Top 5 High-Yielding Stock Market Gainers YTD With More Upside

Wall Street has performed impressively year to date after finishing an astonishing bull run in 2020, exiting the coronavirus-led short bear market. The three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — are up 15.5%, 19.3% and 15.9%, respectively.

Despite this strong performance, a section of economists and financial researchers are worried that the U.S. economic recovery may have reached its peak and may slow down going forward.

A series of weak economic data, the rapid spread of the Delta string of coronavirus, a gradual fading out of fiscal stimulus and the possibility of an earlier-than-expected tapering of the Fed’s quantitative easing program may pull down the U.S. economy in the second half of 2021.

Nevertheless, U.S. economic fundamentals remain robust and the market’s northward journey is expected to continue for the rest of 2021 despite intermittent fluctuations. Several positives are there back up Wall Street’s bull run ahead.

In order to capture the market’s upside, one should invest in stocks with a favorable Zacks Rank that have strong potential for the rest of this year. On the other hand, to protect one’s portfolio from an unexpected downturn, high-yielding stocks with a favorable Zacks Rank that are regular dividend payers will be very lucrative. Combining these two criteria, we can construct a set of stocks that will enrich and protect one’s portfolio in terms of the market’s movement either way.

Possible Downsides

The resurgence of the highly-infectious Delta strain of coronavirus raised questions about the pace of economic recovery. In the United States, new cases are jumping significantly. The preliminary data of the Consumer Sentiment Index for August and IHS Markit’s services and manufacturing indexes for August dropped significantly.

The weekly unemployment benefit, as part of the fiscal stimulus, will terminate in September. This may reduce consumer spending. Retail sales plummeted 1.1% in July compared with the consensus estimate of a decline of 0.3%.

Moreover, there is growing speculation in the financial space that the Fed will start tapering its $120 billion per month bond-buy program as early as this year to curb mounting inflationary pressure. Any reduction in monetary stimulus may be detrimental to U.S. economic recovery.

Possible Upsides

U.S. businesses of all sizes are expanding their scale of operations and hiring more despite soaring wages and salaries to cater to robust demand. The personal savings of Americans are around an astonishing $2 trillion. The sky-high savings are allowing people to indulge in their demands that were pent up during lockdowns and in turn compelling businesses to expand their scale of operations.

On Aug 10, the U.S. Senate passed a bipartisan infrastructure bill of $550 billion in addition to the previously approved funds of $450 billion for five years. Total spending may go up to $1.2 trillion if the plan is extended to eight years.
Infrastructure projects such as roads, bridges, passenger rails, airports, drinking water and waste-water systems, high-speed Internet, and climate-related infrastructure will benefit. The bill is now headed to the House of Representatives for discussions and vote.

On Aug 23, the U.S. Food and Drug Administration (FDA) granted the first approval to the COVID-19 vaccine developed by Pfizer Inc. (NYSE:PFE) PFE and BioNTech SE (NASDAQ:BNTX) BNTX for 16 and above years of age. The regulator also granted emergency-use authorization for those between 12 and 15 and for immunocompromised individuals who qualify for a third shot.

The full approval of the vaccine is expected to convince many Americans who are still reluctant to receive a shot despite the rapid spread of the highly-infectious Delta variant of coronavirus. More than 60% of U.S. citizens have already received at least one shot.

Our Top Picks

We have narrowed down our search to five large-cap stocks (market capital >$30 billion) that have popped more than 30% year to date. These companies have established business models and strong brand recognition. These stocks have seen positive earnings estimate revisions within the last 30 days, indicating that the market is expecting these companies to do well for the rest of 2021.

The current dividend yields of these companies are well above the benchmark 10-Year U.S. Treasury Note’s current yield of around 1.2-1.3%. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The chart below shows the price performance of our five picks year to date.

Image Source: Zacks Investment Research

The Blackstone Group (NYSE:BX) Inc. BX remains well-poised to benefit from its fund-raising ability, revenue mix and inorganic expansion strategies. To provide ESG-focused investment opportunities, it inked a deal to acquire Sphera, while the buyout of DCI will further enhance its digital capabilities.

The company has an expected earnings growth rate of 39.6% for the current year. The Zacks Consensus Estimate for its current-year earnings has improved 1.1% over the last 30 days. This Zacks Rank #1 stock has a current dividend yield of 2.5%. The stock price has soared 78.6% year to date.

ConocoPhillips (NYSE:COP) COP holds a bulk of acres in the three big unconventional plays, namely Eagle Ford shale, Delaware basin and Bakken shale, which are rich in oil. The upstream energy player also has a foothold in Canada’s oil sand resources and exposure to developments related to liquefied natural gas.

The company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings improved 12.6% over the last 30 days. This Zacks Rank #1 stock has a current dividend yield of 3.3%. The stock price has appreciated 37% year to date.

EOG Resources Inc (NYSE:EOG). EOG explores, develops, produces and markets crude oil, and natural gas and natural gas liquids in the United States and internationally. The upstream energy player has an attractive growth profile, huge inventory of drilling opportunities, upper quartile returns and a disciplined management team. It has significant acreage in oil shale plays like Permian, Bakken and Eagle Ford.

The company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for its current-year earnings moved up 0.3% over the last 7 days. This Zacks Rank #1 company has a current dividend yield of 2.6%. The stock price has advanced 36.6% year to date.

MetLife Inc (NYSE:MET). MET is performing well on prudent underwriting and expense management. Several accretive acquisitions led to business diversification and inorganic growth. Business streamlining over the years via divestitures has aligned the company with high-growth operations. It continues to focus on businesses with growth potential and fix or exit businesses that do not create value.

This Zacks Rank #2 company has an expected earnings growth rate of 29.6% for the current year. The Zacks Consensus Estimate for current-year earnings improved 10.8% over the last 30 days. MetLife has a current dividend yield of 3.2%. Year to date, the stock price has rallied 30.2%.

American International Group Inc (NYSE:AIG). AIG has been streamlining its core insurance operations thereby enhancing capital allocation and operating leverage. It has acquired Ellipse, a specialist provider of group life risk protection in the UK, from Munich Re.

The transaction has strengthened the company's position in Life & Retirement businesses. The buyout of Validus Holdings, Ltd. and Glatfelter Insurance Group, has also strengthened its global General Insurance business.

This Zacks Rank #2 company has an expected earnings growth rate of 93.7% for the current year. The Zacks Consensus Estimate for current-year earnings improved 2.5% over the last 7 days. It has a current dividend yield of 2.4%. The stock price has jumped 43% year to date.

Tech IPOs With Massive Profit Potential

In the past few years, many popular platforms and like Uber (NYSE:UBER) and Airbnb finally made their way to the public markets. But the biggest paydays came from lesser-known names.

For example, electric carmaker X Peng shot up +299.4% in just 2 months. Think of it this way…

If you had put $5,000 into XPEV at its IPO in September 2020, you could have cashed out with $19,970 in November.

With record amounts of cash flooding into IPOs and a record-setting stock market, this year’s lineup could be even more lucrative.