With first quarter earnings and economic data looking strong, many companies are expected to increase their dividends. That's why investors should consider dividend stocks with strong upside prospects which also offer the potential of capital appreciation. Three stocks that fit the bill are EOG Resources (NYSE:EOG), America Movil (NYSE:AMX), and Toyota Motor (NYSE:TM).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), America Movil (AMX), and Toyota Motor Corporation (TM) are three top dividend stocks that fit the bill, which is why I am highlighting them below.