Dividend investors scrambling for returns in the turbulent stock market may have an opportunity to lock in yields over 3.5% – and double-digit growth upside – with Stanley Black & Decker, UPS, and Ford stock.
These iconic American companies have faced severe headwinds like inflation, supply chain disruptions, and shifting consumer demand over the past year that have beaten down their share prices. However, savvy investors looking past the short-term challenges can scoop up these dividend payers on the cheap before their imminent comebacks.
As the US likely heads into recession in 2023, these stocks trade at tempting valuations while still delivering the type of stable passive income and long-term growth upside dividend investors crave.
Read on for an in-depth analysis of why Stanley Black & Decker, UPS, and Ford could return over 30% in 2024 and make perfect additions to dividend stock portfolios.
Stanley Black & Decker: More Than Just Tools
Stanley Black & Decker (NYSE: SWK), the power tools icon behind famous brands like DeWalt, Craftsman, and BLACK+DECKER, has faced a brutal couple of years.
Supply chain disruptions, raw material inflation, excess inventories, and a sagging outdoor tools business acquired in 2021 slammed margins and profits. SWK stock cratered nearly 60% from all-time highs as a result.
However, SWK has already begun major restructuring initiatives to drive a turnaround. This includes selling non-core assets, streamlining operations, cutting $2 billion in costs by 2025, and reducing SKUs by 70,000 to improve productivity.
These efforts aim to restore Stanley Black & Decker’s industry-leading profitability after adjusted gross margins cratered to around 20% last year. Margins recovered sharply to 28% in Q3 showing early progress. When combined with SWK’s plans to expand higher growth areas like healthcare, infrastructure, and defense, analysts see over 30% upside from current levels.
Despite the operational stumbles, Stanley Black & Decker impressively maintained its dividend streak spanning over 140 consecutive years. After hiking dividends annually for over 50 straight years, SWK’s stock now delivers a secure 3.6% dividend yield to ride out the volatility.
The company’s push to streamline its portfolio around core brands and recalibrate inventory levels better position Stanley Black & Decker for growth in 2024. Value hunters can pick up shares of this dividend aristocrat at just 11X earnings while collecting a solid passive income stream during the turnaround.
UPS: Ecommerce Behemoth Turned Healthcare Giant
Global logistics powerhouse UPS (NYSE: UPS) became a pandemic winner as consumers flocked online for deliveries while stuck at home. However, business-to-consumer deliveries slowed entering 2023 pressuring shares of UPS down nearly 20% from 2021 peaks.
Fears of a broad economic slowdown punishing UPS ignore the company’s expanding presence in sectors like healthcare and small business. High-margin healthcare shipments now drive over $10 billion in annual revenue for UPS with ample room for further penetration.
Additionally, UPS rapidly grows market share among small and medium businesses (SMBs) via innovative digital access programs. Over 1.2 million SMBs utilized UPS shipping solutions last year, a figure likely topping 1.5 million after 2022’s growth.
The company reinvested pandemic-era profits into dividends and debt reduction leaving UPS with a fortress balance sheet. Even if consumer deliveries continue sliding in the near-term, UPS can maintain its 4.3% dividend yield which has increased annually since 2010.
Shares trade at just 13X earnings presenting a bargain opportunity for income investors. UPS continues evolving beyond just an ecommerce delivery platform making its cheap valuation and big dividend difficult to ignore.
Ford: An EV Leader Trading Like a Dinosaur
Legacy automaker Ford (NYSE: F) faced immense pressure in 2022 from production halts, EV growing pains, and ballooning costs. Nonetheless, the company continues outpacing rivals by delivering over 121,000 electric vehicles year-to-date.
Management expects full-year EV production to top 150,000 vehicles showing Ford’s smooth transition towards sustainable transportation despite significant near-term losses. In fact, Ford plans to become the second largest US EV automaker within two years even while battling exorbitant inflation and supply chain headaches.
The automaker does trade at just a 6.8X P/E ratio making Ford seem more like a dinosaur than an innovator. However, Ford holds over $29 billion in cash on hand and produced $12.4 billion in operating cash flow over the last 9 months.
The balance sheet easily supports consistent dividends with Ford’s 5.85% dividend yield presenting income investors exciting value.
Importantly, management maintains 2026 as the target for Ford’s EV business to turn profitable. As the electric Mustang Mach-E, F-150 Lightning, and E-Transit gain momentum and scale, profitability looks achievable.
Ford may struggle through 2023’s tough macro storm, but Patient investors can secure a 5%+ dividend yield and benefit from the coming EV revolution.
The Bottom Line
As fears of a 2023 economic recession weigh on the overall stock market, dividend stocks often provide safety through consistent passive income and upside when conditions improve.
Iconic American companies Stanley Black & Decker, UPS, and Ford face company-specific headwinds near-term, but trade at tempting valuations for dividend investors seeking secure yields over 3.5%.
Their inexpensive multiples, high dividends, loyal customer bases, and restructuring initiatives underway make 30%+ upside in 2024 achievable. Investors looking past short-term noise can scoop up these dividends at a bargain before the turnaround gains steam heading into 2024.