High Dividend Stocks: Wolfe Research’s Value Picks for Rising Bond Yields

In an investment landscape increasingly shaped by rising bond yields, particularly from long-term Treasury bonds, a new challenge emerges for investors seeking stable returns. The shift in fixed-income markets has put pressure on traditional risk assets, prompting a reevaluation of where value and security can be found. Amidst this volatility, Wolfe Research has pinpointed a selective group of companies that offer a compelling blend of attractive dividend payouts and modest valuations, presenting potential havens for capital.

Wolfe Research’s Investment Strategy

Wolfe Research’s latest analysis arrives as the 30-year Treasury bond yield reached 5.161% and the 10-year yield surpassed 4.6%, levels that typically exert downward pressure on equities. In response, Wolfe focused on identifying companies that deliver dividend yields 60% to 80% higher than the broader market average. Crucially, they avoided the absolute highest-paying companies, a strategy designed to mitigate the risk of future dividend cuts. Their selection criteria emphasize businesses with stable revenue streams and sensible pricing, making them prime candidates for investors prioritizing consistent returns amidst market fluctuations.

Featured Dividend Opportunities

Western Alliance Bancorp (WAL)

Among Wolfe’s selections is Western Alliance Bancorp (WAL), an institution demonstrating significant resilience. Despite a 13% year-to-date share price decline, it offers a 2.1% dividend yield and trades at a compelling 7.7 times projected earnings. Analysts show strong confidence, with twelve of thirteen experts recommending a ‘buy’ and projecting a 27% upside. The Phoenix-based bank has notably strengthened following the 2023 regional banking turmoil, with Truist Securities highlighting its strong organic growth within its segment.

Qualcomm (QCOM)

Technology giant Qualcomm (QCOM) also made the list, boasting a 2.4% dividend yield and an attractive valuation of 12.4 times estimated earnings. While its shares have seen a modest 3% decline this year, the company’s robust cash flow and commitment to shareholder returns instill confidence. Bernstein underscored Qualcomm’s balanced strategy, noting management’s pledge to return 100% of its free cash flow to shareholders through a combination of dividends and share buybacks.

Voya Financial (VOYA)

Completing Wolfe’s picks is Voya Financial (VOYA), a leading provider of retirement services. Despite a slight share dip of over 2% year-to-date, Voya offers a substantial 2.7% dividend yield and trades at 7.6 times expected earnings. Piper Sandler maintains an ‘overweight’ rating, pointing to its strong first-quarter cash flow of $200 million and significant inflows of $31 billion into its wealth management segment. The strategic integration of OneAmerica further solidifies its position. With a consensus analyst estimate for a 17% potential upside, Voya stands out as a compelling choice for investors seeking a blend of growth and steady income in defensive portfolios.