I am a fan of dividend stocks where you buy for the yield, but stay for the upside. In other words, dividend stocks that offer a high forward dividend yield, yet at the same time have the potential to experience high levels of price appreciation.
Sure, it may seem near impossible to get the best of both worlds. Oftentimes, you'll buy a high-yield dividend stock only to find you own a yield trap, where the share price losses exceed the quarterly cash payouts.
However, as always, there are exceptions to the rule. That's the story with the following three dividend stocks: Conagra Brands (CAG 3.15%), Realty Income (O +0.94%), and Oneok (OKE +0.93%). Not only could each one maintain its dividend in the years ahead, but over the next three years, each one could make a big move higher.
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An AI-driven turnaround could secure Conagra's high dividend
Year-to-date, shares in packaged foods company Conagra Brands have declined by over 37%. As has been the case with many of its competitors, Conagra has contended with the impact of high inflation and low growth on its fiscal performance.
NYSE: CAG
Key Data Points
This price drop, coupled with the company's relatively high debt position, has left investors concerned about the company's future prospects, including its $0.35-per-share quarterly dividend. This level of payout, annualized, gives the stock an 8.0% forward yield, but there are growing concerns about an eventual dividend cut. However, these concerns could prove overblown, thanks to the recently announced "Project Catalyst" initiative.
Project Catalyst, which utilizes artificial intelligence (AI) technology to identify areas for operational improvement, could significantly enhance the company's profitability. In turn, this could secure the dividend and drive a rebound for the stock. Shares, currently trading for just 10 times forward earnings, could rise in line with earnings growth, as well as due to valuation expansion.
Realty Income could rally on further rate cuts
Realty Income, best known as the real estate investment trust (REIT) that makes dividend payments monthly, delivered just modest gains in 2025, largely due to uncertainty about the potential for further interest rate cuts by the Federal Reserve.
Yes, the latest Fed minutes from the central bank suggest additional uncertainty regarding rate cuts. Fed officials remain divided on whether it's appropriate to keep lower rates, as inflation remains at elevated levels. However, if the latest Consumer Price Index (CPI) print indicating easing inflation proves to be the start of a trend, the Fed could reconsider its current view, and proceed with a further lowering of interest rates.
NYSE: O
Key Data Points
REITs are highly sensitive to changes in interest rates. If interest rates continue to fall in the years ahead, this could lead to a rerating of this popular REIT stock. Right now, Realty Income has a forward dividend yield of 5.7%. However, during periods of lower interest rates, Realty Income has had a dividend yield as low as 3.3%. Even if the REIT's forward yield fell to 4% to 4.5%, this would mean substantial upside for shares.
Oneok represents another solid high-yield turnaround play
Oneok, a midstream energy company, is another strong turnaround contender among high-yield stocks. Currently, shares have a forward dividend yield of 5.6%. With a payout ratio of approximately 76%, there are concerns about Oneok's dividend sustainability.
However, much like with Conagra, concerns about a dividend cut could be an overreaction. This stock may also have high share appreciation potential. Here's how. For one, Oneok has made some big acquisitions in recent years. Building out its portfolio of pipelines and energy storage infrastructure, the company is starting to generate cost synergies from these acquisitions.
NYSE: OKE
Key Data Points
Recently completed organic growth projects are also starting to contribute to earnings. With increased earnings, not only is Oneok's dividend secure, but the company is also putting its increased cash flow to work through debt reduction and share repurchases. Together, all of these efforts could have a tremendous positive impact on the stock price.
