A great strategy for investors looking to buy stocks right now is to look for stocks trading at a discount and also for stocks that pay a nice dividend. When stocks sell off as they have been, their annual dividends tend to go up because while their dividends stay the same, their stock prices are lower. This gives investors a great opportunity to invest in stocks that pay out passive income, and they can make money from price appreciation as well.

Investing in these three stocks below could turn $12,000 into more than $16,000 in roughly one year's time, representing a 33% plus return on your initial investment.

1. AT&T

The largest mobile service provider in the world, AT&T (T 1.30%), has had a strong year, with shares up roughly 4% in 2022. It may not sound like much, but with the S&P 500 down roughly 21.5% this year, AT&T is widely outperforming.

It's not too surprising to see investors turn to the telecommunications sector as inflation heats up because communication through mobile phones and devices is critical to our society and is not going anywhere anytime soon. In fact, as the world becomes more remote and digital, companies like AT&T will become more critical, not that the space isn't competitive.

AT&T recently spun off its media division Warner Bros. Discovery in order to focus more closely on its core telecommunications business, including 5G and fiberoptic broadband. As part of the spin-off, AT&T chopped its dividend roughly in half from $2.11 to $1.08. Investors weren't thrilled, but the annual yield at AT&T's current share price is still a very healthy 5.4%.

2. Life Storage

As a real estate investment trust (REIT), Life Storage (LSI) must pay out 90% of its taxable income in annual dividends in order to maintain its special tax advantages. This is why you will see many REITs with strong dividends. Life Storage operates more than 1,100 self-storage facilities in 36 states.

Self-storage is a good business these days and is seen as a recession-proof business because of how big e-commerce has become for the economy, which relies on storage space. Over the years, Life Storage has also done an excellent job of growing its adjusted funds from operations per share, with a nearly 10% compound annual growth rate between 2010 and 2021.

Although shares are down roughly 27.5% this year, Life Storage's stock is still up more than 108% over the last five years. The company continues to pay out a competitive annual dividend yield of roughly 3.4%.

3. Citizens Financial Group

The large regional bank Citizens Financial Group (CFG -0.36%) spun off from the Royal Bank of Scotland, now NatWest Group, in 2014. Management has put in a lot of work to improve the bank's core operations and is now starting to see success.

Not only has Citizens vastly improved its deposit base, but it's also built out a much stronger and more diverse operation from a revenue perspective that includes a strong commercial lending operation, wealth management, mortgage, and investment banking capabilities.

Additionally, Citizens has formed a national consumer digital bank that includes a wide array of consumer lending products. The bank's 4.3% annual dividend yield also remains very strong.

The strategy

So, how can you turn a $12,000 investment into more than $16,000 in just around one year's time?

Invest $4,000 in each stock. In one year, a $4,000 investment in AT&T would reap $216 in passive income. The Wall Street Journal has an average 12-month price target of $22.50, which implies about a 12.5% upside from AT&T's roughly $20 share price, which would be another $500. That's a total of $716 from AT&T in one year.

With a dividend yield of roughly 3.4%, a $4,000 investment in Life Storage would result in $136 of annual passive income. Analysts have an average 12-month price target of roughly $143. That implies an almost 35% upside from Life Storage's current share price, which means $1,400 in profit if the stock reaches this price target. That's another $1,536 from Life Storage.

Finally, Citizens would pay out $172 in passive income on a $4,000 investment with its 4.3% yield. The Street has a roughly $51 average 12-month price target on Citizens, implying about 42% upside on the stock from current levels. That means a $4,000 investment would result in $1,680 if the price target is achieved and roughly $1,850 combined with the passive income.

Add all three together, and that's a roughly $4,100 return on your $12,000 investment, which would effectively turn your $12,000 investment into more than $16,000 in one year's time. Analyst price targets are subject to change and are very rarely dead-on, but after such a big sell-off this year, there could certainly be a market bottom and sustained bounce sometime over the next year.