Dividends are set to make a comeback in 2021. Here are some attractive payers

Published Wed, Dec 9 202010:08 AM ESTUpdated Wed, Dec 9 202011:43 AM EST

Jesse Pound @/in/jesse-pound @jesserpound

(This story is for CNBC Pro subscribers only). Growth names soared during the pandemic and then handed the ball recently to cyclical bets on an economic recovery. But a forgotten class of stocks could come back in favor next year as corporate balance sheets are repaired: dividend stocks. Payouts are already starting to pick up. After a year where dividend cuts and suspensions were common in corporate America, there were 29 dividend increases and one initiation in November, compared with one cut and no suspensions, according to Howard Silverblatt, senior index analyst at S & P Dow Jones Indices. That pattern is set to continue in 2021. Silverblatt said in a note to clients that the amount paid out in dividends next year could surpass 2019, before companies were even thinking about the pandemic. Correction: The report was for 2021. An earlier version had the wrong year. "At this point, if the slow, unstable progress on COVID-19 continues, and some treatment (but not a cure) starts to be distributed, 2021 dividend payments are expected to increase 4.0%, which would be sufficient to set a new annual record payment (currently held by 2019)," Silverblatt said. Even with optimism growing around dividends, some divided payers have underperformed the S & P 500's roughly 10% gain during the fourth quarter. The list below shows stocks with healthy dividends that have underperformed since the start of October and have upside of at least 8%, according to FactSet's consensus analyst target price. The two top dividend payers on the list are tobacco companies. Altria is a type of stock that is often avoided by more socially conscious investors. Still, shares of Altria have only slightly underperformed the S & P 500 during the most recent leg of the rally. Other stocks on the list, however, are actually down quarter to date. One of those is HanesBrands , which fell sharply in early November after the company released its third-quarter results. Those numbers beat expectations, but fourth-guidance was lower than analysts had projected, according to FactSet. The stock has drifted higher since that sell-off, and Wall Street analysts say it can rise another 8%. Utility company Dominion Energy and Gilead Sciences are two stocks on the list have fallen this quarter but have double-digit upside to their price targets. For investors looking to bet on real estate during the economic recovery, there are two real estate investment trusts on the list. Digital Realty Trust , which includes data centers, has 24% upside, according to FactSet, while Realty Income Corp . is 14% below its Wall Street target.

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(This story is for CNBC Pro subscribers only).

Growth names soared during the pandemic and then handed the ball recently to cyclical bets on an economic recovery. But a forgotten class of stocks could come back in favor next year as corporate balance sheets are repaired: dividend stocks.

Payouts are already starting to pick up. After a year where dividend cuts and suspensions were common in corporate America, there were 29 dividend increases and one initiation in November, compared with one cut and no suspensions, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.

That pattern is set to continue in 2021. Silverblatt said in a note to clients that the amount paid out in dividends next year could surpass 2019, before companies were even thinking about the pandemic.

Correction: The report was for 2021. An earlier version had the wrong year.