Two high-yield dividend stocks that Wall Street believes could rise 29% and 24% in 2024.

By | December 18, 2023

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Investors looking for a mix of capital growth and passive income generation can currently find what they are looking for in the healthcare sector. Wall Street analysts who follow a real estate investment trust and one of the world’s largest pharmaceutical companies think they’re not getting as much attention as they deserve.

In addition to well-above-average returns, the price targets that investment bank analysts have attached to these stocks suggest they could rise 29% and 24% over the next twelve months.

Before you fill your portfolio with these dividend stocks, it’s important to realize that investment banking analysts who set lofty price targets may simply adjust those targets downward if things don’t work out later.

Wall Street analyst.Wall Street analyst.

Image source: Getty Images.

Here you can take a closer look at whether they are a good fit for your portfolio.

Reliance on medical properties

Shares of Reliance on medical properties (NYSE: MPW), a real estate investment trust (REIT) that owns hundreds of hospitals, is down about 53% this year. Wall Street analysts who follow the company believe it can recoup some of those losses in 2024. The consensus price target for the stock represents a gain of 29% over the next twelve months.

Earlier this year, Medical Properties Trust nearly halved its dividend to $0.15 per share. The share price has fallen so far that it offers a huge yield of 11.5% at recent prices.

Medical Properties Trust is a net lease REIT, meaning its cash flows are very reliable as long as the hospital operators to whom it leases buildings can pay their rent. Earlier this year, the company had to reduce its payout after several tenants struggled to make ends meet.

This REIT offers a high enough yield at recent prices to earn market gains even if the stock price never rises. Of course, the dividend program won’t help you retire faster if management has to cut the payout again.

In the third quarter, Medical Properties Trust recorded $0.38 per share in normalized funds from operations, a measure of earnings used to evaluate REITs. That is more than double the amount needed to meet the dividend obligation.

While its third-quarter results suggest this REIT is on solid financial footing, the REIT has also sold assets to increase liquidity. People who are already retired and need dividend payments they can rely on will likely want to pass on this stock. With interest rates likely to fall significantly in 2024, servicing the debt burden could become much easier. For investors with a moderate risk tolerance, adding a few stocks to a diversified portfolio may be the right move.

Pfizer

Shares of Pfizer (NYSE:PFE) have outperformed Medical Properties Trust, but are still down about 39.5% this year. Wall Street is more than a little optimistic about 2024. The average price target for the stock implies a gain of 24% over the next twelve months.

At recent prices, Pfizer offers a yield of 6.1%. This isn’t nearly as exciting as Medical Properties Trust’s dividend, but it’s still well above average. The average dividend-paying stock in the benchmark S&P500 index offers a return of 1.5%.

Pfizer stock recently plummeted in response to forward-looking estimates that disappointed Wall Street. The high end of management’s estimated 2024 revenue was $1.7 billion below the average expectation of Wall Street analysts.

Pfizer’s 2024 prospects were disappointing as sales of its COVID vaccine, Comirnaty, and its antiviral treatment, Paxlovid, are expected to reach just $8 billion next year. That’s an unthinkable drop when you consider that sales of these drugs reached a combined $56.7 billion in 2022.

Pfizer recently completed its $43 billion acquisition of Seagen, and the timing could hardly have been better. The day after the acquisition was completed, the FDA approved Seagen’s cancer drug Padcev for the treatment of first-line bladder cancer patients, in combination with Keytruda. The approval makes Padcev plus Keytruda the first chemotherapy-free treatment option for approximately 82,000 Americans who receive their first bladder cancer diagnosis each year.

Pfizer’s shares trade at the relatively low price of just 14.6 times trailing earnings, which doesn’t seem to account for Padcev’s potential growth spurt in the coming years. Now seems like the right time to add more shares of this high-yield dividend payer to a diversified portfolio.

Should You Invest $1,000 in Medical Properties Trust Now?

Consider the following before purchasing shares in Medical Properties Trust:

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Cory Renauer holds positions in Medical Properties Trust. The Motley Fool holds and recommends positions in Pfizer. The Motley Fool has a disclosure policy.

Two high-yield dividend stocks that Wall Street believes could rise 29% and 24% in 2024. was originally published by The Motley Fool

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