You won’t find the word “dividend” listed as an antonym for growth in any thesaurus. But some investors might view dividends and growth as opposites.
It’s true that some companies that offer dividends aren’t likely to deliver significant share price appreciation. However, that’s not always the case. Here are three dividend stocks that could soar 34% to 54% over the next 12 months, according to Wall Street.
1. Air Products & Chemicals
Air Products & Chemicals (NYSE: APD) belongs to the elite group of stocks known as Dividend Aristocrats. The company has increased its dividend for 40 consecutive years. Its dividend yield currently tops 2.8%.
Although Air Products hasn’t delivered sizzling growth in the past, the stock outperformed the S&P 500 over the last five years until the recent stock market sell-off. Wall Street analysts expect that Air Products will return to its winning ways. The consensus 12-month price target for the stock reflects an upside potential of 34%.
Air Products is a top global supplier of industrial gases. It’s possible that the company could be negatively affected if the U.S. and other leading economic powers enter a recession.
However, Air Products’ long-term prospects appear to be strong. The company is focused heavily on carbon capture and clean hydrogen. Both technologies should enjoy higher demand in the future as governments and major corporations work to reduce carbon emissions.
2. Scotts Miracle-Gro
Scotts Miracle-Gro (NYSE: SMG) has lost nearly half of its market cap over the past 12 months. But analysts think the stock can rebound. The average price target for Scotts is 36% higher than the current share price.
Cannabis supplier Hawthorne has been Scotts’ fastest-growing segment in recent years. However, an oversupply of cannabis served as a big headwind for Hawthorne in 2021. Hawthorne group president Chris Hagedorn said in Scotts’ recent quarterly conference call that his team expects to “see the business bouncing back in a pretty significant way” by mid-summer.
Scotts’ consumer lawn and garden business continues to perform well. The company even raised its full-year outlook for the segment after a strong start and with price increases on the way to help offset higher costs.
Very few companies that operate in the cannabis industry pay a dividend, but Scotts is an exception. Its dividend yield currently stands at close to 2.3%.
Viatris (NASDAQ: VTRS) managed to defy the overall market sell-off for most of the first two months of 2022. However, shares of the generic drug maker plunged at the end of February. Wall Street remains bullish, though, with the consensus price target reflecting a 54% upside potential for Viatris.
Probably the biggest reason behind analysts’ optimism is that Viatris is dirt cheap right now. Its shares trade at less than three times expected earnings and only 0.72 times trailing-12-month sales.
Viatris stunned many investors with the decision to sell its biosimilars business to India-based Biocon Biologics. The deal will give Viatris up to $3.3 billion as well as a 12.9% stake in Biocon. However, it will also mean that Viatris won’t have several biosimilars that were expected to generate revenue growth in the future.
Meanwhile, Viatris continues to pay an attractive dividend that currently yields more than 4.7%. The company expects to grow its dividend payouts in the future.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.