The S&P 500 is considered the benchmark index for the U.S. stock market. It is comprised of the top 500 companies based on total market capitalization. Over the past year, S&P 500 stocks have increased 22%.
After the rent dip in the stock market, particularly among large-cap stocks, This is a great time to start buying into companies at a slight discount.
Below, I discuss three S&P 500 stocks that offer investors upside potential, a strong dividend yield and a low valuation, making these companies a perfect addition to an investment portfolio.
Caterpillar (CAT)
Caterpillar (NYSE:CAT) primarily manufactures and sells construction and mining equipment such as asphalt pavers, forestry machines, excavators, compactors, articulated trucks and tractors.
Due to solid earnings results and dividend increases, its share price has risen 33% over the past year.
On April 25, Caterpillar released its earnings for the first quarter of 2024, in which it stated that total revenue remained practically unchanged and net income rose by 47% compared to the year before.
On June 12, CAT also announced that it would raise its quarterly dividend by 8% to one dollar and 41 cents per share. The board of directors added another $20 billion in share buybacks to its program.
Caterpillar is trading at a decent valuation. Its forward P/E ratio is 15.95, while the sector average is 19.59.
Due to its dividend increases over the last 30 years, Caterpillar offers investors consistent growth potential and solid income generation. Its earnings growth is expected to continue.
Comcast (CMCSA)
Comcast (NASDAQ:CMCSA) is a communication services company that provides wireless and broadband services for residential and business customers. It also owns the streaming platform Peacock and the Universal theme parks in Florida, California, Japan and China.
Although its share price has fallen by 11% over the past year, the stock is a much better source of income than share price appreciation.
On July 23, Comcast reported earnings for the second quarter of 2024, stating that total revenue decreased by 3% and net income fell by 8%.
It offers investors a dividend yield of approximately 3.22% annually. Its most recent quarterly distribution was 31 cents per share, paid out on July 2.
Despite its falling share price over this past year, it still offers investors income generation due to its solid dividend yield.
It also trades at a fair valuation, with a forward P/E ratio of 9.26, while the sector average is 13.16.
Seagate Technology (STX)
Seagate Technology (NASDAQ:STX) is primarily a data storage technology company offering various uses for hard disk drives and solid-state disc drives.
On July 23, Seagate Technology reported earnings for the fourth quarter of fiscal year 2024, stating that total revenue increased by 18% year-over-year. The company reported a net loss of $92 million for Q4 of FY 2023, which improved to a net income of $513 million for Q4 FY 2024. It also noted the revenue outlook for the first quarter of fiscal year 2025. This is anticipated to be roughly $2.10 billion.
Seagate beat analysts’ expectations regarding its earnings result, and its share price is up approximately 5% pre-market.
It offers a dividend yield of 2.66% annually. In its most recent quarterly distribution on July 5, investors earned 70 cents per share.
STX is also trading at a firm valuation, with its forward P/E ratio of 17.69, while the median sector forward P/E is 24.60.
Seagate Technology offers investors share price appreciation, a strong dividend yield and a low valuation, making it a solid addition to an investment portfolio.
As of this writing, Noah Bolton did not hold (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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
