As the stock market undergoes fluctuations in the closing days of the third quarter, many growth stocks that fueled the earlier rally are now facing corrections or even reaching new lows. In this uncertain environment, marked by concerns about tightening monetary policy and persistent inflation, investors are turning their attention to stable dividend stocks with attractive yields.
Today, we’ll spotlight three S&P 500 Index ($SPX) stocks, each offering dividend yields exceeding 7%, without the risks associated with so-called “yield traps.” Let’s take a closer look at why these dependable income opportunities deserve a closer look.
AT&T Stock: A High-Yield Play in the 5G Space
AT&T (NYSE:T), the largest telecommunications company in the U.S., boasting over 180 million wireless subscribers and 15.5 million broadband customers, offers a generous dividend yield of 7.39%. This places AT&T among the highest-yielding stocks in the S&P 500, and it comes with the added benefits of stable cash flow and a low debt-to-equity ratio of 0.8.
Despite facing stock price pressure since the first half of 2023, AT&T’s fortunes turned during the second-quarter earnings season. The company reported impressive results, including a 7.6% revenue growth to $44 billion and a 5% increase in earnings per share to $0.89. These figures surpassed market expectations, and AT&T also outperformed in subscriber additions for both phones and broadband, gaining 12 million subscribers for HBO Max.
Analysts remain largely optimistic about AT&T’s future, with an average price target of $20.38, indicating a potential upside of 37% from current levels. Among 18 analysts, seven rate it as a “strong buy,” one as a “moderate buy,” and 10 recommend “hold.”
While immediate dividend growth may be tempered by infrastructure investments, AT&T’s involvement in the 5G space presents room for future expansion, making it an attractive choice for those seeking reliable investments with growth potential.
Ford Stock: A Legacy Automaker Embracing Electric Future
Ford (NYSE:F), the iconic automotive giant with a rich history of innovation and global reach, offers investors a substantial dividend yield of 10.06%. In 2023, Ford’s stock has outperformed the broader S&P 500, gaining 15%.
Despite scaling back its electric vehicle (EV) production targets following an earnings report, Ford’s financial results have been promising. The company reported net income of $1.92 billion in Q2, surpassing expectations, and revenue increased by 38.1% to $44.95 billion. Ford’s product lineup now includes the F-150 Lightning, an electric version of their best-selling truck, and the Maverick, a hybrid pickup.
Analysts’ sentiments toward Ford have shifted positively in recent times, with the consensus changing from “hold” to a “moderate buy.” The average price target stands at $15.31, suggesting a nearly 24% potential upside from current levels.
Ford’s appealing valuation, high dividend yield, and a strong pipeline of vehicles make it an attractive choice for investors.
General Electric Stock: Streamlined Conglomerate with an Attractive Yield
General Electric (NYSE:GE), a versatile conglomerate, has intentionally slimmed down in recent years through spin-offs, including its healthcare unit. In its current form, GE boasts a market capitalization of $119.64 billion and an impressive dividend yield of 17.34%.
Unlike many companies with outsized dividend yields, GE’s stock has been on a bullish streak in 2023, climbing more than 69% since the start of the year and a remarkable 121.5% over the last 52 weeks. In Q2, the company reported net income of $35 million, or $0.68 per share, exceeding expectations, and revenue surged by 18% to $16.7 billion, driven by strong performances in aerospace and renewable energy.
Analysts lean favorably towards GE, with an average price target of $122.46, implying a modest premium of 10.3% over current levels. Among 14 analysts, seven rate it as a “strong buy,” two as a “moderate buy,” and five recommend “hold.”
Conclusion
These three S&P 500 stocks offer dividend yields exceeding 7%. Whether in telecommunications, automobiles, or conglomerates, AT&T, Ford, and General Electric possess long-standing operational expertise and relative stability. While they each face unique challenges, they also present the potential for substantial long-term returns. For investors seeking steady income stocks with growth potential, these three S&P names warrant consideration.
Featured Image: Megapixl
Author Faith Yakubu