Short term trends and temporary liquidity fixes have helped push the market higher but have not changed the fact that we are still in a stock pickers market. Long term income investors are looking for high yield undervalued stocks to add to their portfolio. Analyst upgrades have been coming across multiple sectors without preference to any specific industry.
Each of these dividend-paying stocks has been recently upgraded to a buy or outperform rating and has a dividend yield of 2% or more. We’ve highlighted the reason for the upgrade and the new price target for each stock.
Allstate was upgraded by Deutsche Bank from a hold to a buy on December 2nd. Their new price target is $31/share. Allstate was recently trading at $27.27 per share. Deutsche said that ALL is trading at a discount to competitors and believe that it’s poor stock performance is overdone.
Allstate is an insurance company that primarily focuses on personal property and casualty insurance. ALL has a dividend yield of 3.1%. They increased their dividend slightly in 2011 after making a major cut back in 2009.
Cracker Barrel (CBRL)
Cracker Barrel was upgraded by Morgan Keegan from market perform to outperform on December 2nd. Morgan Keegan set a price target of $58 per share based on strong sales trends for CBRL.
Cracker Barrel is a national restaurant chain and country store. I’ve eaten there many times myself and have always enjoyed their food and store. CBRL has a dividend yield of 1.9% and has raised their dividend for the last 8 years. Their 5 year dividend growth rate is 11.9% and they have a payout ratio of 25%.
Seagate Technologies (STX)
Seagate was upgrade by Argus from a hold to a buy on December 1st. Argus set a price target of $24 per share as they expect Seagate to take advantage of drive supply constraints after the flooding in Thailand.
Seagate is a hard drive manufacturer and storage service provider. STX has a dividend yield of 3.3%. They resumed paying dividends in 2011 after not paying a dividend in 2010.
Cenovus Energy (CVE)
Cenovus Energy was upgraded from equal weight to overweight by Barclays Capital on November 30th. Barclays set a new price target of $42 per share as it lifted its mid-cycle West Texas Intermediate crude-oil price.
Cenovus Energy is an oil company that operates oil sands properties and crude oil production in Alberta and Saskatchewan. They also own two refineries in the Midwest. CVE has a dividend yield of 2.4%. They started paying dividends in 2009 but have not raised their dividend during the last 2 years.
Banco Santander (SAN)
Banco Santander was upgraded by Deutsche Bank from a hold to a buy on November 28th. Their new price targe is $85 per share which is lower then their previous price target. They believe there is tremendous value in the stock at current levels. SAN was recently trading at $72.27.
Banco Santander is a Chilean banking institution that provides financial services to retail, middle market and global clients. SAN has a dividend yield of 3.3%. They pay their dividends annually and have increased their dividend for the last two years.
BRE Properties (BRE)
BRE Properties was upgraded by RBC Capital Markets to an outperform rating on November 28th. They set a new price target of $55 per share due to valuation and improvements in Southern California. BRE was recently trading at $48.52 per share.
BRE Properties is a physical property REIT that owns and manages multifamily apartment communities mostly located on the West Coast. BRE has a dividend yield of 3.1%. Their dividend has remained unchanged in 2011 from 2010.
T. Rowe Price (TROW)
T. Rowe Price was upgraded by Ticonderoga from neutral to buy on November 30th. They set a new price target of $57 per share due to better fund flows and excellent equity performance.
T. Rowe Price is an investment services company that consults with individuals and institutional investors. TROW has a dividend yield of 2.1% and has raised their dividend for the last two years in a row. Their payout ratio is 41%.