have dividend yields of 3.50% or more. It may not sound exciting, but it compares to a low yield of 1.68% on 10-year US Treasuries.

Of those 55 stocks, analysts polled by FactSet have majority “buy” ratings on just 19. That’s 35%, compared to majority “buy” ratings of 56% for the S&P 500 as a whole.

Here are the 19 S&P 500 stocks with dividend yields of at least 3.50% with majority or equivalent “buy” ratings among Wall Street analysts. The list is sorted by dividend yield:

You can get a lot more information about each business, including price ratios and news coverage. by looking for its stock symbol at the top right of this page.

Only Healthpeak Properties Inc. has cut its dividend over the past five years, reducing its quarterly payout from 19% to 30 cents per share on February 9. The company previously lowered its dividend from 36% to 37 cents in 2016 when its retirement home business was split.

Williams Cos. Inc and Chevron Corp. provide an overview of what happened in the energy field during the COVID-19 pandemic. Here’s a comparison of the total returns of the two companies and the S&P 500, with the price movement for West Texas crude oil contract prices in a continuous month since the end of 2019:

Williams is an oil refiner and pipeline operator, while Chevron is an integrated oil company. It was not surprising to see both plummet as demand for fuel crater during the pandemic’s most painful period for financial markets. But with a 20/20 pullback, inventory declines appear to be overreacting.

Williams has come back strong, producing a return of just -8% in 2020. The stock is up 20% so far in 2021. Chevron was down 26% in 2020 and has returned 24% so far in 2021.

Analysts see a lot of higher prices for both companies, as you can see in the chart – and that excludes dividends.

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