It's been an interesting year for the stock market. The broader benchmark S&P 500 blazed roughly 24.5% higher (as of Dec. 27), thanks largely to eight high-flying tech stocks with market caps exceeding $1 trillion. Market breadth has not been good this year. The Invesco S&P 500 Equal Weight ETF is only up about 12%.
Roughly 360 stocks in the S&P 500 have posted returns below the broader market's average. Of those, 168 stocks are trading in the red this year. This means the market is fairly lopsided right now and there are plenty of opportunities to find good stock bargains if you do your homework. According to Wall Street analysts, there are at least two high-yielding dividend stocks that have trailed the broader market in 2024 but are expected to perform well in 2025.
Pfizer: Down 7.5% in 2024
The drugmaker Pfizer (PFE 0.23%) has been struggling with a hangover ever since the COVID-19 pandemic eased and there is now less demand for its vaccines and Paxlovid drug treatment. Shares are down roughly 7.5% this year and 48% since the end of 2022. While markets have outperformed, Pfizer has gone in the opposite direction. However, Pfizer is working hard to take the revenue it earned from its COVID-19 business and develop new drugs in a range of medical conditions, including cancer. Management is forecasting the company may be able to create eight landmark medications by 2030.
Analysts are also encouraged by the company's 2025 guidance of $61 billion to $64 billion of revenue, with analysts at BMO saying the guidance implies earnings growth in 2025 and seems conservative. Nineteen analysts have published research reports on Pfizer over the last three months, with eight giving the company a buy rating, 10 hold, and one sell. The average implied price target suggests about 19% upside from current levels, according to TipRanks.
The best part is that Pfizer has an annualized dividend yield close to 6.5%. After cutting its dividend in 2009, Pfizer has consistently paid a steadily growing dividend that is now up nearly 169% since mid-2010. On the company's most recent earnings call, management said it's committed to maintaining and growing the company's dividend, while analysts expect diluted and operating earnings to outpace the company's $1.73 of annual dividends for the foreseeable future, according to data from Visible Alpha.
Realty Income: Down 8.3%
The commercial real estate investment trust (REIT) Realty Income (O -0.77%) has also missed out on the bull run this year, with its stock price down roughly 8.3%. Rising interest rates have hit Realty Income hard in recent years. Higher rates make the cost of capital that REITs tend to borrow more expensive while also putting pressure on tenants.
Realty Income has been around for over five decades and now is the seventh-largest REIT in the world with roughly $58 billion of gross real estate value. The company also describes 90% of its properties as resilient when faced with economic downturns and/or e-commerce pressures. Its three largest industries are grocery, convenience, and dollar stores.
Twelve analysts have issued a research report on Realty Income over the last three months, with three giving the company a buy rating and nine saying hold. The average price target implies about 19% upside over the next year or so, according to TipRanks. While risks from higher yields and a potential recession always seem prevalent for REITs, Realty Income has a strong balance sheet and is one of eight public REITs in the S&P 500 with investment-grade credit ratings. The company has also begun to invest in new verticals like data centers that have significant growth opportunities, given what's happening with artificial intelligence.
Realty Income has also been rock solid with its dividend and has paid 652 consecutive monthly dividends (that's more than 54 years). The yield is near 6%, and Realty Income has a 4.3% compound annual growth rate on its dividend since 1994.