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Which Buy-Rated Dividend Stocks Offer Most Upside?

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·5 min read
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It's been a turbulent start to 2022, with the tech-focused stock market rout broadening across other sectors. Even some of the top Buy-rated dividend stocks haven't been able to escape the first half unscathed. As the broader market attempts to find its footing on the back of a tamer-than-expected April inflation result, many blue-chip dividend players look ripe for picking up here. As their share prices slipped, their yields increased by a proportional amount.

Though it's impossible to tell what the future holds, it's hard to pass up the value to be had at today's levels. In this piece, we used TipRanks' Comparison Tool to evaluate three Wall-Street-favored dividend stocks with yields of at least 3%.

Restaurant Brands International (QSR)

Restaurant Brands International is a quick-serve restaurant firm that owns Burger King, Canadian bakeshop Tim Hortons, Popeye's Louisiana Kitchen, and Firehouse Subs. The four brands provide the firm with a compelling growth runway in the fast-food industry with minimal overlap. With coffee & donuts, burgers, fried chicken, and submarine sandwiches, the company has a wide offering to meet the different tastes of consumers.

Though the balance sheet was weighed down by debt in the past, management is not ready to pull the brakes on acquisitions. The company has an eye open for potential acquisition opportunities within the space. Undoubtedly, a pizza chain would make a lot of sense since it's a food category that Restaurant Brands lacks. In any case, the company has a lot of work to do to grow sales and profits across its current brands.

Overall, fast-food stocks tend to do better than the rest during times of recession. As QSR looks to invest in areas it's lacking, the risk/reward seems decent for income seekers, with shares trading at 19.0 times trailing earnings and 3.9 times sales. Furthermore, the 4.11% dividend yield makes the stock attractive as we head into a period of slowing economic growth.

Amongst Street analysts, opinions are currently split on whether QSR is a good investment, although the bulls are edging ahead. With 8 Buys and Holds, each, and 2 Sells, the stock has a Moderate Buy consensus rating. More decisively, the $63.18 average price target suggests gains of 20% in the year ahead. (See QSR stock forecast on TipRanks)

Crown Castle International (CCI)

With interest rates rising, firms with substantial capital expenditures are bound to get dinged. Crown Castle International, which invests heavily in tower and small cell infrastructure, is a great way to bet on the future of 5G wireless technology. Investing to improve telecom tech will not come cheap, but America needs faster speeds, better coverage, and reliability. With a 3.04% yield, CCI is a nice way to get income and capital gains.

The $84 billion company has a low correlation to the S&P 500, with a 0.54 beta. However, the price of admission is quite steep, given the defensive nature of the firm and its proven ability to generate stable operating cash flows. The stock trades at 57.5 times trailing earnings and 12.7 times sales — that's expensive.

Turning now to the Street, it appears that analysts are bullish. With 6 Buys and no Holds and Sells, the consensus rating comes in as a Strong Buy. In addition, the $210 average price target puts the upside at ~11%. (See CCI stock forecast on TipRanks)

Pfizer (PFE)

Pfizer is a biopharmaceutical company that had a bright spotlight shined on it when it was the first to unveil a COVID-19 vaccine. Comirnaty, Pfizer's vaccine, is an innovation that we'll not be quick to forget.

Though the U.S. has been open for months, with concern moving from COVID-19 to Monkeypox and its potential to cause a pandemic, it seems unlikely that COVID-19 will be eliminated. Booster shots and oral treatments (with Pfizer's Paxlovid) may have more staying power than initially expected.

At this juncture, it's hard to tell when the COVID-19 pandemic will be over. It may not exactly end in the near future, and if that's the case, Pfizer's COVID-19 business could continue to produce ample amounts of cash flow.

Beyond COVID-19, Pfizer has a drug pipeline full of promising potential and other drugs capable of generating substantial cash flow.

A few weeks ago, Pfizer announced its acquisition of Biohaven in a deal worth $11.6 billion. The firm's impressive migraine portfolio could be a massive boon to Pfizer's bottom line. Indeed, it will be interesting to see how the firm performs in the hands of Pfizer.

Like it or not, Pfizer is an incredibly innovative company with expertise in mRNA technology, among other exciting areas of biotechnology. At writing, the stock trades at a ridiculously low 12.2 times trailing earnings and 3.3 times sales. The dividend yield is 3%.

Turning to Wall Street, analysts are bullish, with the average Pfizer price target of $59.15, implying 11.52% upside from current levels. (See PFE stock forecast on TipRanks)

Conclusion

There are many great high-yield blue chips out there. Restaurant Brands, Crown Castle, and Pfizer are just three that look enticing here. Wall Street expects the most from Restaurant Brands, with 23.4% in year-ahead upside potential.

Read full Disclosure.