Benzinga and Yahoo Finance LLC may earn commission or income from some articles through the links below.
Given increasing stock market volatility, increasing macroeconomic headwinds and geopolitical tensions, investors are increasingly attracted to high-dividend paying stocks. These stocks often prove to be an attractive option for those seeking a balance between income and potential appreciation.
But as investors focus on mega-cap tech companies this earnings season following their stellar first-quarter earnings report, industry giants and respected dividend stocks have taken a backseat. With Wall Street’s fear gauge, the CBOE Volatility Index, up nearly 25% so far this year, these beaten-down dividend stocks could be among the safest bets right now.
PepsiCo
PepsiCo Inc. (NASDAQ:PEP) has made a name for itself in the global beverage industry and has long been considered one of the safest investment options. Still, in the age of artificial intelligence, the star has failed to attract the attention investors need, as evidenced by the 7.4% decline in PEP shares over the past year.
The company currently pays dividends of $5.06 annually, which represents a yield of 2.86% on the current share price. PepsiCo is also a dividend aristocrat, having increased its payouts for 51 consecutive years. Interestingly, PepsiCo’s annual dividends have grown at a compound annual growth rate (CAGR) of 6.4% over the past five years.
PepsiCo’s diversified portfolio could cushion the blow in the face of increasing headwinds, as the snack segment, which includes brands like Lay’s and Doritos, remains budget-friendly household favorites. With a history of consistent dividends, PepsiCo could be a good choice for those who value long-term stability.
Analysts expect PepsiCo’s stock price to rebound in the near term as well, as Jefferies rates PEP stock as a “Buy” with a price target of $209, indicating a potential upside of nearly 20%. Wedbush also has an “Outperform” rating on PEP with a price target of $195, indicating potential upside of over 10%.
Checkout: The New Pepsi Challenge: A Dividend Stock Showdown Between Coca-Cola and PepsiCo
BCE
With a decline of over 31% over the past year, shares of BCE Inc. (NYSE:BCE), Canada’s largest telecommunications company, are certainly not doing well.
However, the telecom giant’s dividend profile is extremely tempting as it pays out $2.91 in dividends annually, a whopping 8.83% yield on the current share price.
As the telecommunications industry faces regulatory pressures and technological disruptions, BCE’s position as a leading Canadian telecommunications company is hard to ignore. Its robust infrastructure and steady cash flows from key services such as internet and mobile make it an attractive option for income investors.
With a stunning compound annual growth rate of 10.9% per year over the past five years, BCE’s robust dividend policy could attract investors looking for income stability.
United Parcel Service
Atlanta-based global shipping giant United Parcel Service Inc. (NYSE:UPS) faced several challenges last year, causing its shares to plunge over 18% in the period.
Nevertheless, the dividend figures are causing a stir. United Parcel Service maintains an annual dividend payout of $6.52 per share per year, which represents a dividend yield of 4.42% on the current stock price.
As e-commerce continues to thrive, UPS is a potential long-term investment opportunity due to its important role in the supply chain. Analysts are currently bullish on UPS, with both Deutsche Bank and HSBC rating the stock as “Buy.” Deutsche Bank has a $179 price target on UPS, suggesting a potential upside of nearly 22%. HSBC, on the other hand, maintains its price target on UPS shares at $170, representing a potential upside of nearly 15%.
High return, withstand volatility
While these stocks offer the potential for significant upside, the fact that they have come under pressure at all highlights the risks associated with investing in dividend stocks to generate passive income.
If you’re intrigued by the idea of generating reliable passive income but want to explore options outside of the stock market, consider these two alternative investment platforms:
Arrived houses: This platform allows you to invest in rental properties from as little as $100, offering the potential for stable rental income and long-term appreciation without the hassle of a landlord. With an average annual dividend yield of 4.2% and backing from big-name investors like Amazon founder Jeff Bezos, Arrivald Homes is worth exploring. Click here to explore the available properties on the platform.
Cityfunds Yield Fund: The Cityfunds Yield fund offers investors a target annual return of 8% (with a guaranteed floor of 7%) by investing in a diversified pool of secured real estate loans. With quarterly distributions and a low minimum investment of $500, this fund offers an attractive option for income-seeking investors looking to diversify their portfolios. Click here to find out more about the Yield fund or view other Cityfund offerings.
Both platforms offer unique opportunities to generate passive income through real estate investing without the volatility often associated with the stock market.
This article Is It Time to Buy These Beaten-Down Dividend Stocks? originally appeared on Benzinga.com