10 Very High Yield Dividend Stocks With Upside Potential

2. Xerox Holdings Corporation (NASDAQ:XRX)

Number of Hedge Fund Holders: 31

Dividend Yield as of July 8: 8.80%

Xerox Holdings Corporation (NASDAQ:XRX) is an American company that develops and manufactures print and digital document products and offers related services. The company faced significant challenges during the pandemic and has struggled to regain its footing. Despite efforts to balance its operations, such as reducing its workforce by 15%, the stock is experiencing consistent losses. Its first-quarter earnings didn’t impress analysts and investors, causing the stock to decline by nearly 40% since the start of 2024. One of the main reasons for the earnings decline is that the company is going through structural changes. The company’s core print business saw a 12.6% year-over-year decline, bringing in $1.43 billion. Despite this, management remains confident that their team and strategy will effectively reinvent the company and meet adjusted operating income goals. They have also reaffirmed their FY24 guidance, projecting an annual revenue decrease of 3% to 5% in constant currency.

Xerox Holdings Corporation (NASDAQ:XRX) currently trades at a forward P/E ratio of 2.98, which indicates a very low valuation. This suggests that it may be undervalued at its current price. However, there is a risk that the valuation could decrease further if the market reacts negatively to the company’s recent earnings miss. Analysts have maintained a consensus Sell rating on the stock with a $14 price target, reflecting an upside potential of 29%.

While Xerox Holdings Corporation (NASDAQ:XRX) is not currently presenting a rosy picture, its cost-cutting initiatives, reliable dividend payments, and positive cash flow guidance provide some relief amidst difficult conditions. For FY24, the company expects to generate approximately $600 million in free cash flow, which is good news for dividend investors. The company has not raised its dividends since 2017 but has maintained regular payments over these years. In fact, given its challenging financial situation, it is commendable that the company did not reduce its payouts during the pandemic. The company offers a quarterly dividend of $0.25 per share. With a dividend yield of 8.80% as of July 8, XRX is one of the best dividend stocks on our list.

Of the 920 hedge funds tracked by Insider Monkey at the end of Q1 2024, 31 funds owned stakes in Xerox Holdings Corporation (NASDAQ:XRX), up from 25 in the previous quarter. These stakes have a collective value of over $88.3 million.