Since the financial crisis in 2008, growth stocks have significantly outperformed value stocks. However, sticky inflation and elevated interest rates have some investors seeking the relative safety and stability of cash flows and profits. Dividends also provide a dependable source of income in an uncertain economic environment.
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The Morningstar analyst team rates all the stocks in its coverage universe on a scale of one to five stars, so if you’re looking to prioritize consistency, value and income in your portfolio in 2024, here are seven value stocks to buy that have four- or five-star Morningstar ratings and dividend yields of at least 4%:
| Stock | Implied upside from June 26 close | Dividend yield |
| Pfizer Inc. (ticker: PFE) | 53.2% | 6.1% |
| Bristol-Myers Squibb Co. (BMY) | 48.2% | 5.7% |
| Gilead Sciences Inc. (GILD) | 40.0% | 4.4% |
| CVS Health Corp. (CVS) | 53.4% | 4.4% |
| Realty Income Corp. (O) | 44.3% | 6.0% |
| Kraft Heinz Co. (KHC) | 76.4% | 5.0% |
| Healthpeak Properties Inc. (DOC) | 57.5% | 6.2% |
Pfizer Inc. (PFE)
Pfizer is one of the world’s largest pharmaceutical companies and has a diversified portfolio of drugs for treating a variety of conditions. Its top drugs include its Comirnaty COVID-19 vaccine, its Paxlovid COVID-19 oral treatment and its Prevnar pneumococcal vaccine. Pfizer’s 6.1% dividend is the highest yield of any stock on this list. Analyst Damien Conover says Pfizer’s financial performance has been solid, and the company is making significant progress toward its goal of completing $4 billion in cost cuts by the end of 2024.
Morningstar has a “buy” rating and $42 fair value estimate for PFE stock, which closed at $27.42 on June 26.
Bristol-Myers Squibb Co. (BMY)
Bristol-Myers Squibb is a biopharmaceutical company that specializes in oncology, immunology and cardiovascular therapeutics. The company’s leading drugs include blood thinner Eliquis, lung cancer drug Opdivo and multiple myeloma drug Pomalyst. Conover says sales of cancer drug Revlimid have exceeded his expectations, but Bristol-Myers’ new product sales were somewhat disappointing in the first quarter. Unfortunately, Revlimid sales will likely decline sharply in coming years amid generic competition. However, Conover says Bristol-Myers has such a strong pipeline of new products that it can offset its looming patent cliffs.
Morningstar has a “buy” rating and $63 fair value estimate for BMY stock, which closed at $42.50 on June 26.
Gilead Sciences Inc. (GILD)
Gilead Sciences is a biopharmaceutical company that develops treatments for HIV/AIDS, hepatitis C, liver disease, hematology/oncology and inflammation. Its leading drugs are HIV drugs Biktarvy and Genvoya and antiviral medication Veklury. Analyst Karen Andersen says it’s encouraging that Gilead’s long-acting HIV therapy has advanced to late-stage clinical trials, and she expects positive trial data later in 2024. In addition, Andersen says Gilead’s liver disease portfolio is well positioned for sustainable growth after reporting 9% growth in the first quarter of 2024.
Morningstar has a “buy” rating and $97 fair value estimate for GILD stock, which closed at $69.31 on June 26.
CVS Health Corp. (CVS)
CVS Health is the largest U.S. pharmacy health care provider. Including dividends, the stock is down 21.8% in 2024 through June 26, the worst performance of any stock on this list. However, analyst Julie Utterback says the recent weakness is a buying opportunity for long-term investors. In the near term, Utterback says CVS is facing headwinds in its Medicare Advantage and pharmacy benefit manager (PBM) businesses. But Utterback says CVS’s health insurance, retail pharmacy and PBM businesses create the potential to lower health care costs and improve health outcomes. Morningstar has a “buy” rating and $93 fair value estimate for CVS stock, which closed at $60.63 on June 26.
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Realty Income Corp. (O)
Realty Income is a retail real estate investment trust (REIT) that owns, develops and manages U.S. retail real estate with a focus on single-tenant buildings. It is the largest triple-net REIT in the U.S., meaning tenants pay all property expenses, including real estate taxes, maintenance and building insurance. Realty Income has a 6% dividend yield and makes monthly dividend payments, making it an attractive income source. Analyst Kevin Brown says Realty has recently acquired properties in Europe at a significantly higher cap rate than U.S. properties offer.
Morningstar has a “buy” rating and $76 fair value estimate for O stock, which closed at $52.68 on June 26.
Kraft Heinz Co. (KHC)
Kraft Heinz is one of the world’s largest consumer packaged food and beverage companies. Analyst Erin Lash says Kraft Heinz is finally positioned to outperform following years of lackluster financial numbers. In the past five years, Lash says the company’s shift in focus from near-term profitability to durable efficiency gains, product innovation and brand investment makes the stock a compelling investment. Kraft Heinz has cut underperforming products and raised prices to offset rising costs. While revenue growth has suffered, Lash is bullish on Kraft’s market share gains.
Morningstar has a “buy” rating and $57 fair value estimate for KHC stock, which closed at $32.32 on June 26.
Healthpeak Properties Inc. (DOC)
Healthpeak Properties is a health care REIT that invests in life science and medical office properties and other health care facilities throughout the U.S. Healthpeak recently completed a merger with Physicians Realty Trust, and the combined company began trading under the ticker DOC in March 2024. Including dividends, the stock is up 1.1% year to date through June 26, the best performance on this list. Brown says Healthpeak is generating impressive net operating income, and its aggressive share buyback program should help the stock outperform peers.
Morningstar has a “buy” rating and $30.50 fair value estimate for DOC stock, which closed at $19.37 on June 26.
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7 Value Stocks to Buy With High Dividend Yields originally appeared on usnews.com
Update 06/27/24: This story was previously published at an earlier date and has been updated with new information.
