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With the Fed expected to cut rates, high-yield dividend stocks are poised for a major rally. Fund managers are eager to snap up these juicy dividends in a low-rate environment.
$AT&T Inc(T)$ , the telecom giant, and $Pfizer(PFE)$ , the drugmaker, seem like steals right now. Both of these stocks offer yields above 6%. Once rates start to drop, fund managers will be all over them like flies on honey!
1.AT&T
AT&T, a household name in the US telecom industry, is trading at a significant discount. While the industry average trailing PE ratio is 11.7, AT&T's PE ratio stands at just 8.84.
This low valuation, coupled with AT&T's impressive 6.4% annualized yield, makes it a potential gem for both value investors and income seekers.
And the good news is, AT&T's juicy dividend seems sustainable, thanks to their ambitious cost-saving plan. Launched in 2020, the plan aims to save a whopping $6 billion!
In short, AT&T stock is a buy for its high dividend, attractive valuation, and improving fundamentals.
2.Pfizer
Pfizer's share price has taken a beating over the past two years, mainly due to the decline in sales of COVID-related products and the expiration of several key patents.
But despite these challenges, Pfizer stock still offers a great opportunity for long-term investors. The company's forward PE ratio stands at 12, significantly below the industry average of 17.
Moreover, Pfizer boasts the highest yield among large pharma stocks, clocking in at 6.2%.
This big pharma stock is a buy because its product pipeline, especially in oncology, is potentially undervalued. Plus, its sky-high yield and attractive valuation make it a steal!
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