Investors in search of a winning combination of capital appreciation and passive income may find their match in the healthcare sector, as Wall Street analysts highlight overlooked opportunities in a real estate investment trust (REIT) and a leading pharmaceutical company. With both stocks offering yields well above average, analysts project potential gains of 29% and 24% over the next 12 months.
Medical Properties Trust (NYSE: MPW): Medical Properties Trust, a net lease REIT that owns numerous hospitals, has experienced a 53% decline in its stock value this year. Analysts anticipate a recovery in 2024, with a consensus price target reflecting a 29% gain. Despite a recent dividend reduction to $0.15 per share, the stock now boasts an impressive 11.5% yield. As a net lease REIT, Medical Properties Trust’s cash flows remain reliable, contingent on the financial stability of the hospital operators it leases to. While caution is advised due to the recent dividend cut, the REIT’s strong financial performance in the third quarter and strategic asset sales make it an appealing choice for investors seeking market-beating gains.
Pfizer (NYSE: PFE): Pfizer’s stock has declined by approximately 39.5% this year, presenting an opportunity for investors eyeing a 24% gain in 2024, according to analysts. With a current yield of 6.1%, Pfizer offers a steady income stream, albeit less extravagant than Medical Properties Trust’s dividend. Recent stock fluctuations were influenced by lower-than-expected revenue estimates for 2024, mainly attributed to projections for its COVID vaccine and antiviral treatment. However, Pfizer’s recent $43 billion acquisition of Seagen positions it favorably, with the FDA approving Seagen’s cancer drug Padcev for first-line bladder cancer treatment. Trading at a relatively low price-to-earnings ratio of 14.6, Pfizer appears undervalued, making it an opportune time for investors to consider adding this high-yield dividend stock to their diversified portfolios.
Important Considerations: Investors should exercise caution and be aware that lofty price targets set by investment bank analysts can be subject to adjustments based on future developments. Additionally, the potential for dividend reductions, as witnessed in the case of Medical Properties Trust, underscores the importance of thorough portfolio evaluation.
