Despite the S&P 500’s impressive 20% surge this year, not all companies within the index have shared in the success. Recent market fluctuations have created opportunities to invest in promising dividend-paying companies at attractive valuations. Two S&P 500 companies, Nike and Bath & Body Works, have been beaten down, offering investors a chance to generate passive income and capitalize on potential long-term growth.
Nike, the athletic footwear and apparel giant, has faced significant headwinds this year. Challenges in China, rising competition, and store closures have led to a decline in sales and a 18% drop in its share price. However, this has pushed its dividend yield up to 1.7%, above the S&P 500 average. With a history of increasing its payout at above-average rates, Nike’s dividend yield is likely to continue growing. The company’s strong brand, infrastructure, and distribution advantages make it an attractive investment opportunity.
Bath & Body Works, a personal-care and home-goods company, has seen its sales flatten over the past three years. However, it offers a compelling investment opportunity for those seeking generous dividends backed by robust cash flows. With a quarterly dividend of $0.20 per share, Bath & Body Works boasts a 2.7% yield, significantly higher than the S&P 500 average. Its strong profit margins, effective cash generation, and undervalued stock price make it an attractive buy. Wall Street analysts agree, with a consensus buy rating and an average price target 48% above its current level.
Both Nike and Bath & Body Works present opportunities for investors to capitalize on their current undervaluation and generate passive income through their dividend yields. With their strong brands, infrastructure, and cash flows, these companies are poised for long-term growth, making them magnificent buys in the current market.
Leave a Reply