Income investors can be growth investors, too. Granted, it's not always easy to find stocks that pay generous dividends and offer solid prospects of share price appreciation. However, such stocks exist. Here are three high-yield dividend stocks that could soar 22% to 49% over the next 12 months, according to Wall Street.
1. Pfizer
Pfizer (PFE 0.68%) stock has been on a downward trajectory for nearly two and a half years. Blame it mainly on declining demand for the company's COVID-19 vaccine and oral antiviral drug Paxlovid. However, Pfizer also faces the looming loss of exclusivity for multiple products.
NYSE: PFE
Key Data Points
Despite this bad news, analysts remain perhaps surprisingly bullish about Pfizer. The average analysts' 12-month price target reflects an upside potential of around 22%. Not everyone on Wall Street is enamored with Pfizer. One analyst surveyed by LSEG in April recommended selling the stock. But over half of the analysts polled rated Pfizer as a buy or a strong buy.
I don't know if Pfizer will hit the 12-month price target. However, I agree with the overall optimism about the stock over the long run. The drugmaker's launches of new products should generate more than enough additional revenue to make up for the sales losses stemming from its patent cliff. Pfizer's wheeling and dealing should also pay off handsomely with promising new products added to its lineup thanks to shrewd acquisitions.
The stock's valuation doesn't reflect Pfizer's better-than-meets-the-eye prospects. Pfizer's shares trade below 11.9 times forward earnings. By comparison, the forward earnings multiple for the S&P 500 healthcare sector is 18.
Income investors should love Pfizer's juicy dividend yield of nearly 6.6%. I expect the company to continue increasing its dividend payout over the next several years.
2. Brookfield Infrastructure
Brookfield Infrastructure (BIP 2.41%) (BIPC +0.00%) is another high-yield stock that some investors seem to have given up on. Units of the limited partnership (LP) trading under the BIP ticker and shares of the corporate entity trading under the BIPC ticker are both down significantly over the last 12 months.
NYSE: BIP
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Analysts haven't thrown in the towel on Brookfield Infrastructure, though. Seven of the nine analysts surveyed by LSEG in April rate the stock as a buy or strong buy. The consensus 12-month price target is roughly 39% higher than the current price.
Will Brookfield Infrastructure jump that much? Maybe, maybe not. Wall Street is right to be upbeat about the stock overall, though, in my opinion.
Brookfield Infrastructure owns a diversified portfolio of infrastructure assets, including utilities, rail, toll roads, terminals, pipelines, data centers, and cell towers. Its strategy of acquiring top assets, improving them, and selling mature assets to invest in new opportunities should enable the company to grow funds from operations (FFO) per unit by 10% or more annually.
I like that Brookfield Infrastructure is committed to growing its distribution by 5% to 9% each year. That's especially great considering the LP's distribution yield tops 5.9% and the yield for BIPC is over 5.1%.
3. Brookfield Renewable
There's another Brookfield that income investors and growth investors should find attractive. Brookfield Renewable (BEP 0.66%) (BEPC +0.00%) is a sibling of Brookfield Infrastructure: Brookfield Asset Management is the parent for both companies.
NYSE: BEPC
Key Data Points
Like Brookfield Infrastructure, Brookfield Renewable trades under two tickers -- one for its LP (BEP) and another for its corporate entity (BEPC). Analysts are especially enthusiastic about BEPC with the consensus 12-month price target reflecting an upside potential of 49%.
As with the other stocks on the list, I'm uncertain if Brookfield Renewable will manage to hit Wall Street's price target. However, I'm on the same page as analysts about the company's long-term prospects.
Brookfield Renewable owns hydroelectric, wind, solar, and distributed energy facilities across the world. The company expects to invest at least $7 billion in new renewable energy assets over the next five years. It should benefit from tailwinds including aggressive carbon emissions reduction targets and the increasing demand for electricity.
This renewable energy leader has increased its distribution by a compound annual growth rate of 6% over the last 20 years. Brookfield Renewable intends to grow its distribution by 5% to 9% annually. With its yield currently topping 6%, this stock looks like a great pick for income investors who also seek growth.
