As concerns about deficits rattle the market, stocks are once again experiencing volatility. However, there are still opportunities for investors to secure reliable income by selecting the right dividend-paying stocks. This week, stock prices have remained stable thanks to a notable uptick in Treasury bond yields. By Thursday, the yield on 30-year bonds had surged to 5.161%, while the benchmark 10-year note yielded 4.6%. This rise in yields followed the House’s approval of President Trump’s extensive tax bill, which now moves to the Senate. Among its provisions are increased exemptions for state and local taxes, raising the deduction from $10,000 to $40,000.
For those pursuing long-term investments, Wolfe Research has compiled a list of stocks that fall within the second quintile for dividend yields. This range can be appealing for income investors because companies with the highest yields might be more vulnerable to reducing their payouts if financial challenges arise. Additionally, unusually high yields can indicate stagnant stock prices and underlying business struggles. Below is a selection of some stocks highlighted by Wolfe.
One notable mention is Western Alliance Bancorp, which has been included on Wolfe’s list. Although the stock has dipped around 13% over the year, it offers a dividend yield of 2.1%. Recently, Truist Securities began analyzing regional banks, including Western Alliance, awarding the Phoenix-based firm a buy rating, characterizing it as “one of the fastest organically growing banks.” Analyst David Smith noted that Western Alliance was among the most profitable banks within its mid-cap segment, boasting over 20% return on tangible common equity from 2018 to 2022. He also pointed out that returns might take a hit in ’23/’24 as the bank strengthens its balance sheet, but even its ‘bad year’ still aligns with peer median performance.
Banks maintain a strong following on Wall Street, with 13 analysts favoring buy equivalents and consensus price targets suggesting an increase of nearly 27%. Currently, the stock trades at 12.4 times its estimated revenue for the coming year. “The company is navigating this period, and we don’t anticipate a major downturn,” the report states.
About half of the analysts monitoring Qualcomm lean toward recommendations for buying or strong buys, with a consensus price target suggesting a nearly 20% increase from current levels, according to LSEG. The report reiterated Qualcomm’s P/E ratio, backed by insights from a meeting with Piper Sandler analyst Barnijge, who pointed out Voya’s fierce commitment to the market amidst shifting dynamics. He noted that Voya’s wealth business experienced impressive inflows of $31 billion in the first quarter.
