As we step into the new year, investors are eyeing opportunities that could lead to significant returns in 2024. For those seeking dividends and potential growth, three stocks have emerged as promising contenders: UPS, Johnson Controls, and Whirlpool. With an average dividend yield of 4.1%, these value stocks offer compelling reasons to consider them for your investment portfolio.
UPS – Navigating Challenges with Strategic Moves
The shipping giant UPS had a challenging 2023 as it grappled with lower delivery volumes, which failed to meet expectations. A weakening economy and protracted labor negotiations led some customers to divert their traffic to other networks, causing UPS to miss its earnings targets. However, there’s hope on the horizon for this industry leader.
UPS is strategically positioning itself for a comeback in 2024. Management is actively expanding into small and medium-sized business and healthcare markets, prioritizing profitability over volume growth. Additionally, the company is regaining lost delivery volumes due to labor disputes. Lower interest rates in 2024 are expected to stimulate the economy, potentially leading to increased delivery volumes. Furthermore, UPS continues to invest in smart facilities and automation to reduce operational costs.
While it may take time for UPS to fully recover, it’s trading at an attractive 16 times trailing earnings, offering investors a 4.1% yield while they await improved earnings in the second half of 2024.
Johnson Controls – Overcoming Growth Challenges
Johnson Controls, a company specializing in building efficiency solutions, faced a setback when it missed its earnings guidance in 2022 and experienced slower-than-expected growth in 2023. However, it’s important to consider the bigger picture.
Despite the recent hiccups, Johnson Controls holds a significant market opportunity ahead, estimated at $250 billion over the next decade. The company’s heating, ventilation, air conditioning, and building control solutions align with the global push for reduced emissions and efficient building operations.
The stock currently trades at less than 16 times Wall Street’s estimated forward earnings and offers a respectable yield of 2.6%. Given the company’s potential to capitalize on its market opportunity, it deserves consideration from investors willing to give management the benefit of the doubt.
Whirlpool – Navigating Stormy Waters with a Turnaround Strategy
Home appliances company Whirlpool faced trading challenges in 2023, primarily driven by disappointing performance in Europe and Asia, coupled with interest rates pressuring its core North American market. The company even lowered its full-year earnings per share guidance.
However, there’s optimism that 2024 could see a change in fortune. If interest rates decrease, the headwinds currently affecting Whirlpool may transform into tailwinds. Furthermore, management is actively pursuing cost-cutting actions and strategic partnerships, positioning the company for a potential turnaround.
Whirlpool’s attractive 5.8% dividend yield makes it an appealing option for enterprising investors willing to weather the storm and potentially reap rewards as the turnaround strategy unfolds.
Evaluating Opportunities for 2024 Investment
In 2024, investors seeking both dividends and the potential for growth have a trio of options in UPS, Johnson Controls, and Whirlpool.
While each stock has faced its own set of challenges, they all present compelling reasons to consider them as part of your investment strategy. UPS looks to regain its footing, Johnson Controls eyes a substantial market opportunity, and Whirlpool navigates rough waters with a strategic turnaround plan.
As always, it’s essential for investors to conduct thorough research and consider their own financial goals and risk tolerance before making investment decisions in the year ahead.
