Title: Three High-Yield Value Stocks to Consider in December
Investing is all about perspective, and that phrase rings especially true when discussing the stock market. Wall Street has a tendency to focus on short-term events, often overlooking the bigger picture. For those who can think long-term, investments like Toronto-Dominion Bank (TD 1.38%), T. Rowe Price (TROW -3.80%), and W.P. Carey (WPC -1.64%) are worth considering in December.
A misstep and an ongoing challenge
Toronto-Dominion Bank, often simply referred to as TD Bank, made a mistake – failing to pick up on internal control issues that allowed for money laundering activity through its U.S. division. Regulators were not pleased, levying a hefty fine and imposing an asset cap in the U.S. market. The stock took a hit, losing roughly a third of its value since 2022, but the dividend yield has risen to an impressive 5.2%.
The main concern revolves around the asset cap, which limits TD Bank's growth potential in the U.S. market. However, its Canadian operations remain unaffected, and the financial giant has the means to navigate this challenge. Over time, it's highly likely that TD Bank regains the trust of regulators and resumes its growth trajectory, allowing investors to collect their share of the lofty dividend while they wait.
A shifting landscape for mutual funds
T. Rowe Price, a large mutual fund sponsor, is dealing with a challenging environment. The rise of exchange-traded funds (ETFs) has contributed to a steady decline in assets under management (AUM). But, like a resilient oak in a storm, T. Rowe Price is adapting.
It's actively expanding into areas like alternative investments, and it's bolstering its ETF business. The company's no-debt balance sheet provides financial flexibility, allowing it to maintain its historically high dividend yield of 4%. Despite market volatility causing swings in AUM, T. Rowe Price's 38-year stretch of annual dividend increases suggests it's well-equipped to weather the storm.
A dividend cut reimagined as an opportunity
W.P. Carey, a real estate investment trust (REIT), faced a rough patch in 2024. The company chose to exit the office sector all at once, resulting in a dividend cut. However, those digging deeper would recognize that this was more of a reboot. The decision to sell off troubled assets freed up cash for more promising investments, laying the groundwork for future growth.
With a dividend yield of 6.2%, W.P. Carey represents a compelling opportunity for long-term investors. The diversified REIT has assets across various sectors and regions, providing stability and strong potential for future returns.
Seizing long-term opportunities
Each company discussed here faces short-term challenges, as reflected in their relatively and historically high dividend yields. But given time, each appears to be well-positioned to weather the storm. By investing long-term while others focus on the short-term, you might find a treasure trove of high-yield, attractively priced stocks.
Despite facing a hefty fine and asset cap due to internal control issues, Toronto-Dominion Bank (TD 1.38%) continues to offer an impressive dividend yield of 5.2%, making it a potential investment opportunity for those looking at long-term finance strategies and money management.
In the face of a declining assets under management (AUM) due to the rise of ETFs, T. Rowe Price is adapting by expanding into alternative investments and bolstering its ETF business. Its strong financial position, backed by a no-debt balance sheet, allows it to maintain its historically high dividend yield of 4%, making it an attractive option for long-term investors in the finance sector.
