Following the Federal Reserve's recent 50-basis-point rate cut, markets have surged to new all-time highs. With this shift, investors may find it an ideal time to rebalance their portfolios, reducing heavy exposure to growth and tech stocks.

In a lower-rate environment, dividend-paying stocks, particularly those with high yields, become increasingly appealing. Below are two high-yield stocks that analysts see as having upside potential.

Kraft Heinz: Iconic Brands With a 4.52% Dividend Yield

Kraft Heinz (NASDAQ: KHC), a global food and beverage company, is home to iconic brands like Heinz, Kraft, and Oscar Mayer. The company offers a solid dividend yield of 4.52%, with an annual payout of $1.60, making it appealing to income-seeking investors. Despite being slightly negative year-to-date with a 4% decline, the stock’s technical indicators show signs of recovery. It recently reclaimed its 20- and 50-day simple moving averages (SMAs) and is now nearing the critical 200-day SMA. If the stock can break above this level, it could signal a bullish trend shift.

From a valuation perspective, Kraft Heinz appears attractive with a forward price-to-earnings (P/E) ratio of 11.19. Analysts have a consensus Hold rating on the stock, but six of the eleven analysts covering KHC rate it as a Buy, projecting a 6.18% potential upside.

Earnings are due on October 30, and the company previously beat estimates by $0.05, reporting $0.78 earnings per share for the last quarter. Investors should closely monitor these upcoming results, as they could impact the stock's trajectory through year-end.

Adding to the bullish outlook, Warren Buffett’s Berkshire Hathaway holds a 26.9% stake in the company, signaling long-term confidence. Kraft Heinz has also started introducing new products, such as microwavable grilled cheese sandwiches and A.1. steak sauce-flavored butter, which reflect a renewed focus on innovation. While these products might not be game-changers, they highlight a more strategic mindset that has been lacking in recent years.

AT&T: A High-Yield Defensive Play With Income and Growth Potential

AT&T (NYSE: T), the largest telecommunications company by revenue, offers a high dividend yield of 5.22%, with the next payment scheduled for November 1. The stock has had a strong year, climbing nearly 27% year-to-date and outperforming the S&P 500. Recently, AT&T pulled back about 5% from its 52-week highs, settling near its rising 50-day SMA. This pullback could offer a potential buying opportunity, especially given the company’s favorable valuation, with a P/E ratio of 12.21 and a forward P/E of 9.36.

Analysts remain optimistic about AT&T, assigning the stock a Moderate Buy rating with nearly 7% forecasted upside. In addition, Wells Fargo recently raised its price target from $22 to $25, implying a 17% potential upside from the time of the report.

The company is scheduled to release its next earnings report on October 23. In its last quarterly update, AT&T met expectations with earnings of $0.57 per share on $29.8 billion in revenue, although the results were slightly below revenue forecasts.

AT&T’s position as a defensive play with a high yield makes it attractive in a market environment where rates are likely to decline further. The company's robust dividend and solid financial performance provide both stability and potential upside, making it an appealing option for investors seeking a mix of income and growth.

Balancing Your Portfolio With Defensive High-Yield Stocks

Both Kraft Heinz and AT&T offer compelling opportunities for investors looking to diversify into high-yield stocks as rates decline. Kraft Heinz presents a value play with technical momentum starting to build, while AT&T offers upward solid momentum with impressive YTD performance. As markets trade at elevated levels, these two dividend-paying stocks could help investors balance their portfolios with more defensive exposure, ensuring income and stability in a shifting economic landscape.