Income investors can also be growth investors. Admittedly, it’s not always easy to find stocks that pay generous dividends and offer solid prospects for share price growth. However, such stocks do exist. Here are three high-yield dividend stocks that could rise 22% to 49% over the next 12 months, according to Wall Street.
1. Pfizer
Pfizer (NYSE:PFE) The stock has been on a downward trend for almost two and a half years. This is largely due to falling demand for the company’s COVID-19 vaccine and oral antiviral drug Paxlovid. However, Pfizer also faces the threat of losing exclusivity for several products.
Despite this bad news, analysts remain perhaps surprisingly optimistic about Pfizer. Analysts’ average 12-month price target reflects an upside potential of around 22%. Not everyone on Wall Street is enthusiastic about Pfizer. An analyst interviewed by LSEG recommended selling the stock in April. But more than half of analysts surveyed rated Pfizer a “buy” or “strong buy.”
I don’t know if Pfizer will hit the 12-month price target. However, in the long term, I agree with the general optimism about the stock. The drugmaker’s new product launches are expected to generate more than enough additional revenue to offset lost sales due to the patent cliff. Pfizer’s efforts are also likely to pay off, with clever acquisitions adding promising new products to its range.
The stock’s valuation doesn’t reflect Pfizer’s prospects are brighter than one might think. Pfizer shares trade below 11.9 times forward earnings. In comparison, the expected win multiplier for the S&P 500 The health sector is 18.
Income investors will love Pfizer’s juicy dividend yield of nearly 6.6%. I expect the company to continue increasing its dividend payout in the next few years.
2. Brookfield Infrastructure
Brookfield Infrastructure (NYSE:GDP) (NYSE:BIPPC) is another high-yield stock that some investors appear to have given up on. Limited partnership (LP) shares, which trade under the BIP ticker, and corporate shares, which trade under the BIPC ticker, have both declined significantly over the past 12 months.
However, analysts haven’t given up on Brookfield Infrastructure yet. Seven of the nine analysts surveyed by LSEG in April rate the stock as a “buy” or “strong buy.” The consensus 12-month price target is approximately 39% above current price.
Will Brookfield Infrastructure rise that much? Maybe, maybe not. However, in my opinion, Wall Street is right to be bullish on the stock overall.
Brookfield Infrastructure owns a diversified portfolio of infrastructure assets, including utilities, rail, toll roads, terminals, pipelines, data centers and cell towers. Its strategy of acquiring top assets, improving them, and selling mature assets to invest in new opportunities should allow the company to grow funds from operations (FFO) per unit by 10% or more annually.
I like that Brookfield Infrastructure is committed to increasing its sales by 5% to 9% each year. This is especially great when you consider that the LP’s distribution yield exceeds 5.9% and the BIPC’s yield is over 5.1%.
3. Brookfield Renewables
There’s another Brookfield that income investors and growth investors should find attractive. Brookfield Renewables (NYSE:BEP) (NYSE:BEPC) is a sibling of Brookfield Infrastructure: Brookfield Asset Management is the parent company of both companies.
Like Brookfield Infrastructure, Brookfield Renewable trades under two tickers – one for its LP (BEP) and another for its corporate unit (BEPC). Analysts at BEPC are particularly excited, as the 12-month consensus price target has an upside potential of 49%.
As with the other stocks on the list, I’m not sure Brookfield Renewable will be able to hit Wall Street’s price target. However, I agree with the analysts when it comes to the company’s long-term prospects.
Brookfield Renewable owns hydroelectric, wind, solar and distributed energy assets around the world. The company expects to invest at least $7 billion in new renewable energy assets over the next five years. It should benefit from tailwinds including aggressive targets to reduce carbon emissions and rising demand for electricity.
This renewable energy leader has grown its sales at a compound annual growth rate of 6% over the past 20 years. Brookfield Renewable aims to increase its sales by 5% to 9% annually. With a current yield of over 6%, this stock looks like a good choice for income investors who are also looking for growth.
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Keith Speights holds positions at Brookfield Infrastructure, Brookfield Infrastructure Partners, Brookfield Renewable, Brookfield Renewable Partners and Pfizer. The Motley Fool holds positions in and recommends Brookfield Asset Management, Brookfield Renewable and Pfizer. The Motley Fool recommends Brookfield Infrastructure Partners and Brookfield Renewable Partners. The Motley Fool has a disclosure policy.
“3 High-Yield Dividend Stocks That Could Rise 22% to 49%, According to Wall Street” was originally published by The Motley Fool