Bank of America likes these stocks with secure dividends

Bank of America has a sweet spot for investors searching for the right dividend plays. Savita Subramanian, equity and quantitative strategist, on Tuesday released a screen for the second quintile of the Russell 1000 by trailing dividend yield. This group, she said, excludes yields of distressed companies found in the top quintile. They are also attractively valued. “We believe that we are now in a total return world in which the contribution of dividends to total market returns could be significantly higher than it was in the last decade, a period marked by falling cash yields and lofty price returns,” Subramanian wrote to clients. “We advise investors to seek out companies with above-market and secure (not stretched) dividend yields.” Bank of America’s screen yielded more than 100 companies that fell into this second quintile. CNBC Pro then sorted for the names with the highest dividend yields: Zions had the highest dividend yield of the stocks on the screen at 3.47%. The bank stock has climbed around 15% this year, putting it on track to snap a two-year losing streak. After the recovery rally this year, the average analyst polled by LSEG foresees little upside ahead. The typical analyst also has a hold rating on the stock. AES was another top yielder at 3.41%. The energy stock is struggling this year, down more than 8% despite the market’s rally. ZION AES YTD mountain Zions and AES, year to date But Wall Street foresees a big rebound ahead, with an average price target suggesting shares can climb around 29% over the next year, per LSEG. The majority of analysts have a buy rating. Jefferies analyst Julien Dumoulin-Smith joined the bull camp last month, initiating coverage at a buy rating. He called the play a pivot to renewable energy, while noting that it comes at a discount for investors. “The quality improvement story is compelling, but we view the stock underperformance as a sign the market is cautious about ability to execute,” Dumoulin-Smith wrote to clients. “We see the name as a way to gain exposure to US renewables with a quality improvement twist at a discounted price.” Citigroup was further down the list, registering a 3.39% dividend yield. Even after a strong year with a gain of more than 24% in 2024, the average analyst surveyed by LSEG has a buy rating and price target suggesting further upside of 11.5%. Shares of the stock tumbled more than 3% on Tuesday after the major bank reported earnings for the third quarter. While the firm beat analysts’ expectations on both lines, it reported a slide in net income and revenue tied to fixed income.