High-yield dividend stocks typically distribute a significant portion of their profits back to shareholders in the form ofdividends. In addition to regular dividend income, such shares offer the potential for capital appreciation. But like any investment, picking the right high-yield dividend stocks requires a keen understanding of the market, the ability to analyze a company’s fundamentals, and the foresight to anticipate future trends. With that in mind, here are three high-yield dividend stocks that deserve your attention in the rest of 2024.
Genuine Parts Company (GPC)
First up on our list of high-yield dividend stocks is Genuine Parts Company (NYSE:GPC). With an extensive network of NAPA Auto Parts stores in North America, it holds a significant market share in the automotive and industrial parts sectors. In addition, it has an expanding overseas presence.
Yet, Genuine Parts Company’s performance in the first quarter was mixed. The company reported a slight increase in total sales, which rose by 0.3% to $5.8 billion. The Automotive Parts Group, which accounts for a significant portion of GPC’s revenue, saw a 1.9% sales increase. In contrast, the Industrial Parts Group experienced a 2.2% sales decline. Despite these mixed results, both segments reported higher profitability.
Looking ahead, GPC reaffirmed its revenue growth target for 2024 and gave an improved earnings outlook in part due to its “operating discipline.” Additionally, GPC projects gross margin expansion of 30 to 50 basis points, driven by continued focus on strategic sourcing and pricing initiatives.
Since January, GPC stock has appreciated over 4% and currently offers a dividend yield of 8%. We should note thatGPC’s dividend history is impressive, dating back to 1971. The forward price-to-earnings (P/E) and price-to-sales (P/S) ratios stand at 14.4x and 0.9x. Meanwhile, analysts remain optimistic about GPC’s performance with a 12-month price forecast of $170, a 17% upside potential.
Merck (MRK)
We continue our discussion of high-yield dividend stocks with Merck (NYSE:MRK). Headquartered in New Jersey, Merck operates through two main segments: Pharmaceutical and Animal Health. The company is renowned for its innovative contributions to diverse therapies and a strong pipeline. As a result, Merck boasts a substantial market capitalization of over $330 billion.
According to the most recent quarterly metrics, revenue came in at $15.8 billion, up 9% year-over-year (YOY), driven primarily by its Pharmaceutical segment, which contributed more than $14 billion. The human health business, which includes key brands like Keytruda, Gardasil, and Welireg, grew by 13%, driven by strong performance in oncology and vaccines. The Animal Health segment also performed well, generating over $1.5 billion in revenues. Investors agreed that Merck’s recent quarterly earnings report highlighted its financial health and operational efficiency.
Over the years, Merck’s approach to strategic investments has been both prudent and forward-looking. In May, Merck announced a potential $3 billion acquisition of privately held Eyebiotech, which focuses on developing gene therapies for ophthalmic diseases. This move signals Merck’s intention to expand its presence into the growing eye care market.
So far in 2024, MRK has advanced close to 20%, while the dividend yield is a healthy 2.4%. With a consistent history of dividend payments, Merck stock is a dependable source of income for investors. At present, the shares are trading at 14 times forward earnings and 5.2 times sales. Wall Street remains optimistic on Merck stock with a 12-month median price forecast of $144.50, an upside potential of 10%.
Starbucks (SBUX)
The final company among our high-yield dividend stocks is the coffee retailing giant Starbucks (NASDAQ:SBUX). Starbucks also licenses its trademarks through licensed stores, grocery, and food service accounts, offering products under several brands. Management continues to expand, especially in high-growth markets like China. This expansion not onlyfuels Starbucks’ revenue growth but also diversifies income sources.
Over the years, Starbucks has shown impressive revenue growth, with a 5-year compound annual growth rate (CAGR) of over 8%. Yet, Starbucks’ latest quarterly earnings call raised eyebrows. Revenue was down 2% year-over-year, while global comparable store sales declined by 4%. Management attributed the challenges to a more cautious consumer environment as well as severe weather stateside.
Year-to-date, SBUX stock has declined 15%, while the dividend yield stands at 2.8%. Many on Wall Street agree that Starbucks’ brand strength drives customer loyalty and allows for premium pricing, which in turn supports profitability and dividend payouts. Currently the forward P/E is 21.6x, while the P/S ratio stands at 5.5x. Finally, the 12-month average price target for SBUX stock suggests an upside potential of over 4%.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
