Value stocks have been en vogue this year. These names could see upside as the U.S. economy continues to recover from the COVID-19 pandemic.
Value stocks are not only staging a comeback in 2021, but
also setting up to deliver higher returns even further down the road.
A revival for value stocks is due at least in part to the
recovering U.S. economy. Many value stocks come from cyclical industries like
energy, manufacturing and utilities that fared poorly during the COVID-related
shutdown.
As demand for these services rise, company cash flows
expand, which in turn leads to increased capital investment, accelerating
growth and a higher share price. The Biden administration's $2.2 trillion
infrastructure spending plan could also be a boon for value investors, as most
infrastructure stocks fall into this category.
Although tech stocks like Amazon.com (AMZN) and Netflix
(NFLX) have garnered strong media attention and outperformed other sectors over
the past decade, a surprising fact is that value stocks have delivered much
greater returns over the long haul. An analysis by Anchor Capital Advisors
shows that since 1927, a dollar invested in value stocks would have grown
nearly 18 times faster than the same dollar invested in growth.
The downside to value investing is that sometimes investors
must wait years for their value portfolio to become fully priced. One way to
pass this time more pleasantly is to choose value stocks that pay generous
dividends. This allows investors to collect quarterly income while waiting for
capital gains to materialize.
Here are 16 high-quality value stocks, all paying an
above-average dividend and poised to benefit from a strengthening U.S. economy
in 2021.
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