As the stock market tumbles at the prospects of an imminent recession, the relative stability of high-yield stocks offer a safe harbor for investors. Generating current income from portfolio holdings has become more important than ever.
Accordingly, buy-and-hold investors are looking for for the best high-yield stocks to help them safely navigate a volatile stock market.
So far in 2022, the S&P 500 High Dividend Index has gained around 5%, whereas the S&P 500 Index has declined roughly 14% year to date. Furthermore, the iShares Core High Dividend ETF (NYSEARCA:HDV) has returned 7.4%
High-yield stocks with robust businesses shield investors from high inflation while generating reliable returns. For example, research indicates that dividend stocks gained 1.8% even during the 2000s when the stock markets crashed at the height of the dot.com bubble.
With that information, here are seven high-yield stocks that offer a safe path to tap into lucrative yields in the summer:
|AAP||Advance Auto Parts||$171.48|
|AEO||American Eagle Outfitters||$11.58|
|CWH||Camping World Holdings||$25.46|
|IGT||International Game Technology||$18.85|
Advance Auto Parts (AAP)
52-week range: $172.86 – $244.55
Advance Auto Parts (NYSE:AAP) is a leading aftermarket automotive parts provider with over 4,700 stores in North America. Sales to professionals account for roughly 60% of total revenue.
The company released Q1 results on May 23. Revenue increased 1.3% year over year to $3.4 billion. Adjusted diluted earnings increased to $3.57 per share, compared to $3.34 a year ago. Cash and equivalents ended the period at $139 million.
Advance Auto Parts reported the eighth consecutive quarter of comparable store sales growth. In 2021, the average age of vehicles on our roads hit a record 12.2 years. Thus, the company is expected to benefit, since it primarily profits from drivers who keep their existing vehicles longer.
AAP stock has declined nearly 28% so far this year. The dividend payout currently generates a yield of 3.24%, which puts it among the high-yield stocks that are ready to bounce back. Shares have a reasonable valuation at 14.4 times forward earnings and 1.15 times sales. The 12-month median price forecast for AAP stock stands at $190.
American Eagle Outfitters (AEO)
52-week range: $11.61 – $38.99
Clothing retailer American Eagle Outfitters (NYSE:AEO) offers clothing, accessories, and personal care products worldwide, under its flagship legacy brands, American Eagle and Aerie.
The size of the U.S. retail market stands at $317 billion. Therefore, with a market capitalization (cap) of $2.1 billion, investors are hopeful that American Eagle Outfitters can continue to generate quarters of growth.
The retailer announced Q1 results on May 26. Revenue increased 2% year over year to $1.06 billion even though margins were pressured by rising freight and labor costs. Net income declined to 16 cents per diluted share, down from 46 cents a year ago. Cash and equivalents ended the period at $229 million.
Piper Sandler’s (NYSE:PIPR) Taking Stock with Teens survey recently revealed that American Eagle is the second most popular women’s apparel brand as well as the third most popular men’s apparel brand among teens.
Yet, AEO stock has tanked more than 54% year to date, but the generous 5.6% dividend makes it a high-yield stock worth keeping your eyes on. Shares are priced at a bargain valuation of 6.1 times forward earnings and 0.6 times sales. The 12-month median price forecast for AEO stock stands at $16.
Camping World Holdings (CWH)
52-week range: $24.58 – $46.77
Recreational vehicle (RV) retailer Camping World Holdings (NYSE:CWH) is well known among RV enthusiasts stateside. It offers products and services for about 11 million U.S. households that own RVs.
According to demographic data RV owners tend to be middle-aged, married, and earning more than $62,000 per year. The industry’s economic impact is valued at about $114 billion.
Wall Street pays attention to companies in this niche segment.
Camping World issued Q1 results on May 3. Revenue increased 6.7% year over year to $1.7 billion. Adjusted earnings came in at $1.15 per diluted share, down from $1.40 a year ago. Cash and equivalents ended the period at $139.5 million.
The company generated record sales driven by its peer-to-peer (P2P) RV-rental platform. Meanwhile, the RV Industry Association (RVIA) forecasts strong demand could make 2022 the RV industry’s second-best year on record after 2021.
The RV retailer also provides insurance, roadside assistance, and repair services. These segments mean relatively consistent cash flow during market downturns.
In March, management increased its dividend payout to an annual $2.50. At present, CWH stock generates an impressive 9.5% dividend yield at current prices, making it one of the more tempting high-yield stocks to buy.
Cheesecake Factory (CAKE)
52-week range: $27.42 – $63.25
Casual dining chain Cheesecake Factory (NASDAQ:CAKE) operates more than 300 restaurants throughout the U.S. and Canada under The Cheesecake Factory and North Italia brands.
It closed out 2021 with revenues of over $2.9 billion.
The restaurant operator released Q1 results on April 27. Revenue soared 27% year over year to $794 million. Adjusted net income came in at 47 cents per diluted share, compared to 20 cents a year ago. Total available liquidity stood at $424 million.
Comparable sales at The Cheesecake Factory and North Italia restaurants jumped 20.7% and 32% year over year, respectively, highlighting pent-up demand after the ease of Covid-19 lockdowns. Management now expects revenue in metropolitan areas to surpass pre-pandemic levels in the coming months.
So far in 2022, CAKE stock has declined 16%. It currently supports a 3.4% dividend yield. Shares offer value 11 times forward earnings and just 0.5 times sales. Meanwhile, the 12-month median price forecast for CAKE stock stands at $44.
International Game Technology (IGT)
52-week range: $17.27 – $32.95
Our next high-yield stock comes from across the pond. London-based International Game Technology (NYSE:IGT) provides gaming technology products and services. It generates the bulk of its revenue from its Global Lottery and Global Gaming segments.
International Game Technology put out Q1 results on May 10. Revenue increased 4% year over year to $1.05 billion. Net income declined to 39 cents per diluted share, compared to 44 cents a year ago. Cash and equivalents ended the period at $685 million.
Investors noted that Global Gaming revenue increased 42% year over year to $325 million, more than compensating for the decline in Global Lottery revenue. In April, the company announced an agreement to acquire iSoftBet, a leading iGaming content provider, for 160 million euros. Wall Street expect the transaction to contribute to the top line.
So far in 2022, IGT stock has lost more than 35% of its value and supports a 3.65% dividend yield. Shares are changing hands at 13 times forward earnings and 1 times sales. The 12-month median price forecast for IGT stock stands at $36.
52-week range: $22.70 – $67.76
Rent-A-Center (NASDAQ:RCII) leases durable household goods and consumer electronics to North American customers on a lease-to-own basis. Customers usually make rental payments with the option to own the product they agree to rent.
On May 4, Rent-A-Center issued Q1 results. Revenue grew by 12% to $1.16 billion. However, adjusted diluted earnings per share declined to 74 cents, down from $1.32 in the prior-year period. Additionally, RCII had an outstanding debt of $1.4 billion at the quarter-end, compared with $439 million in liquidity.
In 2021, Rent-A-Center acquired Acima, which offers rent-to-own financing. The transaction has boosted the company’s store footprint and is helping grow the bottom line.
Yet, RCII stock has tumbled 52% year to date. It currently yields a generous 5.2% dividend. Shares are undervalued at 4.2 times forward earnings and 0.35 times sales. Lastly, the 12-month median price forecast for RCII stock stands at $42.
52-week range: $44.17 – $84.96
Our final of the high-yield stocks to buy is the apparel and footwear giant VF (NYSE:VFC). Its brands include Vans, The North Face, and Timberland.
On May 19, VF released its Q4 and full-year metrics. Revenue increased 9% year over year to $2.8 billion. Adjusted earnings came in at 45 cents per share, up 67% year over year. Cash and equivalents ended the period at $1.28 billion.
Sales from the North Face brand grew 24% year over year and generated 27% of total sales. Q4 gross margin stood at almost 52% despite rising input costs.
So far in 2022, VFC stock has lost more than 38%. Readers would be interested to know that the company is just one year away from becoming a Dividend King. The recent selloff has elevated the dividend yield to 4%.
Shares are changing hands at just 13 times forward earnings and 1.6 times sales. The 12-month median price forecast for VF stock stands at $51.
On the date of publication, Tezcan Gecgil, PhD, did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.