3 Magnificent S&P 500 Dividend Stocks Down 62%, 63%, and 64% to Buy and Hold Forever

In This Article:

Key Points

  • After several years of subpar results, retailer Target is primed for a rebound in more discretionary-minded spending.

  • Pharmaceutical giant Pfizer’s post-pandemic hangover may finally be about to abate.

  • PepsiCo shares’ prolonged weakness makes sense, but the future looks more promising than the recent past.

  • 10 stocks we like better than Target ›

With China and the United States finally talking to one another regarding tariffs, there's a glimmer of hope on the macroeconomic horizon. Investors might want to continue thinking and acting defensively though, given that we still don't exactly what the future holds. That would mean owning fewer risky growth stocks than you normally might, and holding a few more dividend payers that can generate reliable cash flow regardless of the economic environment.

With that as the backdrop, here's a rundown of three solid S&P 500 dividend stocks that have been driven down far more than they deserve, driving their dividend yields up to levels too good to pass up.

Target

There's no denying Walmart stock has outperformed Target (NYSE: TGT) stock since the dust of the pandemic finally started to settle in 2021. Indeed, although Walmart is back within sight of its record high reached in February, Target shares are near a five-year low. The stocks' disparate performances reflect the two retailers' differing results. Target's higher-end "cheap chic" schtick hasn't resonated as much with consumers who are simply looking for affordable consumer staples in this high-inflation environment.

Nothing lasts forever though. As time marches without any hint of an actual recession taking hold, the closer we inch toward economic growth that creates demand for Target's more-premium discretionary offerings.

We're already seeing glimpses of this recovery, in fact, even if it's difficult to believe the world's ready to rebound in the midst of tariff-fueled turbulence. For instance, Target topped its revenue and earnings estimates for the quarter ending in early February, while same-store sales improved by 1.5%. That's not much, but it's a respectable start to a turnaround following several years' worth of subpar sales. In this vein, although analysts aren't looking for much heroic growth this year, the top line should swell by nearly 3% next year, with earnings following suit. That would actually be a big victory for this recently beleaguered retailer.

This doesn't mean it will be easy -- or consistent -- to be clear. While there's reason for hope that consumer spending can grow again (perhaps boosted by lower interest rates), the U.S. economy is still on shaky ground.