The first-quarter earnings season has gotten off to a great start as banks have been crushing Wall Street analyst estimates. The results so far look like a precursor for a strong earnings season. These results, along with robust economic data, show the economy is improving rapidly. This has boosted not only confidence in investors, but also corporate management teams…
As companies increase their earnings, many are expected to use that extra cash to reinstate or increase their dividend payouts. Investing in dividend stocks is a great way for investors to generate income. Still, an even better strategy is to invest in dividend stocks with high upside potential.
I find that stocks trading below the average of their analyst price targets offer a great chance for price gains in the months ahead. So, I ran a screen for dividend stocks trading at least 13% below their average target price and rated a Buy or Strong Buy in our POWR Ratings system. EOG Resources, Inc. (EOG – Get Rating), America Movil (AMX – Get Rating), and Toyota Motor Corporation (TM – Get Rating) are three top dividend stocks that fit the bill, which is why I am highlighting them below.
EOG is an oil and gas producer with acreage in several U.S. shale plays, including the Permian Basin, the Eagle Ford, and the Bakken. In fact, it is one of the largest independent exploration & production companies operating in the United States. The company derives almost all of its production from shale fields in the U.S.
The company recently announced plans to shift its strategy to something it calls “double premium,” which means developing wells that deliver a 60%+ after-tax rate of return at $40 WTI crude oil. The “double” is twice its original premium strategy from five years ago when it aimed for a 30% return. EOG is also one of the most proficient operators in the business, with initial production rates from its shale wells that consistently exceed the industry average.
The company has a dividend yield of 2.4% and is currently trading 16.3% below its average analyst target price. EOG has an overall grade of B, or Buy rating in our POWR Ratings system. The company has a Growth Grade of B, as analysts expect earnings to rise 161.8% year over year in the quarter that just ended in March. Its earnings are forecasted to jump 647.8% year over year in the quarter ending in June.
EOG also has a Quality Grade of B, which indicates a healthy balance sheet. The company had $3.3 billion in cash at the end of the year, compared with only $781 million in short-term debt. If you would like to access the rest of EOG’s grades (Value, Momentum, Stability, and Sentiment), click here. EOG is ranked #6 in the Energy – Oil & Gas industry. For more top stocks in the industry, click here.
AMC is the largest telecom carrier in Latin America, serving approximately 270 million wireless customers across the region. In fact, it dominates the Mexican wireless market with a 63% customer share. The company also provides fixed-line phone, internet access, and television services in most countries it operates.
The company’s unmatched scale in the telecom market in Latin America bodes well for its prospects. Its competitive advantage is so strong that it can increase prices to offset local inflation and currency weakness. Plus, the company’s market share in Mexico is expected to expand due to the recent reduction in competition in the wireless business.
AMX has a dividend yield of…
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