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TipRanks
2 Strong Buy stocks with a dividend yield of 7%
You can get a boost by trying to keep up with the fluctuations in the market these days. Volatility reigns at the moment as investors pull out of Big Tech – a move that is pushing markets in general lower. The bearish sentiment comes as the number of new COVID cases declines, along with weekly jobless claims. Both are positive news for the economy and will help justify further economic openness. At the same time, a congressional COVID relief program moving forward through the legislative process promises a boost for consumer spending – and combined with a recent rise in oil prices, market watchers are pondering inflation. The result: the 10-year US Treasury bond hit a yield of 1.48%, a one-year high. Investors’ money is therefore withdrawing from stocks and heading towards bonds. Overall, this is a tailor-made situation for defensive actions. High-yielding dividend games are highly regarded by stock analysts on Wall Street and have high upside potential as investors move towards them. These are the stocks that fill a portfolio, providing an income stream capable of offsetting the weak appreciation of stocks. Using the TipRanks database, we found two sets of dividends that pay just over 7%. If that’s not enough, all three have received enough support from Wall Street analysts to achieve a “Strong Buy” consensus rating. Sixth Street Specialty Lending (TSLX) The financial industry is often a source of high dividend yielding stocks, so it makes sense to look into it. Sixth Street Specialty Lending is, as the name suggests, a player in the credit industry, where it is a provider of equity and credit finance to small and medium businesses. These small and medium-sized businesses are the traditional engine of America’s business sector, providing the majority of all jobs created, and specialty finance companies like Sixth Street are critical to their success. Over the past year, two trends have been clear in the performance of Sixth Street. First, the company posted a sharp drop in profits when the crown hit, followed by a strong rebound in 2Q20 as EPS has since fallen in line with historical norms. And second, the stock price has slowly but steadily regained value from its low at the end of March. A quick glance at the numbers confirms this. TSLX posted a loss of earnings in the first quarter of last year, but the 79 cents per share reported in the fourth quarter, although down 34% sequentially, was still up 41% year-to-year. the other. The stock also rallied back to the share price, up 112% from its low in “covid panic”. Sixth Street stock peaked momentarily earlier this month, when it announced fourth quarter results, as well as the latest dividend declaration. The company’s earnings and revenues have lived up to expectations, and management declared a base dividend of 41 cents per common share, as well as a special dividend of $ 1.25. Sixth Street has a habit of using special dividends to top up the base payment. At the current base rate, the dividend is paying a solid 7.5%. Raymond James analyst Robert Dodd is impressed with Sixth Street’s overall performance, but particularly appreciates the dividend potential here. He writes: “With its recurring top-ups, a large special offer and base dividend income, we believe TSLX is well positioned to perform in a market where it is increasingly difficult to find yield …” Dodd attributes TSLX to an outperformance Buy), and its price target of $ 23.50 suggests a growth margin of 8% over the coming year. (To look at Dodd’s track record, click here) Overall, it’s clear that Wall Street agrees with Dodd on how good Sixth Street is – the stock has had 5 reviews recently and all are buyable, this which is unanimous in the Strong Buy consensus note. The shares are valued at $ 21.67 and their recent appreciation has left only a 6% rise below the average price target of $ 23. (See TSLX stock market analysis on TipRanks) Barings BDC, Inc. (BBDC) Next, Barings BDC, a business development company. Like Sixth Street, Barings provides financial services to mid-market companies. Barings’ services include access to capital as well as asset management, and the company invests in debt, equity and fixed income assets. The company had an investment portfolio worth $ 1.12 billion at the end of 3Q20, according to the latest quarter. This latest reported quarter has also seen Barings exceed earnings expectations. EPS of 17 cents increased 21% sequentially. Net assets from operations increased to 90 cents per share, a huge gain from the 10 cents reported to the same extent a year ago. The company also showed $ 7.1 million in cash at the end of the third quarter. Along with his secure financial position, Barings saw his share regain the value lost when the coronavirus first struck. The stock hit its lowest point on March 18 of last year; since then, stocks have rebounded 91%. That was all Q3. In the fourth quarter, Barings completed a merger with MVC Capital. The market transaction will leave Barings shareholders to own 73.4% of the combined entity (which will use the Barings name), while MVC shareholders will own the remaining 26.6%. The expanded Barings is expected to have $ 1.5 billion in assets under management; the 4Q20 report, expected in March, will provide details. Barings’ dividend reflects the steady growth of the company. Over the past two years, management has kept the quarterly dividend payment on the rise, from 3 cents per share to the 19 cents reported earlier this month for payment in March. At 19 cents per common share, the dividend yields a 7.8% yield. In his Compass Point stock review, analyst Casey Alexander clearly endorsed the dividend announcement: “BBDC previously announced 4Q20 NII of $ 0.19 per share against our estimate of $ 0.16 and consensus estimates of $ 0.17. This was clearly motivated by an improvement in profit power on the Barings platform… ”Further, Alexander sees the company making steady business gains, even without considering the MVC merger, writing:“ In addition to the assets acquired from MVC Capital, BBDC generated $ 528 million in new investment commitments during the quarter. These commitments were split between 24 new borrowers and 17 existing borrowers… ”Alexander’s optimistic comments are complemented by a buy note on the stock, and his price target of $ 10.25 implies a 5% increase for the next 12 months. (To look at Alexander’s track record, click here) This is another stock with a consensus rating from Strong Buy analysts based on unanimous opinion; the three recent reviews are on the buyer’s side. BBDC shares are selling for $ 9.66, and the average price target of $ 11 suggests a one-year rise of 13%. (See BBDC Stock Analysis on TipRanks) For great ideas for dividend-paying stocks traded at attractive valuations, visit TipRanks Best Stocks to Buy, a newly launched tool that brings together all the information about TipRanks stocks. . Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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