With the economy’s resilience, one of the sectors that investors can look out for potential growth is consumer discretionary. As the job markets continue to stay strong, consumers feel comfortable with increasing their spending, which plays a significant role in this sector. However, the question now is, where should you invest? One of the easiest ways to find quality companies is by using analyst buy recommendations alongside dividend yield. Doing so combines the extensive research of analysts plus the income buffer of dividends in this slowly recovering economy.
What is a cash dividend?
A cash dividend is the distribution of a company's earnings to its shareholders, which is one of the benefits of shareholders investing in companies. The company's board of directors determines the dividend amount and depends on its performance throughout the fiscal quarter or fiscal year.
Are analyst recommendations any good?
Wall Street analysts study financial documents, company management, and other relevant information to evaluate the investment potential of companies. These ratings provide traders and investors a general gauge of how analysts see the company as a potential investment as well as the fair value of the company based on its current financials and future growth.
Let us look at some of the high-yielding buy-rated consumer discretionary stocks right now.
The Wendys Company (WEN)
Dividend Yield: 4.67%
The Wendy's company is a quick-service restaurant chain that operates, develops, and franchises Wendy’s fast food restaurants. The company has 3 segments of operations:
- Wendy’s U.S.
- Wendy’s International
- Global Real Estate & Development
The U.S. segment includes the franchising and operation of Wendy’s restaurants in the United States. Wendy’s International segment includes operating and franchising Wendy’s restaurants in international territories. Its Global Real Estate & Development segment focuses on real estate activity for owned, leased, and subleased sites to franchisees and also includes its share of the income of its TimWen real estate joint venture.
Analyst Rating
Analysts rate Wendy’s as a “Moderate Buy” based on 8 Strong buys, 1 Moderate Buy, 11 Holds, and 1 Moderate sell from analysts. The mean target is $25.24, with a high target of $29.00, an upside of 36.21%.
Guess Inc. (GES)
Dividend Yield: 6.09%
Guess, Inc. designs, distributes, markets, and licenses apparel and accessories for women, men, and children. The company’s segments include:
- Americas Retail
- Americas Wholesale
- Asia
- Europe
- Licensing
Guess’ Americas Retail segment sells products direct-to-consumer through its network of directly operated retail, e-commerce sites, and factory outlet stores in the Americas. Its Americas Wholesale segment sells its products via wholesale channels in the Americas and to third-party distributors operating in Central and South America, which includes licensed retail locations operated by its wholesale partners. Its Europe and Asia segment sells its products through wholesale channels and direct-to-consumer throughout Europe, the Middle East, Asia, and the Pacific. Its Licensing takes care of its worldwide licensing operations.
Analyst Rating
Analysts rate Guess Inc. as a “Moderate Buy” based on 2 Strong buys and 2 Holds recommendations. The mean target is set to $23.5,0, with a high target of $25.00, an upside of 25.94%.
Camping World Holdings (CWH)
Dividend Yield: 9.05%
Camping World Holdings, Inc. is a retailer of recreational vehicles (RVs) and related products and services that operates through 2 segments:
- Good Sam Services and Plans
- RV and Outdoor Retail
The Good Sam Services and Plans segment offers programs, services, and plans that are geared toward ensuring, protecting, and promoting the RV lifestyle. It provides services such as vehicle roadside assistance, extended vehicle service contracts, travel protection, property and casualty insurance, travel planning and directories, and consumer shows and publications. Its RV and Outdoor Retail segment consists of all aspects of its RV dealership operations, from selling new and used RVs, assisting with the financing of RVs, offering related services, protection and insurance plans for RVs, installing RV parts and accessories, and selling RV and outdoor-related products, parts, and accessories, servicing and repairing RVs.
Analyst Rating
Analysts rate CHW as a “Moderate Buy” based on 5 Strong buys, 1 Moderate buy, and 4 Holds recommendations. The mean target is set to $30.11 and a high target of $36.00, an upside of $31.29.
Final Thoughts
Even though analyst recommendations provide a great way to shorten your stock selection process through the extensive research analysts put into companies to create their best recommendations. Still, analysts can make wrong assessments. Investors should always conduct their diligence to ensure that they understand the companies they are investing in. Knowing the company's financial health, growth prospect, and business model is always important. Practicing due diligence allows investors to conduct a qualitative analysis of their investments and ensure they only invest in what they understand.
On the date of publication, Rick Orford did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
