Steep market downturns work to the benefit of income investors in a couple of ways. First, as dividend stocks fall, their yields rise. Second, sell-offs make the shares of strong companies better bargains. When things turn around, these stocks can take off in a big way.
There are plenty of stocks that now pay higher dividend yields that are attractively valued right now. But some especially stand out. Here are three high-yield dividend stocks that could soar 25% to 100% over the next 12 months, according to Wall Street.
1. Enterprise Products Partners
Enterprise Products Partners (EPD 0.51%) has fared better than most stocks so far this year. The midstream energy stock is still up close to 12% after rising as much as 30% in early June.
Wall Street analysts think that Enterprise can recapture its previous gains and then some. The average 12-month price target for the stock reflects a premium of more than 25% over the current share price.
Investors who bought Enterprise Products Partners now wouldn't need that big of a gain to make money, though. The company's dividend yield currently stands at nearly 7.6%. Enterprise has increased its distribution for 24 consecutive years.
Like most energy stocks, Enterprise has benefited from the increase in oil and gas prices as investors focused on the energy sector. However, the company's fees don't hinge on the prices of the crude oil, natural gas, and petrochemicals that flow through its 50,000-plus miles of pipelines. Because of this, Enterprise should hold up pretty well, regardless of market conditions.
There's significant uncertainty about the future of oil and gas companies. But it seems likely that the demand for fossil fuels will increase rather than decline over the next few decades. Enterprise Products Partners should be well-positioned to keep those juicy distributions flowing for a long time to come.
2. Medical Properties Trust
Medical Properties Trust (MPW 0.56%) (MPT) stock has taken a big hit this year, sinking more than 30%. However, Wall Street remains bullish about the real estate investment trust (REIT). The average price target for MPT is 36% higher than the current share price.
While investors wait for MPT to rebound, they can enjoy steady and sizable quarterly dividends. The company's dividend yield stands at 7.5%. MPT has increased its dividend for 10 consecutive years.
The healthcare REIT owns 440 hospitals in 10 countries, including the U.S. That number should grow in the near future. MPT expects to spend between $1 billion and $3 billion on acquisitions in 2022.
It's possible that rising interest rates could present a headwind for MPT's acquisitions strategy going forward. But the high inflation that's spurring interest-rate hikes won't be a big problem for the company. MPT's leases are protected against inflation with automatic rent increases.
3. Innovative Industrial Properties
2022 has been especially brutal for Innovative Industrial Properties (IIPR 0.01%) (IIP). The once high-flying stock has plunged nearly 60% year to date. This sell-off hasn't changed Wall Street's views about IIP, though. The average 12-month price target is 100% higher than the current share price.
IIP's dividend yield of 6.3% is a little lower than the yields for Enterprise Products Partners and Medical Properties Trust. But few companies have increased their dividend payouts as much as IIP has in recent years. Since 2017, IIP's dividend has grown more than 1,000%.
Like MPT, IIP is a REIT. It focuses on buying properties from cannabis operators in the U.S. and then leasing those properties back to the operators. The company currently owns 111 properties in 19 states with legal regulated cannabis markets.
IIP's growth could be derailed if full banking access were made available to U.S. cannabis operators. However, even if regulatory restrictions are lifted, the company's real estate capital alternative would probably still be attractive to many businesses. IIP's long-term prospects appear to remain bright.