High-yield dividend stocks are gaining attention from value-conscious investors as the AI-led rally pushes stock valuations higher. The Madison Dividend Income Fund believes that dividend stocks will rebound, especially in sectors like Energy, Industrials, and Financials, which have seen significant gains. According to Bank of America Global Research, some dividend funds are currently undervalued compared to the S&P 500.
Wall Street analysts are also recommending dividend stocks in the current volatile market environment. JoAnne Feeney, Partner and Portfolio Manager at Advisors Capital Management, advises investors to focus on “good” companies that pay dividends and take a long-term view to navigate through market volatility.
Here are five high-yield dividend stocks with over 20% upside potential:
1. Vale SA: Brazilian metals and mining company Vale SA has a dividend yield of 11% and a 40% upside potential, according to Wall Street analysts.
2. BP PLC: British oil giant BP PLC has a dividend yield of 4.9% and a 22.35% upside potential based on analyst price targets.
3. KeyCorp: Cleveland-based banking company KeyCorp offers a 6% yield and has over 20% upside potential, with analysts estimating a target price of $16.44.
4. Rio Tinto PLC ADR Common Stock: Mining giant Rio Tinto pays dividends semiannually and has a yield of over 6.5%, with a 23% upside potential according to analysts.
5. UGI Corporation: Pennsylvania-based natural gas and power distribution company UGI Corp. has a dividend yield of 6.7% and a 39% upside potential based on analyst estimates.
These high-yield dividend stocks present opportunities for investors looking for steady income and potential stock price appreciation. Considered undervalued by some analysts, these stocks offer a way to navigate through market volatility and achieve long-term growth.