Although the stock market has performed well in the first half of the year, with the S&P 500 up about 15%, investors still have an opportunity to find undervalued stocks with solid dividends. With the Federal Reserve expected to start cutting interest rates later this year, bond yields will also fall, which could make dividend stocks more attractive. The central bank has signaled it will start cutting interest rates this year, but currently expects only one rate cut in 2024. The income generated by these dividend-paying stocks could help protect investors’ portfolios in a turbulent market. To find dividend stocks trading at a discount, CNBC Pro used data from FactSet to screen the S&P 500 for stocks that are rated buy or overweight by at least 60% of the analysts who cover them and have a forward price-to-earnings ratio below the S&P 500’s 22.56. According to FactSet, these stocks also have room for upside of 10% or more above analysts’ average price target. Additionally, these companies have dividend yields of at least 2%, which is higher than the index’s dividend yield of 1.27%. The selected stocks are: Vici Properties and Host Hotels & Resorts are both real estate investment trusts with dividend yields of 5.9% and 4.5%, respectively. The real estate sector has been hit hard this year. It is the only S&P sector in the red, down more than 4% year to date. However, many on Wall Street see opportunity. About 88% of analysts covering Vici Properties rate the stock as a buy or overweight, while 78% of analysts covering Host Hotels & Resorts rate it as a buy or overweight. Both are up about 25% above the average analyst price target. BMO is one of the companies bullish on real estate. In May, the company said it expects a recovery in the coming months. Host Hotels & Resorts is one of the stocks it rates as outperform. Shares of Host Hotels & Resorts have fallen more than 8% year to date, while Vici Properties has fallen about 11%. Meanwhile, utilities have been rising this year. The S&P Utilities sector is up more than 7% year to date. With a dividend yield of 3.3%, Sempra stands out as a utility stock that is still trading at a discount. The company’s forward P/E of 15.8 is 10% higher than the average analyst price target. About 77% of analysts covering the stock rate it a buy or overweight. SRE YTD Mountain Sempra YTD Sempra is up more than 1% so far this year. Baker Hughes, SLB, and ConocoPhillips are the energy stocks that got cut. Baker Hughes and SLB both have dividend yields of 2.4%, while ConocoPhillips has 2%. The S&P 500 Energy sector has also performed well this year, up more than 9% so far. However, ConocoPhillips is down 1% year to date, SLB is down nearly 9%, and Baker Hughes is up 3%. Analysts believe these stocks have plenty of room to rise. SLB has a staggering 41.5% upside potential relative to its average price target, while ConocoPhillips has over 27% upside potential relative to its average price target. Baker Hughes has 18% upside potential relative to its average price target. In May, ConocoPhillips announced it had signed an agreement to acquire Marathon Oil in a $17 billion all-stock deal. The move is expected to increase ConocoPhillips’ shale assets and add 2 billion barrels of resources to its U.S. inventory. COP YTD Pt ConocoPhillips YTD Finally, toy company Hasbro stands out with its 4.8% dividend yield. Around 68% of analysts covering the stock rate it buy or overweight, giving it around 22% upside potential relative to its average price target. Among the analysts who rate the stock highly is Bank of America, which upgraded Hasbro’s investment rating to buy from neutral earlier this month. The bank sees profits recovering in 2024 and 2025, thanks in part to its digital gaming strategy.
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