Given the prevalence of value traps and yield traps among dividend stocks, it's understandable if investors are hesitant to double down on a poor performer with a high yield. After all, by sending a stock with a high dividend to lower prices, often the market is trying to tell you something, like "a dividend cut is imminent," or "earnings are about to fall off a cliff."
However, sometimes, the market overreacts to poor short-term news and financial performance, overly extrapolating it in its predictions for the future.
While it is not certain, there is evidence to suggest that this may be the case with these three dividend stocks: VICI Properties (VICI +1.58%), Verizon Communications (VZ +0.28%), and Wendy's (WEN +1.63%). Each has a high dividend yield, has come under pressure, and could be in for a big rebound in 2026.
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1. Tourism downturn concerns are likely overblown with VICI Properties
VICI Properties is a real estate investment trust (REIT) specializing in acquiring casino and gaming-related real estate through sale-leaseback transactions. VICI owns 54 properties , including much of the Las Vegas Strip, as well as some of the largest casinos located in other major U.S. gaming destinations.
NYSE: VICI
Key Data Points
Earlier this year, shares were holding up relatively well, but in recent months, VICI shares experienced a steady decline in prices, falling more than 15% from its 52-week high. Negative sentiment about casino stocks has likely spilled over to this REIT. Moreover, there are concerns that VICI may soon lower the annual base rent on properties leased by the REIT to Caesars Entertainment.
However, even if VICI agrees to a rent decrease, it'll likely receive something in return, including possibly the acquisition of a new property on favorable terms.
In the meantime, following the recent weakness, this stock has a forward dividend yield of 6.1%. Buying today, not only could you start collecting this payout, but chances are, any sort of resolution to the Caesars issue will lead to a rebound for shares.
2. Recent restructuring news may bode well for Verizon's dividend and valuation
Verizon Communications shares are technically in the green for 2025, but the telecom stock has trailed the broader market, and not just for the year. Over the past decade, Verizon's shares declined by 10%, while the S&P 500 (^GSPC 1.18%) has increased by nearly 245%. This lack of share price appreciation calls into question the merits of buying the stock, even as it sports a 6.7% forward yield, not to mention a 20-year track record of dividend growth.
NYSE: VZ
Key Data Points
However, the company, under new CEO Dan Schulman, has started to "build a better Verizon" through sweeping changes to its cost structure. Only time will tell, but better times and much better investment returns may lie ahead. Reduced operating expenses could lead to increased profitability, and in turn, greater dividend coverage.
The market could also reward a leaner, meaner Verizon with a much higher forward earnings multiple. Currently, the stock trades for around 8.5 times forward earnings. Compare that to competitors like AT&T and T-Mobile US, which trade for 11 and 16 times forward earnings, respectively.
That's not to say that Verizon could one day experience enough valuation expansion to push its forward P/E to the mid-teens. Still, even if shares rerate to AT&T's valuation, that would mean a nearly 30% increase in Verizon's stock price.
3. Wendy's is another high-yield, name-brand turnaround story
Just like Verizon, Wendy's is another household name trying to pull off a turnaround. The fast-food franchisor has seen its shares decline by 50% over the past 12 months. Chalk this up to the company's steadily declining revenue, combined with the impact of higher costs on demand and profitability. Still, in the year ahead, the situation with Wendy's may have the potential to improve substantially.
NASDAQ: WEN
Key Data Points
Right now, the company's management is putting in a variety of efforts, including menu simplification and technology investments, to make its existing stores more profitable. Wendy's is also aggressively reducing is store count. The company recently announced plans to close hundreds of underperforming locations.
Sell-side analyst estimates have yet to factor in the potential for improved growth, but the fact that's yet to happen could work in your favor. After the sell-off, Wendy's shares trade for less than 10 times forward earnings, and the stock's current forward dividend yield is 6.5%.
Buy now to collect this high payout, and down the road, if the turnaround takes shape, shares could experience outsized price appreciation. In the past, shares have traded at a forward P/E of around 15.
