Despite recent volatility, the stock market remains near record highs. However, in the case of certain stocks, including some dividend stocks, various factors have placed them under pressure.
However, after falling 20% or more from their 52-week highs, now may be the time to go bottom-fishing with these stocks. Following their respective price declines, each now has a much higher forward yields, providing steady gains regardless of price action.
While some of these stocks have justifiably pulled back, in certain situations, the market has overreacted to perceived near-term negatives. The stocks I'm talking about are Best Buy (BBY 0.32%), Kimberly-Clark (KMB 1.27%), and Kraft Heinz (KHC 2.79%).
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High-yielding Best Buy still has recovery potential
Over the past year, factors like slowing consumer spending and tariff uncertainty have weighed on Best Buy shares, pushing them over 30% lower. Worse yet, according to analysts like J.P. Morgan's Christopher Horvers, these headwinds are likely to persist in 2026.
Just recently, the analyst downgraded the stock from "Overweight" to "Neutral" and lowered his price target from $99 to $76 per share. Yet while challenging times could continue for the electronics retailer, for long-term investors, this may have created an opportune entry point for shares.
At current prices, Best Buy trades for 11.5 times forward earnings. In the past, shares have traded at a slightly higher mid-teens forward multiple. Moreover, over a longer time frame, if issues like tariffs and high inflation fade, a big earnings rebound may be in store.
NYSE: BBY
Key Data Points
In the meantime, investors can collect Best Buy's 5.9% dividend. With a forward payout ratio of just 52.7%, this dividend appears sustainable. The company also has a 22-year track record of dividend growth. Payouts have increased by an average of 15.2% annually over the past 10 years.
Kimberly-Clark's upcoming merger could exceed expectations
In November, Kimberly-Clark announced plans to acquire Kenvue for a $48.7 billion in cash and stock. If completed, this deal will create one of the world's largest consumer health and personal care companies, with brands that include Huggies, Kleenex, Tylenol, Listerine, and Band-Aid.
Kimberly-Clark shares tumbled on news of the merger. Analysts and investors appear skeptical that the deal will create shareholder value. However, investors may be underestimating the impact this transaction could have on the company's bottom line.
NASDAQ: KMB
Key Data Points
As noted in the merger announcement, total annualized cost savings could reach $2.4 billion. Besides being accretive to Kimberly-Clark's earnings, the deal should bode well for future dividend growth.
Kimberly-Clark is one of the Dividend Kings, with over 50 years of consecutive annual dividend growth. Dividend growth has been modest, averaging 3.8% annually. However, increased earnings growth from the merger could lead to higher dividend growth in the future.
Kraft Heinz could still bounce back, even as it puts spin-off plans on pause
Earlier this month, Kraft Heinz paused plans to split its condiments and staple foods businesses into separate companies. Many investors may have seen this event as a key near-term catalyst, but the packaged food giant's latest plans could also pave the way for higher prices.
NASDAQ: KHC
Key Data Points
For one, it's possible that, even among food stocks, Kraft Heinz has become oversold. Shares have fallen by 25% from the stock's 52-week high. At current prices, shares trade for less than 10 times forward earnings. Compare that to peers like General Mills and Campbell's, both of which are at forward multiples in the low to mid-teens.
Given its valuation, even a small improvement could lead to a rerating. In the meantime, Kraft Heinz investors can collect the stock's relatively high dividend. At today's prices, the stock has a forward dividend yield of 6.6%
