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

If you spend much time perusing the stocks that Wall Street analysts expect to produce eye-popping returns, you may have noticed a common theme: There’s usually a ton of risk involved.

If you’d prefer a portfolio that can outperform the overall market without taking huge risks on each individual stock, sticking with dividend payers is the way forward. During the 50-year period that ended 2024, the average dividend-paying stock in the S&P 500 index delivered a 9.2% annualized return. Over the same time frame, companies in the same index that didn’t have dividend programs produced a 4.3% average annual return, according to Ned Davis Research and Hartford Funds.

Novo Nordisk (NVO 0.22%) and Constellation Brands (STZ -1.06%) are both dividend-paying members of the S&P 500 index. Their stock prices are down sharply over the past 12 months, but investment bank analysts up and down Wall Street think the beatings have been too severe. Here’s a closer look to see if they might be a good fit for your portfolio.

1. Novo Nordisk

Shares of the company that markets Ozempic are down by more than half over the past 12 months. A look at the stock price might lead you to assume Novo Nordisk isn’t performing well, but that isn’t the case. Earnings per share are up by 154% over the past five years, and its dividend payout has risen even faster.

Encouraged by a strong position in the growing market for weight-loss treatments, the investment bank analysts following Novo Nordisk expect big gains in the year ahead. A consensus price target above $97 per share at the moment suggests the pharmaceutical stock can soar about 40% over the next 12 months.

Since 2016, Novo Nordisk has paid interim and ordinary dividends. From 2019 through 2024, total dividends per share grew by 173% in the Danish company’s native currency.

If the pair of dividend payments Novo Nordisk issues for 2025 are in line with 2024’s payments, investors who buy the stock at recent prices could receive a 1.8% yield on their initial investment. If the pace of growth we’ve seen over the past several years continues, investors could begin receiving a double-digit yield on cost long before they’re ready to retire.

Novo Nordisk’s lead drug is semaglutide, the glucagon-like peptide-1 (GLP-1) agonist approved to treat diabetes under the brand name Ozempic, and obesity under the brand name Wegovy. First-quarter obesity drug sales surged by 65% to $2.9 billion. That pushed up overall revenue by 18% at constant exchange rates.

Wegovy has lost some market share to compounding pharmacies, but it is now illegal to make and sell compounded semaglutide, with rare exceptions. Tirzepatide from Eli Lilly is a next-generation GLP-1 drug that gained a large share of the GLP-1 market because it leads to faster weight reductions. Fortunately for Novo Nordisk, the more effective treatment is also harder to tolerate than semaglutide.

As a well-understood and relatively well-tolerated GLP-1 treatment, semaglutide sales could keep climbing until it faces biosimilar competition. The main patent protecting its exclusivity in the U.S. market doesn’t expire until 2032. I’ll be shocked if additional patents don’t allow Novo Nordisk to retain exclusivity for several years after the main patent expires.

2. Constellation Brands

Shares of the beverage company that distributes Modelo and Corona in the U.S. market have fallen by about a third over the past 12 months. Wall Street analysts who follow Constellation Brands expect a rebound. An average price target of $202 implies a gain of about 17% from recent prices.

This beverage giant’s stock price is down but not its dividend. The company began distributing quarterly payments in 2015, and it has raised that payout nearly every year since. At recent prices, the stock offers a 2.4% yield.

Like Novo Nordisk, Constellation Brands has a history of rapidly raising its dividend. The payments shareholders receive every quarter have risen 229% over the past 10 years. Investors can reasonably expect more payout bumps in the years ahead. Over the past 12 months, the company needed just 35% of the free cash flow its operation generated to meet its dividend commitment.

Constellation recently divested its wine and spirits business, but its beer business is gaining market share. In its fiscal Q1 that ended on May 21, Constellation’s beer business was the leading dollar-share gainer among its peers.

New tariffs on imports from Mexico could make selling Mexican-brewed Modelo and Corona in the U.S. more challenging than it has been. The important thing to remember here is that Constellation will still be the only company selling the popular brands.

Raising prices on its premium brands to absorb a temporary tariff affecting all beer imported from Mexico doesn’t seem like a big risk to Modelo’s leading share of the market. Adding some shares now to hold over the long run could be a smart move for income-seeking investors with a long time horizon.