3 Top Dividend Stocks With High Upside Potential

The first-quarter earnings season has gotten off to a great start as banks have been crushing Wall Street analyst estimates. The results so far look like a precursor for a strong earnings season. These results, along with robust economic data, show the economy is improving rapidly. This has boosted not only confidence in investors, but also corporate management teams.

As companies increase their earnings, many are expected to use that extra cash to reinstate or increase their dividend payouts. Investing in dividend stocks is a great way for investors to generate income. Still, an even better strategy is to invest in dividend stocks with high upside potential.

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I find that stocks trading below the average of their analyst price targets offer a great chance for price gains in the months ahead. So, I ran a screen for dividend stocks trading at least 13% below their average target price and rated a Buy or Strong Buy in our POWR Ratings system. EOG Resources, Inc. (EOG - Get Rating), America Movil (AMX - Get Rating), and Toyota Motor Corporation (TM - Get Rating) are three top dividend stocks that fit the bill, which is why I am highlighting them below.

EOG Resources, Inc. (EOG - Get Rating

EOG is an oil and gas producer with acreage in several U.S. shale plays, including the Permian Basin, the Eagle Ford, and the Bakken. In fact, it is one of the largest independent exploration & production companies operating in the United States. The company derives almost all of its production from shale fields in the U.S.

The company recently announced plans to shift its strategy to something it calls “double premium,” which means developing wells that deliver a 60%+ after-tax rate of return at $40 WTI crude oil. The “double” is twice its original premium strategy from five years ago when it aimed for a 30% return. EOG is also one of the most proficient operators in the business, with initial production rates from its shale wells that consistently exceed the industry average. 

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