While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.
What: Shares of PPL Corporation (NYSE: PPL ) gained slightly this morning after Jefferies upgraded the energy and utility company from hold to buy.
So what: Along with the upgrade, analyst Paul Fremont raised his price target to $34 (from $33), representing about 11% worth of upside to yesterday's close. While momentum traders might be turned off by the stock's sluggish action over the past six months, Fremont thinks PPL is too cheap to pass up given its seemingly undervalued unregulated supply segment.
Now what: According to Jefferies, PPL's risk/reward trade-off is pretty attractive at this point. "We are upgrading PPL to Buy from Hold based on the free option that investors get if the company is able to spin-off its unregulated supply business," noted Fremont. "Management has forecasted PPL's unregulated generation to be break-even beginning in 2015 and we believe the market is currently ascribing no value to these assets." When you couple PPL's juicy optionality with its 4.5%-plus dividend yield, it's tough to disagree with Jefferies' bullish stance.
More compelling income opportunities
One of the dirty secrets that few finance professionals will openly admit is the fact that dividend stocks as a group handily outperform their non-dividend-paying brethren. The reasons for this are too numerous to list here, but you can rest assured that it's true. However, knowing this is only half the battle. The other half is identifying which dividend stocks in particular are the best. With this in mind, our top analysts put together a free list of nine high-yielding stocks that should be in every income investor's portfolio. To learn the identity of these stocks instantly and for free, all you have to do is click here now.