The stock market’s rally has raised concerns about an impending 10-15% correction. While mega-cap tech stocks have struggled, value stocks unaffected by AI hype may fare better. At least, that’s what the market appears to be pricing in right now. AI investments must soon yield significant returns, or disappointment could follow.
Moreover, aside from AI hype, its also best to look into stocks that offer excellent dividends. Dividend stocks have long been investor favorites for their reliable income and increased portfolio returns over time, especially when undervalued. These successful businesses have weathered numerous cycles with strong management, sharing profits with shareholders.
Here are three such stocks to consider that offer long-term dividends and excellent total return upside.
Restaurant Brands (QSR)
Restaurant Brands International Inc. (NYSE:QSR) strengthened its China presence with two key transactions. QSR acquired Popeyes China from TH International Limited for $15 million, allowing direct ownership and operation of 14 outlets in Shanghai, with plans for expansion. Additionally, QSR and Cartesian Capital invested up to $50 million in Tims China via convertible notes, enhancing QSR’s equity stake to 18% and securing two board seats.
Restaurant Brands’ investments in Popeyes and Tims China highlight its focus on leveraging China’s market growth. With strong early performance, Popeyes China is set for significant development. The Tims China investment aligns with capitalizing on the expanding Chinese coffee market. These excellent business moves shows how committed QSR is to growth and strengthening its market position.
Moreover, the company is focused on revamping its branches, especially Burger King. The company set remodeling plans and increased advertising for the fast food chain. Notably, Restaurant Brands spent $1 billion acquiring Carrols Restaurant Group to accelerate renovations.
With a 3.2% dividend yield and a reasonable valuation, this is a stock I think could have more room to run from here. Analysts’ median price target for QSR stock is 23% above its current price.
Meta Platforms (META)
Meta Platforms (NASDAQ:META) has outperformed the S&P 500, with a 44% year-to-date gain in addition to a dividend yield of 0.40%. Trading at 29x earnings, Meta is another company that appears to be reasonably valued. Much of this has to do with the company’s fundamentals, with Meta reporting 3.24 billion daily active users in Q1, a 7% increase. Revenue grew 27% and net income surged 117% year over year.
Meta has successfully utilized AI to enhance user engagement and content personalization. This strategy boosted ad impressions by 20% and operating income surged to $13.8 billion in Q1, reflecting strong profitability growth. Despite heavy investments in AI and the metaverse, Meta returned substantial value to shareholders, paying $1.3 billion in dividends and repurchasing $14.6 billion in shares in Q1. This reduced share count and increased profits are set to boost earnings per share moving forward.
Recently, Meta CEO Mark Zuckerberg issued $4 million worth of shares for sale on July 11. Each share were valued $534.48, and was sold through the Chan Zuckerberg Initiative Foundation. The total value for this transaction was $4.14 million according to its SEC filing.
PepsiCo (PEP)
With products becoming widely available around the world, PepsiCo (NASDAQ:PEP) remains a top stock for long-term investors to consider. The company’s portfolio includes world-class brands such as Lay’s, Pepsi, and Doritos. Driven by strong execution, the company’s revenue reached $91.5 billion in 2023, as net income hit $9.1 billion.
The company has been consistent with its strong free cash flow, gaining $6.9 billion in 2023, raising its quarterly dividend of 7.1%. In Q1 2024, revenue reached $18.3 billion, as net income reached $2 billion. Pepsi Co expects more growth in 2024, projective over 4% in organic revenue.
The stock remained attractive despite ongoing challenges. With shares down 10% from May’s peak, current issues were largely priced in. CEO Laguarta acknowledged Frito-Lay’s struggle with price-sensitive consumers, stating they seek more value. He expressed confidence that addressing these concerns would lead to growth, highlighting the tools and resources in place to improve performance.
On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.