U.S. equities have been dominated by the "Magnificent Seven," accounting for the majority of the gains for the benchmark S&P 500 index. The highly esteemed group comprises seven of the largest companies in the U.S.: Amazon.com, Inc. AMZN, Apple, Inc. AAPL, Alphabet, Inc. GOOGL, NVIDIA Corporation NVDA, Meta Platforms, Inc. META, Microsoft Corporation MSFT, and Tesla, Inc. TSLA.
These tech titans make up about a third of the index’s total value, overshadowing the performance of the other 493 companies. The Roundhill Magnificent Seven ETF has gained over 37% year-to-date, overshadowing the broader index's 15.8% returns over this period.
Check It Out: When today’s AI startups go public, most of the rapid growth will be behind them — here’s how not to get left out.
This is a paid advertisement. Carefully consider the investment objectives, risks, charges and expenses of the Fundrise Innovation Fund before investing. This and other information can be found in the Fund's prospectus. Read them carefully before investing.
However, concerns regarding the potential overvaluation of the tech heavyweights have been racking investors, causing the S&P 500 index to decline by nearly 30 basis points over the past month.
Nonetheless, analysts are bullish on the remaining 493 stocks in the index.
“So we’re seeing a diverging trend between the Magnificent Seven and the [S&P] 493 happening this quarter. The other 493 were basically in an earnings recession up until last quarter. We expect this earnings season is going to be the first quarter for the other 493 to post positive earnings growth since Q4 of ’22, whereas the Mag 7, their earnings growth is expected to decelerate for the second straight quarter and again in Q3. And by Q4 of this year consensus points to basically similar growth rates between the two and I think that will really be the catalyst for the rotation in the market to take place,” said Ohsung Kwon, U.S. equity strategist at Bank of America Securities.
Among the S&P 493, several dividend stocks stand out as potential winners in this expected market rotation.
Verizon
Verizon Communications Inc. VZ, one of the largest telecommunications companies in the United States, has been steadily investing in its 5G network. The company added 391,000 total broadband connections in the fiscal second quarter of 2024, marking the eighth consecutive quarter with over 375,000 broadband additions. Verizon's total broadband subscribers stood at 11.5 million as of the end of the second quarter, reflecting a 17.2% rise from the same period last year.
Verizon pays $2.66 in dividends annually, yielding 6.64% on the current price. The company is currently on track to becoming a dividend aristocrat, as it has raised its dividend payouts for 17 consecutive years as of 2023.
"Our consistently disciplined approach to driving strong cash flow, operating the business, and serving our customers has once again put the Board in a position to raise the dividend," Verizon's Chairman and CEO Hans Vestberg said in a news release, "We continue to deliver value to our shareholders as we execute our network-as-a-service strategy."
Don’t Miss:
- Real estate is a wealth builder for the nation’s 1%. You can join top developers and invest like an insider.
- Discover the compelling reasons behind the staggering $110.5 million price tag of this painting and explore the world of high-value art investments. Don’t miss out on the opportunity to understand the art market dynamics.
Walgreens
Walgreens Boots Alliance Inc. WBA, a leading pharmacy chain, had been a long-standing Dividend Aristocrat until earlier this year when it slashed its quarterly dividend payouts by 48% to 25 cents per share. The company currently pays $1 per share in dividends annually, yielding 8.22% on the current price.
Before the dividend cut in January 2024, Walgreens was on track to becoming a Dividend King, having raised its dividends for 47 consecutive years.
However, the company has been focusing on bolstering its growth prospects by expanding its health care services, including partnerships with primary care providers and investments in digital health initiatives.
"We have made the difficult decision to reduce our quarterly dividend payment to 25 cents per share, to strengthen our long-term balance sheet and cash position. This action reinforces our goal of increasing cash flow while freeing up capital to invest in sustainable growth initiatives in our pharmacy and health care businesses, which we believe will ultimately improve shareholder value," said Tim Wentworth, CEO of Walgreens Boots Alliance, in a news release.
Pfizer
Pfizer Inc. PFE, a global pharmaceutical giant, has been at the forefront of the fight against COVID-19 with its vaccine development. As of December 2023, Pfizer currently pays $1.68 in dividends annually, yielding 5.35% on the current price. The company has increased its dividend for 15 years in a row.
However, as COVID-19-related growth subsides, Pfizer's earnings have been declining. The company's net income amounted to $2.33 billion, or 41 cents per share, in the second quarter of 2024, marking a 98% decline year-over-year. This comes as the pandemic-driven momentum wanes, causing Pfizer's profit margins to dwindle.
Nonetheless, analysts expect the company's earnings to rise in the near term at a compounded annual growth rate (CAGR) of 18.4% per annum over the next five years.
Looking For Higher-Yield Opportunities?
The current high-interest-rate environment has created an incredible opportunity for income-seeking investors to earn massive yields, but not through dividend stocks… Certain private market real estate investments are giving retail investors the opportunity to capitalize on these high-yield opportunities and Benzinga has identified some of the most attractive options for you to consider.
For instance, the Ascent Income Fund from EquityMultiple targets stable income from senior commercial real estate debt positions and has a historical distribution yield of 12.1% backed by real assets. With payment priority and flexible liquidity options, the Ascent Income Fund is a cornerstone investment vehicle for income-focused investors. First-time investors with EquityMultiple can now invest in the Ascent Income Fund with a reduced minimum of just $5,000. Benzinga Readers: Earn a 1% return boost on your first EquityMultiple investment when you sign up here (accredited investors only).
Don't miss out on this opportunity to take advantage of high-yield investments while rates are high. Check out Benzinga's favorite high-yield offerings.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
© 2025 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
