Why wait for U.S. Treasury yields to poke above 4%? Analysts see upside in S&P 500 stocks that already yield that much or more.
Nine stocks in the S&P 500, including energy firm Diamondback Energy, consumer goods company Newell Brands and financial U.S. Bancorp, yield 4% or higher, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. What's more, all the stocks are up this year and analysts think they'll rise 14% or more in the next 12 months.
To be sure, any S&P 500 stock will be much riskier than a Treasury. There's stock market volatility not to mention risk the dividends could be cut. But if you're able to get a 4% yield now on with a stock with upside price potential, that's not a bad way to weather the S&P 500's drama. The S&P 500 dropped 1.5% and is getting close to erasing all its gains this year. And the U.S. 10-year Treasury stands at 3.98%.
"Stocks did not stand a chance after Fed Chair Powell convinced markets that policymakers are comfortable taking this rate hiking campaign much higher," said Edward Moya at Oanda. "Powell is not taking any chances and wants to send home a clear message that the Fed will do whatever it takes to bring down inflation."
Finding Yield In The S&P 500
Following last year's S&P 500 drop, it's getting easier to find some decent yield.
The average yield of S&P 500 stocks that pay a dividend is 2.5%. But some investors are looking for more, especially with Treasuries paying out nearly 4%. But you don't want to take on too much stock risk, either. The S&P 500 stocks yielding 4% or more are also down nearly 1% this year.
So which 4%-yielding S&P 500 stocks are up this year, and seen soaring more?
Mining The Energy Field For Dividends
Midland, Texas-based energy firm Diamondback is the kind of energy firm investors are looking for now.
Yes, it yields a whopping 7.88%. But on top of that, shares are up more than 4% this year to 142.53. Additionally, analysts think the stock will be worth 176.07 a share in 12 months, which would be nearly 24% upside.
Another example is Rubbermaid seller Newell. The stock is up 2.4% this year to 13.39 on top of yielding 6.8%. Furthermore, analysts think it will jump another 21% in 12 months.
And then there's a host of financials. U.S. Bancorp is yielding 4.1%. And the stock is up nearly 5% to 45.76. Analysts think it will be a 55.31-a-share stock in 12 months. That, if true, would mark more than 20% upside.
Again, S&P 500 stocks are much riskier than Treasuries even if they yield 4% or more. But if analysts are right, you'll at least make decent money while you wait for the market's volatility to cool off.
High Yielding S&P 500 Stocks With Benefits
Shares are up this year and analysts see 14% or more upside
| Company | Ticker | Yield % | Year-to-date | Upside to analysts' target | Sector |
|---|---|---|---|---|---|
| Diamondback Energy | 7.9% | 4.2% | 23.5% | Energy | |
| Newell Brands | 6.8 | 2.4 | 21.4 | Consumer Discretionary | |
| U.S. Bancorp | 4.1 | 4.9 | 20.9 | Financials | |
| KeyCorp | 4.5 | 0.9 | 19.2 | Financials | |
| Truist Financial | 4.5 | 2.7 | 18.9 | Financials | |
| Digital Realty Trust | 4.6 | 3.3 | 18.2 | Real Estate | |
| Coterra Energy | 10.3 | 5.3 | 15.0 | Energy | |
| International Paper | 5.1 | 4.7 | 14.1 | Materials | |
| Federal Realty Investment Trust | 4.0 | 3.1 | 14.0 | Real Estate |
Sources: IBD, S&P Global Market Intelligence
Follow Matt Krantz on Twitter @mattkrantz
