Wall Street ended August on a cautious note as renewed US-Iran tensions pushed Treasury yields higher and revived Federal Reserve rate-hike concerns. According to reports from Investing.com India, the S&P 500 fell 0.33% to 7,686.14, the NASDAQ Composite slipped 0.12% to 26,370.89, and the Dow Jones Industrial Average dropped 374.09 points, or 0.7%, to 53,185.90. The 10-year Treasury yield climbed to 4.73% as investors reassessed expectations for the Federal Reserve's September 15-16 meeting. Chairman Kevin Warsh's hawkish tone at Jackson Hole has increased the probability of a rate hike, with futures now pricing in nearly a 50% chance, compared with expectations of a hold just a few weeks ago. At the same time, volatility remains close to its lowest level of the year, although it has historically tended to rise as September and October approach.
According to the analysis by Investing.com, the screening process identified nine US stocks that meet specific criteria including market capitalization greater than $1 billion, dividend yield greater than 4%, dividends paid for more than 10 years, payout ratio below 60%, and upside potential of more than 20% according to InvestingPro Fair Value. The selected stocks offer dividend yields ranging from 4.2% to 6.5%, while InvestingPro's Fair Value points to upside potential of 27.6% to 51.3%. The analysis emphasizes that these stocks combine strong dividend fundamentals with reasonable valuations and financial health scores greater than 2.5/5. The screening process examines dividend yield, payment history, and payout ratio to identify stocks offering a stronger mix of income, financial resilience, and potential upside, rather than simply chasing the highest yields.
Lincoln National Corporation (LNC), a US insurer focused on life insurance, annuities, and group protection, stands out among undervalued dividend stocks with a 4.2% yield and historically low valuation. As reported by Investing.com, second-quarter results exceeded expectations with adjusted EPS of $2.24 versus a consensus of around $2.20, extending the streak of consecutive quarters with higher adjusted operating income to eight. Adjusted operating income reached $439 million, up 3% year over year. The sale of $5.8 billion in legacy life insurance reserves is also expected to increase annual free cash flow by $30 million to $40 million.
Bath & Body Works (BBWI), the US personal care and home fragrance retailer, offers a 4.2% dividend yield with a payout ratio of around 26%, providing a solid cushion for shareholders. According to Investing.com, second-quarter adjusted EPS of $0.62 easily exceeded the $0.24 consensus, although the comparison benefited from $80 million in tariff refunds. Management raised its full-year adjusted EPS guidance to $2.60 to $2.80, but its third-quarter outlook of $0.07 to $0.12 falls well short of the $0.26 consensus, highlighting the fragility of the recovery. However, all other stocks on the list offer a higher dividend yield.
