- Investors are increasingly looking for stocks that offer both reliable income and growth potential.
- Using the InvestingPro Stock Screener, I found several high-quality dividend-paying stocks with strong upside ahead.
- Below are three stocks that are expected to provide some of the highest returns based on the InvestingPro models.
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In today’s market, finding stocks that offer both high dividend yields and significant upside potential is a rare combination.
However, using the InvestingPro ‘I Dream of Dividends’ stock screener, I have identified three stocks that tick both boxes: Franklin Resources (NYSE:), LyondellBasell Industries (NYSE:), and Conagra Brands (NYSE:).
Source: InvestingPro
All three of these companies provide generous dividend payouts and substantial growth potential, making them attractive investments for income-focused investors seeking to maximize returns.
Let’s discuss the three picks in detail below.
1. Franklin Resources
- Dividend Yield: 6.04%
- InvestingPro Fair Value Upside: +33.3%
Franklin Resources, a global investment management powerhouse, stands out with a hefty 6.04% dividend yield and 33.3% upside potential, according to InvestingPro’s quantitative models, making it an enticing option for income investors.
The San Mateo, California-based company, known for managing mutual funds and other investment products, has built a diverse portfolio that spans equities, fixed income, and alternative assets like private equity.
Source: InvestingPro
The tailwinds expected to drive Franklin Resources’ earnings and sales growth include the ongoing recovery in financial markets, rising demand for actively managed funds, and the company’s push towards alternative investments like real estate and private equity.
Moreover, as interest rates potentially peak, Franklin Resources stands to benefit from greater investor confidence and inflows into its fixed income products, providing a dual benefit of income and capital appreciation.
With financial markets on the mend and investors increasingly favoring active management in volatile conditions, Franklin Resources looks set to capitalize on these trends, offering both income and upside potential.
2. LyondellBasell
- Dividend Yield: 5.97%
- InvestingPro Fair Value Upside: +18.1%
LyondellBasell, one of the world’s largest plastics, chemicals, and refining companies, combines a 5.97% dividend yield with 18.1% upside potential according to InvestingPro’s models, making it a standout for investors looking for a high-yield stock with growth drivers.
The Houston, Texas-based company is integral to industries such as packaging, automotive, and construction, thanks to its production of essential chemicals and polymers used in everyday products.
Source: InvestingPro
A key growth catalyst for LyondellBasell is the rising global demand for its products, particularly in emerging markets where industrialization and infrastructure projects are driving consumption.
Additionally, the company’s strong position in North America’s energy sector and its ongoing focus on sustainability and circular economy initiatives are likely to drive future growth.
With its significant cash flow and shareholder-friendly capital allocation policies, LyondellBasell remains a compelling high-yield play with solid upside potential.
3. Conagra Brands
- Dividend Yield: 4.74%
- InvestingPro Fair Value Upside: +13.6%
Conagra Brands, a leader in branded food products, rounds out the list with a 4.74% dividend yield and 13.6% upside potential based on InvestingPro’s models.
The packaged foods company’s well-known portfolio includes household names like Healthy Choice, Slim Jim, and Marie Callender’s. Conagra has been capitalizing on rising consumer demand for frozen and packaged foods, particularly amid ongoing economic uncertainty where consumers are shifting towards more cost-effective meal options.
Source: InvestingPro
Tailwinds driving Conagra’s earnings growth in the coming quarters include the company’s ability to manage input cost inflation, its strong pricing power, and continued innovation within its product lineup.
Additionally, Conagra’s focus on premiumization in its frozen food and snacks categories is expected to boost sales and margins, further bolstering its long-term growth potential.
With solid fundamentals and a growing dividend, Conagra presents an appealing investment for both income seekers and growth investors alike.
Conclusion
Franklin Resources, LyondellBasell, and Conagra Brands are three high-yield dividend stocks offering significant upside potential.
Each of these companies also boasts an above-average InvestingPro Financial Health score, highlighting their financial strength and ability to navigate economic challenges.
Additionally, analysts have been increasingly bullish on these stocks, with multiple upward revisions to their earnings estimates in recent weeks, signaling confidence in their growth trajectories.
For investors seeking a blend of income and growth, these three high-yield dividend stocks are well-positioned to deliver strong returns in the quarters ahead.
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Disclosure: At the time of writing, I am long on the S&P 500, and the Nasdaq 100 via the SPDR® S&P 500 ETF, and the Invesco QQQ Trust (NASDAQ:) ETF. I am also long on the Technology Select Sector SPDR ETF (NYSE:XLK).
I regularly rebalance my portfolio of individual stocks and ETFs based on ongoing risk assessment of both the macroeconomic environment and companies’ financials.
The views discussed in this article are solely the opinion of the author and should not be taken as investment advice.
Follow Jesse Cohen on X/Twitter @JesseCohenInv for more stock market analysis and insight.
