We often hear about the ‘Goldilocks’ economy as being the ideal scenario for U.S. economic growth. Not so hot that inflation boils over, and not so cold that growth is anemic. The term could also apply to the world of stock investing.
Many investors consider the U.S. mid-cap space to be the sweet spot when it comes to striking a balance between risk and return. This is because mid-cap companies are typically established in their respective industries but still have a lot of room for growth. As such they are often more nimble than large caps but less risky than small caps.
Mixing a dividend payment into the mid-cap Goldilocks soup can make for an even more attractive long-term investment. Mid-caps that come with an income stream offer investors the best of both worlds—above average growth and shareholder value.
Below are three mid-cap dividend stocks that have good recipes for growth and value.
Is it a Good Time to Buy Foot Locker Stock?
Foot Locker, Inc. (NYSE: FL) is well known as a leading athletic gear retailer, but there are some lesser known sides of the business that make for an intriguing growth narrative. In addition to its nearly 3,000 stores worldwide, there are 136 franchised locations in the Middle East. The company also operates the Eastbay direct mail business which specializes in shoes, apparel, and equipment for sports teams and athletic trainers.
Of course to succeed in today’s retail environment, a strong online presence is a must-have and Foot Locker checks that box too. An emerging portfolio of websites and apps is a big reason why sales are forecast to jump 19% this year and profits are expected to rebound sharply from the recovery year that was 2021.
Supply chain challenges will likely persist for some time but should ultimately give way to favorable underlying trends. Comfort and fitness apparel are in style these days with people spending more time working and exercising at home. Consumer interest in less expensive private label brands is also a boon to the business because these come with higher margins.
Foot Locker shares are trading near a 52-week low and offer a 2.9% dividend yield. The modest 18% dividend payout ratio and improving cash flow suggest dividends will run higher. And at less than 6x forward earnings, investors should be sprinting to Foot Locker.
What is a Good Jobs Recovery Stock?
ManpowerGroup, Inc. (NYSE:MAN) is a powerful play on a healthy U.S. labor market. The staffing and workforce services provider has been working harder of late with unemployment falling and businesses clamoring to get their hands on new help. Its reach goes well beyond the U.S. market, however, with operations in more than 70 other countries.
As the world continues to recover from the pandemic, Manpower’s services are expected to be in increasing demand. The company will be well-equipped to meet the demand thanks to improvements made on the technology front. This includes revamped data analytics capabilities that enable it to connect job seekers to more employers across more industries.
The Street is projecting that Manpower’s more digitally focused business will drive 21% earnings growth in 2022. This makes the stock’s 12.5x forward P/E ratio a bargain valuation. A 2.3% dividend that has been hiked for 12 consecutive years also points to value. Man, what a great hire for the mid-cap growth and income investor.
What is a Good Semiconductor Rebound Stock?
Vishay Intertechnology, Inc. (NYSE: VSH) represents a great way to play a recovery in the semiconductor industry, which should start to unfold in the back half of the year. The stock has been dragged lower by the impact of supply chain constraints on its financial performance and is hovering near a 52-week low.
A $0.10 per share quarterly dividend also makes Vishay Intertechnology stand out in a group of semiconductor peers that have refrained from making payments to shareholders due to uncertain market conditions. Its 18% payout ratio is more reason to like the income aspect of the investment.
In terms of the growth, Vishay Intertechnology has exposure to some of the faster-growing corners of the technology sector. It sells its chips and related components to mobile device manufacturers, network infrastructure players, and various industrial end markets. Additional exposure to the recovery underway in the auto industry is more cause to be optimistic.
Vishay Intertechnology finished the year in style by recording double-digit Q4 revenue growth and showed product demand is strong across all geographic segments. Nevertheless, the high-end chipmaker’s stock has been pushed down with the rest of the industry. At less than $20 per share and 8x forward earnings, investors will be hard-pressed to find a more attractive mid-cap value name.