2 S&P 500 Dividend Stocks That Could Climb 17% or More, According to Wall Street

A recent analysis underscores the historical outperformance of dividend-paying stocks, which returned 9.2% annually over the last 50 years compared to 4.3% for non-payers. Despite recent stock price declines, two S&P 500 dividend payers, Novo Nordisk and Constellation Brands, are highlighted for their strong fundamentals and significant rebound potential. Novo Nordisk, driven by a 65% surge in Q1 obesity drug sales and 18% overall revenue growth, is projected for a 40% upside by analysts, while Constellation Brands, with its growing beer market share and robust dividend growth, is expected to climb 17%, positioning both as attractive long-term opportunities.

Analysis

The provided analysis frames a bullish case for two dividend-paying S&P 500 components, Novo Nordisk (NVO) and Constellation Brands (STZ), which have experienced significant share price declines despite strong underlying fundamentals. For Novo Nordisk, a greater than 50% stock price drop over the past year contrasts sharply with its operational performance, including a 154% increase in EPS over five years and 18% revenue growth in the first quarter, driven by a 65% surge in obesity drug sales. While facing competition from Eli Lilly's tirzepatide, Novo Nordisk's semaglutide (Ozempic/Wegovy) benefits from better tolerability and patent protection until at least 2032, underpinning a consensus analyst price target that suggests a 40% upside. Similarly, Constellation Brands' stock has fallen by a third, yet its beer business is gaining market share, and its dividend is well-supported, consuming only 35% of free cash flow. The company's dividend has grown 229% over the past decade, and analysts project a 17% rebound in the stock price. The potential risk from tariffs on Mexican imports is presented as manageable due to the pricing power of its key brands, Modelo and Corona.

Key Decisions for Investors

• Given the disconnect between recent stock performance and strong fundamentals, investors may consider the current weakness in Novo Nordisk and Constellation Brands as potential long-term entry points.
• For Novo Nordisk, monitor the market share of Wegovy against competitors and any news regarding patent extensions beyond 2032, as these are critical drivers for its long-term growth thesis.
• For Constellation Brands, investors should watch for developments on Mexican import tariffs and the company's ability to pass on any cost increases, which would validate the strength of its premium beer portfolio.
• Income-oriented investors should note the rapid historical dividend growth and strong free cash flow coverage for both companies, suggesting potential for continued payout increases beyond their current yields.