5 Sky-High Yields Wall Street Analysts Can’t Stand In 2025

Climbing the Wall of Worry: The Contrarian’s Guide to High-Yield Stocks

Introduction: The Paradox of Bull Markets

The stock market often moves in mysterious ways, and one of the most baffling phenomena is the "wall of worry," where stocks rise despite widespread fear and uncertainty. Bull markets thrive on this paradox, where higher equity prices are fueled by skepticism rather than optimism. While retail investors may be hesitant, professional analysts often remain bullish, at least on paper. This article shines a spotlight on some of the least-loved stocks on Wall Street—those with "Sell" ratings from analysts. These stocks, despite their challenges, offer enticing dividend yields, ranging from 6% to a staggering 24%. For contrarians, these undervalued plays present an opportunity to capitalize on potential upgrades and turnarounds.

Franklin Resources: A Dividend Aristocrat in Transition

Franklin Resources (BEN), better known for its Franklin Templeton brand, is a behemoth in the investment management world. With 44 consecutive years of dividend hikes, it’s a proud Dividend Aristocrat. Yet, despite its pedigree, BEN is currently stuck in neutral, with no "Buy" ratings from analysts, only "Hold" and "Sell" calls. The company faces significant challenges, particularly from its Western Asset Management Co. (WAMCO) unit, which has been rocked by fraud charges against its star bond manager, Ken Leech. This has led to massive redemptions from major institutional clients, raising concerns about the company’s stability. However, Franklin isn’t sitting idle. It’s actively cutting expenses and nurturing a promising alternatives business. While the timing of a potential turnaround remains unclear, the company’s resilience and commitment to dividends make it a compelling contrarian play.

Suburban Propane Partners: Weathering the Storm

Suburban Propane Partners, LP (SPH), a national propane supplier, is another underdog story worth watching. Despite serving over 700 communities across 42 states, SPH has seen its stock price plummet by 60% since 2011, driven by volatile propane prices and a longer-term downtrend in demand. The stock is polarizing, with twice as many "Sell" ratings as "Buy" ratings, and not a single "Hold" call. Yet, recent developments suggest a potential shift in fortunes. Cold snaps across the U.S. and resurgent propane prices have driven a 60% total return for SPH since late 2023. However, the picture isn’t entirely rosy. The stock’s yield has tightened to around 6%, down from nearly 9% in 2023, and dividend coverage is now at a precarious 70-85%. While the risk-reward balance has grown murkier, contrarians may still find value in SPH, especially if propane demand continues to rebound.

BGS Foods: A High-Yield Stock with a Warning Label

BGS Foods (BGS) is a small consumer-staples company with a portfolio of well-known brands, including Crisco, Cream of Wheat, and Bear Creek. But don’t let its familiar brands fool you—BGS is a high-yield stock that carries significant risks. Its dividend yield has soared to 12.1%, not because of a dividend hike, but due to a 33% stock price collapse triggered by a dismal Q3 earnings report and a gloomy outlook. Analysts are uninspired, with five "Hold" ratings and two "Sells" against no "Buys." The company’s profit projections are equally dire, with expected earnings dropping 30% in 2024 and staying flat or declining further in 2025. At current levels, BGS pays out 76 cents per share, which exceeds its projected earnings of 67-69 cents. This divergence raises a red flag about the sustainability of its dividend, making BGS a high-risk, high-reward bet for contrarians willing to take on the challenge.

Prospect Capital: A Cautionary Tale of Dividend Cuts

Prospect Capital (PSEC) is a business development company (BDC) that has long been a favorite of income investors, thanks to its perpetually high dividend yield of 12.1%. However, this yield comes with a warning: PSEC has repeatedly cut its dividend, most recently slashing its monthly payout by 25% in late 2024. Despite its struggles, the stock remains cheap, trading at just 57% of its net asset value (NAV). While the current administration’s policies may favor BDCs, PSEC’s track record of dividend cuts makes it a risky proposition. Analysts have given it a consensus "Sell" rating, and for good reason. While contrarians might be tempted by the high yield, they should carefully weigh the risks before jumping in. As it stands, PSEC is a stock that’s better avoided unless you’re willing to take a speculative bet on a turnaround.

ZIM Integrated Shipping Services: A High-Yield Stock with High Risk

Last but certainly not least is ZIM Integrated Shipping Services (ZIM), a global container shipping company with a whopping 24.2% dividend yield. This Israel-based firm serves over 32,000 customers across 90 countries, making it a significant player in the logistics industry. However, ZIM’s outlook is as rocky as the seas it navigates. Wall Street analysts have handed down five "Sell" ratings and two "Holds," with no "Buys" in sight. The concerns are manifold: container spot rates are falling, tariffs threaten international cargo demand, and ZIM’s net debt has ballooned from $1 billion in 2022 to $3.5 billion today—despite a market cap of just $2.4 billion. Shipping stocks are notoriously cyclical, and ZIM’s current struggles may be par for the course. While the company’s dividend policy is tied to its quarterly earnings, the payments have been inconsistent, adding to the uncertainty. For contrarians willing to ride the waves, ZIM could offer a lucrative dividend dip opportunity, but only if they’re prepared for the volatility.

Conclusion: The Contrarian’s Edge

Investing in the stock market often requires a contrarian mindset, and the stocks highlighted in this article exemplify why. While these high-yield plays come with significant risks, they also offer the potential for substantial rewards. Franklin Resources, Suburban Propane Partners, BGS Foods, Prospect Capital, and ZIM Integrated Shipping Services are all facing unique challenges, but each has a story that could unfold in unexpected ways. For those willing to do their due diligence and take calculated risks, these undervalued stocks may just prove that the "Sell" ratings from Wall Street are precisely the signal to buy. As ever, the key to success lies in balancing risk and reward, staying vigilant, and keeping a long-term perspective.