Life and the market are about compromise. Generally speaking, if you’re looking for high growth, you typically aren’t getting much in the way of dividends, if anything. On the other hand, established enterprises usually offer robust passive income at the expense of growth potential. Still, on rare occasions, it’s possible to have high-yield safe stocks that can also expand the top line.
Fundamentally, the math helps the underlying narrative. Presently, we have thousands upon thousands of publicly traded opportunities available. It’s simply not possible for analysts to provide equal coverage to every enterprise. So, it’s inevitable that some companies – even big ones – fall through the cracks. Intrepid investors can exploit this “coverage gap” so to speak and potentially profit handsomely.
Further, in shaky circumstances – such as a recovery from a pandemic – the established players can deliver some surprises. Basically, their massive footprint enables surprisingly stout performances. With that in mind, below are enticing high-yield safe stocks to consider.
PepsiCo (PEP)
One of the world’s biggest beverage (and snack) manufacturers, PepsiCo (NASDAQ:PEP) is no stranger to the business community. Thanks to its massive footprint, it easily commands stability. Further, amid a tough economic environment, PepsiCo offers a cheap source of caffeine. Given this and many other advantages, it’s no surprise that analysts rate PEP stock a consensus moderate buy.
Another factor to consider regarding Pepsi is its financial consistency. During the past four quarters, its average earnings per share landed at $1.90. However, covering experts anticipated EPS of almost $1.81. Therefore, the earnings surprise came out to nearly 5.1%. That’s not bad for an established stalwart.
During the trailing 12 months (TTM), Pepsi posted net income of $9.18 billion or earnings of $6.63 per share. Revenue during the cycle came out to $91.88 billion. For fiscal 2024, experts anticipate 11.2% growth in the top line to $94.44 billion.
Lastly, the company offers a forward dividend yield of 3.33%. It makes a solid case for high-yield safe stocks to buy.
Exxon Mobil (XOM)
On the surface, integrated oil and gas giant Exxon Mobil (NYSE:XOM) might not seem the most relevant idea for high-yield safe stocks. With the ideological winds pushing for green and sustainable solutions, Exxon seems anachronistic. Still, the world runs on oil. And one geopolitical flashpoint could change the narrative cynically in favor of XOM stock. Thus, it carries a moderate buy view among experts with a $135.53 average price target.
Admittedly, Exxon has encountered a rough patch in terms of meeting expectations. In the past four quarters, its average EPS reached just under $2.19. However, analysts were looking on average for around $2.20. Therefore, the earnings surprise landed at about half a percent below parity. That’s not ideal.
During the TTM period, Exxon posted net income of $32.8 billion or $8.16 per share. Revenue in the cycle hit $335.35 billion, which is rather disappointing. For fiscal 2024, analysts only see a modest lift in the top line to $353.7 billion. However, it’s also possible that sales could soar to $470.13 billion based on geopolitical rumblings.
Oh yeah, the oil giant offers a big yield of 3.31%.
McDonald’s (MCD)
Fast-food giant McDonald’s (NYSE:MCD) really needs no introduction. Basically, the Golden Arches is both a business icon and a symbol of American capitalism. So, when it comes to attributes like brand power and awareness, MCD hits the safe component of high-yield safe stocks. However, does it provide much growth and is it a dividend monster?
To be sure, it’s pretty much impossible to expect a blue-chip icon to have the growth potential of a promising tech startup. However, McDonald’s is a respectable growth machine given how long it’s been in business. During the TTM period, it posted net income of $8.6 billion on sales of $25.76 billion. In the most recent quarter, its sales growth rate (year-over-year) came in at 4.6%.
Sure, that’s not the most impressive stat you’ve seen. However, keep in mind that for fiscal 2024, analysts anticipate revenue of $26.6 billion. That’s up 11.7% from the prior year. As for the bottom line, McDonald’s has seen average EPS of $2.96 in the past four quarters. That helps to support the underlying dividend yield of 2.67%. Overall, it’s one of the balanced high-yield safe stocks to buy.
On the date of publication, Josh Enomoto 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
