NEW YORK – Several high-dividend paying stocks across various sectors and geographies look ripe for explosive growth in 2024, according to recent analyst recommendations.
Sasol Ltd (SSL), a South African energy and chemicals company; Vodafone Group PLC (VOD), a multinational telecom player; Crescent Point Energy Corp. (CPG), a Canadian oil producer; and Icahn Enterprises LP (IEP), an American investment firm, all offer eye-popping dividend yields above 4%. More importantly, analysts forecast each stock surging over 45% this year.
Let’s explore why analysts remain bullish on these high-yielders and if investors should buy into the optimism.
Sasol:
Poised to Bounce Back Currently yielding 9.2%, Sasol’s stock cratered 40% over the past year amid a challenging macro backdrop. However, with a cheap valuation and high dividend, one analyst believes Sasol offers substantial upside from current levels.
Operating globally across 30 countries in energy and chemicals, Sasol struggled recently as lower oil and chemical prices weighed on profitability. Supply chain snags and inflationary pressures exacerbated the situation. The stock swooned in response.
However, Sasol took steps to shore up its balance sheet by selling assets and reducing debt. With a much improved financial position, the company seems ready to capitalize on recovering energy prices and demand growth.
The lone analyst covering Sasol set a bullish price target implying nearly 100% upside this year. If achieved, the stock would recoup all its losses over the past three years.
While more analyst coverage could help validate the bull thesis, contrarian investors might have an opportunity to grab an ultra-high 9%+ dividend yield before the crowd catches on.
Vodafone:
Turnaround Story The U.K.-based Vodafone, yielding 10.9%, underperformed badly last year, dropping 13% amid falling profits in key European markets and C-suite shakeups.
But all three analysts covering Vodafone rate it a buy with sky-high upside. Consensus price targets suggest 60%+ gains in 2024.
Vodafone remains one of the world’s largest mobile and broadband networks operators with over 300 million customers throughout Europe and Africa. While competition and regulations strained profitability recently, analysts expect new CEO Margherita Della Valle to reinvigorate growth.
The new CEO aims to simplify Vodafone’s portfolio and improve returns from infrastructure assets like cell towers. With strong cash flows supporting its generous dividend, analysts anticipate easier year-over-year earnings comparisons and network investments bearing fruit.
If achieved, analysts’ average price target would restore Vodafone’s stock to 2021 levels. Income investors can grab an 11% yield today ahead of the potential rebound.
Crescent Point Energy:
Playing Offense The Canadian oil producer Crescent Point Energy, boasting a 4.3% base dividend and variable payout, returned nearly 200% over the past three years. But analysts still foresee another 60% upside in 2024.
With only one analyst covering the stock, visibility remains limited. However, that analyst cites Crescent’s improving balance sheet, low-cost oil sands operations, and shrewd acquisitions as reasons the stock still has room to run.
Despite tripling since 2020, Crescent Point’s valuation remains reasonable at under 4x operating cash flow. With oil prices still elevated and Crescent expanding production, analysts expect another stellar year.
Crescent’s base 4% dividend should remain rock-solid, supplemented by ongoing variable dividends. For energy exposure and income, analysts contend investors should stick with this Canadian winner.
Icahn Enterprises:
Legendary Investor And finally, the diversified holding company Icahn Enterprises, boasting an astronomical 22% dividend yield following a 65% crash last year, offers deep value and turnaround potential, according to one analyst.
Founded by renowned billionaire investor Carl Icahn, Icahn Enterprises houses a sprawling portfolio of businesses spanning energy, real estate, auto, food packaging, and mining. The eclectic mix of assets produces sizable cash flows to support its mouthwatering dividend.
However, Icahn Enterprises slice its distribution in half last year amid the broad market downturn which wreaked havoc on several of its underlying businesses. But with a stabilize dividend and cheap valuation, analysts forecast a dramatic comeback this year.
The lone analyst covering Icahn Enterprises expects 45% upside from current levels. If achieved, the stock would still lag its pre-2022 prices. But investors today can lock in an 22% yield while awaiting the projected turnaround.
While more Wall Street coverage could validate the bullish thesis, risk-tolerant income investors might have a rare opportunity here.
Bottom Line With sky-high yields over 4% and poised rebound potential, the four aforementioned stocks offer compelling income and growth stories for 2024. However, limited analyst coverage makes validation tricky.
Conservative investors may prefer more widely-covered and diversified dividend stocks. But for aggressive income seekers, these could be ideal high-risk, high-reward opportunities if the analysts prove correct.
