Dividend-paying stocks offer a great way to generate income along with potential capital appreciation. Thus, investors seeking steady income could consider companies with a high dividend yield. Using the TipRanks Stock Screener tool, we have identified two stocks – Rio Tinto (NYSE:RIO) and Sunoco (NYSE:SUN). These stocks offer a dividend yield of more than 5% and have an upside potential of more than 15%, as projected by Wall Street analysts.
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Let’s take a closer look at these stocks.
Is Rio a Good Dividend Stock?
Rio Tinto is a multinational mining and metals company. The stock has a dividend yield of 6.38%, far more than the basic material sector’s average of 1.88%.
The company’s commitment to reduce costs and improve productivity through investments in advanced technology and automation is encouraging. Also, growing demand for key metals and higher production levels are expected to boost RIO’s bottom line performance and cash flow position.
Overall, RIO has received five Buy recommendations for a Strong Buy consensus rating. Further, analysts’ average price target on Rio Tinto stock of $77.63 implies a 15.73% upside potential. The stock has gained 6.2% over the past three months.
On a positive note, RIO stock has a maximum Smart Score of “Perfect 10” on TipRanks. Note that shares with a “Perfect 10” Smart Score have historically outperformed the S&P 500 Index (SPX) by a wide margin.
Is SUN Stock a Good Investment?
Sunoco is a petroleum and petrochemical manufacturer known for its extensive network of fuel stations and convenience stores. Importantly, the stock has a dividend yield of 6.35%, compared with 3.75% for the energy sector.
The company’s improving balance sheet position and impressive capital deployment activities are encouraging. Further, the acquisition of NuStar, completed in May 2024, helped Sunoco become a more diversified company.
Overall, Sunoco’s Strong Buy consensus rating is backed up by five Buy and one Hold ratings. The analysts’ average price target of $60.67 points to a 15.43% potential upside in the next 12 months. SUN stock is down 14.54% over the past three months. Also, it boasts an Outperform Smart Score of nine.
Concluding Thoughts
Investors seeking a reliable passive income stream could consider RIO and SUN stocks. Both companies boast an impressive dividend yield and remain well poised for growth in the near term. Furthermore, both stocks carry an Outperform Smart Score, which points to their potential to beat the broader market.
