Key points
- As market hype surrounds artificial intelligence and potential Federal Reserve interest rate cuts loom, investors are presented with a combination of caution and opportunity.
- Oversold and overlooked large-cap stocks offer attractive dividend yields for investors seeking income and potential capital appreciation.
- High-dividend-yield stocks prove advantageous in low-interest-rate environments, offering stability and income to investors seeking alternatives to bonds and savings accounts.
- 5 stocks we like best from BHP Group
As the market continues its relentless ascent to new heights, driven by the growing technology sector and the hype surrounding artificial intelligence, murmurs of potential interest rate cuts by the Federal Reserve continue and investors find themselves in a moment when prudence meets opportunity.
In this euphoric rally, it’s easy to overlook the less glamorous corners of the stock market. Specifically, oversold large-cap stocks that have fallen out of favor but offer attractive dividend yields.
The allure of overlooked and undervalued stocks cannot be overstated in an environment where the spotlight is mostly on high-flying tech giants and growth stocks. Since the Relative Strength Index (RSI) signals oversold conditions in many of these stocks, these stocks represent an attractive proposition for investors seeking income and potential capital appreciation.
Against this backdrop, we look at four oversold large-cap stocks that boast above-average dividend yields and positive analyst ratings. In a market where optimism often overshadows caution, these undervalued stocks may offer a prudent alternative for investors looking to navigate future uncertainties and potential rate cuts, while benefiting from the potential upside of dividend-paying stocks .
4 Oversold Large-Cap Stocks Offering High Dividends
Kraft Heinz, a global food and beverage company, boasts strong dividend strength, a healthy dividend yield of 4.63% and a P/E of 14.95. Its stock has struggled recently; however, it is trading below all major moving averages and down nearly 7% year to date. Despite the weakness, analysts are bullish on the name, with a Moderate Buy rating and a consensus price target predicting nearly 20% based on twelve ratings. The stock has positive news and is forecast for earnings growth of 5.63%, while its RSI is approaching oversold territory, currently at 38.
Amgen, the biopharmaceutical giant with a market capitalization of $147 billion, boasts strong dividend growth and a P/E of 22.10. Year to date, the stock has fallen just over 4% and is currently trading at an attractive RSI of 37.92 and above a rising 200-day SMA. Amgen offers an attractive dividend yield of 3.26% and expected earnings growth of 7.91%. Based on nineteen analyst ratings, the company has a hold rating with a consensus price target of 7% upside.
BHP Group, a leading natural resources company based in Australia, has a market capitalization of $144 billion and an attractive P/E ratio of 11.11. The stock boasts strong dividend growth and a much above-average dividend yield of 5.01%. Year to date, the stock has fallen into a significant support area, down nearly 17%. BHP shares have a hold rating based on nine analyst ratings and the stock has an RSI of 40.83, approaching oversold territory.
Rio Tinto Group is the world’s second-largest miner and a top-rated dividend stock, with a huge dividend yield of 8.15%. The $79 billion company has recently struggled to outperform its industry, with its shares down year-to-date, now down more than 15%. Analysts remain optimistic despite the steady year-to-date sell-off and expected negative full-year earnings growth. Based on eleven ratings, the stock has a Moderate Buy rating and a price target of $72, projecting an upside of nearly 14%.
Rate cuts favor high-dividend stocks
As talk of interest rate cuts gains strength, it’s worth noting that high-dividend-yielding stocks are particularly advantageous in low-interest rate environments. They offer higher returns than bonds and savings accounts, attracting investors looking for alternative sources of income.
Additionally, these stocks provide a steady income stream, which is valuable for retirees or those who want stable earnings. Conversely, in high interest rate environments, as has been the case in recent years, the attractiveness of equities may decline as bonds become more competitive in terms of yield.
Before you consider BHP Group, you’ll want to hear this.
MarketBeat tracks Wall Street’s highest-rated and best-performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market takes hold… and BHP Group wasn’t on the list.
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View the five stocks here
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