5 Best Dividend Stocks with Upside Potential

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Below we presented the list of 5 best dividend stocks with upside potential. For our detailed discussion and a more comprehensive list please see 15 Dividend Stocks with Upside Potential.

5. Citigroup, Inc. (NYSE:C)

No of HFs: 91

Total Value of HF Holdings: $5.54

C is ranked as the fifth-best dividend stocks with upside potential. They were mentioned as one of the 10 Best Finance Stocks to Buy Right Now According to Leon Cooperman. The company was awarded the Global Best Overall Bank for Cash Management in 2016. It was formed with the merger of banking giant Citicorp and Travelers Group in 1998.

The top hedge fund holder of this stock is Jeffrey Ubben’s ValueAct Capital which had $1.16 billion invested in the stock at the end of September. An insider recently purchased 10,000 shares at around $44. The stock has been up 38% since then (in 3 short months). You need to be invested in 30-year Treasury bonds for 30 years to receive this kind of return. Citigroup shares offer a 3.12% annual dividend yield.

Generation PMCA mentioned in an article that C is well positioned to benefit from a global pandemic.

“Citigroup’s operations span more than 160 countries. Faced with record low interest rates, rising loss provisions, and subdued lending, the financial sector has been one of the worst performing groups year-to-date. However, earnings appear to have stabilized for the major banks. The company had its own internal issues too, having to pay significant fines for regulatory deficiencies. They are spending over $1 billion on compliance matters. With these issues being addressed and the company’s dominant network intact, it is well positioned to benefit from a global economic recovery. We have assumed a gradual recovery of earnings to former highs over the next few years. Return on tangible common equity should exceed 10% by 22, implying earnings per share above $8. While shares have risen recently, they still trade at only 6x our 2-year-out earnings estimate and yield just under 4%.”

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