3 Dividend Stocks That Can Gain Over 50% In 2022
03 Janeiro 2022 - 8:57AM
Finscreener.org
As we inch closer to the end of
2021, the indices have posted stellar gains despite rising
inflation rates, supply chain disruptions, the possibility of
higher interest rates and more recently the threat of the Omicron
variant. The S&P 500 Index has gained close to 27% while the
tech-heavy NASDAQ index is up 21% in 2021.
However, there are several stocks
across sector that are trading at a massive discount compared to
Wall Street estimates. A few of these stocks also offer investors a
tasty dividend yield, allowing you to benefit from a steady stream
of dividend income as well as capital gains.
Here, we look at three dividend
stocks that have a high yield with significant upside potential
looking at consensus price target estimates.
Enterprise Product Partners
The first stock on my list
is Enterprise Product Partners (NYSE:
EPD), a midstream company valued at a market cap of
$46.5 billion and an enterprise value of $74 billion. According to
RBC Capital analyst T.J. Schultz, EPD stock can touch $32 per share
in the next year, implying a 50% increase from current
prices.
The onset of the COVID-19
pandemic decimated oil stocks in early 2020 as economies were shut
and borders were closed. The tepid demand all over the world
resulted in record low prices of crude oil that impacted oil
producers to a great extent.
However, midstream companies such
as Enterprise Product Partners operate pipeline, refining
facilities as well as storage tanks and do not produce oil. They
operate on take-or-pay contracts and cash flows are backed by
long-term commitments from upstream companies.
Enterprise Product Partners is an
entity that is fundamentally sound and one that has survived
multiple recessions. In fact, even amid the pandemic, its
distribution coverage ratio did not fall below
1.6x.
This ratio calculates the amount
of distributable cash flow in relation to the cash available that
can be distributed to investors. A ratio below 1x would mean the
payout is unsustainable.
Enterprise Product Partners has
increased its payouts for 23 consecutive years and is well poised
to benefit from rising crude oil prices going forward.
AT&T
Shares of telecom giant
AT&T (NYSE: T) are
currently trading at $24.9 and the company pays investors annual
dividends of $2.08 per share, indicating a yield of 8.4%. Earlier
this year, Deutsche Bank (NYSE:
DB) increased the price target of AT&T stock
to $37, implying a 50% upside for investors.
A
key catalyst for the
company is the rollout of
5G infrastructure which should drive revenue higher in 2022 and
beyond. Another positive development for AT&T is the plan to
merge WarnerMedia with Discovery
(NASDAQ:
DISCA) thereby
creating a media behemoth targeting sports-based and original
programming.
After the merger the combined
entity will have over 85 million subscribers and is expected to
derive $3 billion in cost synergies each year. The spin-off will
also allow AT&T to lower debt and operational
costs.
Mobile TeleSystems
Another high-yield stock that can
generate significant returns in 2022 is Mobile
TeleSystems (NYSE:
MBT). A Russia-based
telecom company MBT stock provides investors a
tasty dividend yield of
almost 13%. In the past 10 years, its payout has averaged around
9%.
Similar to AT&T, Mobile
TeleSystems will also benefit from the transition towards 5G while
its widening suite of
services that now include banking, online streaming, and
cloud.
However, the ancillary businesses
account for a small portion of overall sales. Alternatively, its
paid TV subscribers rose by 39% year over year in Q3 to 2.2 million
while over-the-top subscribers doubled to 3.5 million. The gross
loans in its banking division rose by 54.3% and operating income
surged 50% year over year in Q3 of 2021.
Discovery (NASDAQ:DISCA)
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