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2 large dividend stocks with a yield of at least 10%; Here’s what you need to know
Stock markets are rising and holding near record highs, a condition that would generally make life difficult for dividend investors. High market values normally lead to lower dividend yields – but even in today’s climate, it’s still possible to find a high-yielding dividend payer. You have to watch carefully, however. The history of the market over the past year has been unusual to say the least. Last winter was marked by the steepest and deepest recession in market history – but it was followed by a rapid recovery that is only slowing down now. Many companies pulled their dividends at the height of the corona panic, but now they are finding that yields are too low to attract investors and are looking to start increasing payouts again. In short, the stock market’s valuation record is out of balance and stocks are still trying to find it. This leaves a cloudy picture for investors as they attempt to navigate these muddy waters. Wall Street analysts and the TipRanks database together can make sense of the seemingly model-free situation. Analysts look at stocks and explain how they fit; TipRanks data provides objective context, and you can decide if those 10% dividend yields are right for your portfolio. Ready Capital Corporation (RC) We will start with a Real Estate Investment Trust (REIT) that focuses on the commercial market segment. Ready Capital purchases commercial real estate loans and the securities guaranteed by them, as well as the creation, financing and management of these loans. The company’s portfolio also includes multi-family homes. Ready Capital posted strong results in its latest quarterly release, for 3Q20. Profit came to 63 cents per share. This result exceeded expectations by 75% and increased by 133% year over year. The company ended the third quarter with more than $ 221 million in cash and cash on hand. During the fourth quarter of 2020, Ready Capital completed loans totaling $ 225 million for projects in 11 states. Projects include refinancing, redevelopment and renovations. Full fourth quarter results will be released in March. The extent of Ready Capital’s confidence can be seen in the company’s recent announcement that it will merge with Anworth Mortgage in a deal that will create a combined $ 1 billion entity. In the meantime, investors should note that Ready Capital has announced its 4Q20 dividend, and the payout has been increased for the second time in a row. The company had cut the dividend in the second quarter, when COVID hit, as a precaution against depressed earnings, but increased the payout as pandemic fears begin to subside. The current dividend of 35 cents per share will be paid at the end of this month; it annualizes to $ 1.40 and gives an extremely high return of 12%. Covering the Raymond James stock, 5-star analyst Stephen Laws writes: “Recent results have benefited from non-interest income and the strength of the loan origination segment, and we expect the high contributions to continue. short term. This prospect gives us increased confidence in the sustainability of dividends, which we believe justifies a higher valuation multiple. Laws views the company’s merger with Anworth as a net positive and refers to the merger, says: “[We] expects RC to redeploy the capital currently invested in the ANH portfolio into new investments in RC’s targeted asset classes. Based on his comments, Laws attributes RC to outperform (ie Buy) and sets a price target of $ 14.25. Its target involves an increase of 23% over the next 12 months. (To look at Laws’ track record, click here) There are two recent reviews from Ready Capital and both are buyouts, giving the stock a moderate buy consensus rating. The shares of this REIT sell for $ 11.57 while the average price target stands at $ 13.63, indicating an upward growth margin of about 18% during the year to come. (See RC stock market analysis on TipRanks) Nustar Energy LP (NS) The energy and liquid chemicals markets may not seem like natural partners, but they see a lot of overlap. Crude oil and natural gas are very dangerous to transport and store, an important attribute they share with industrial chemicals and products like ammonia and asphalt. Nustar Energy is a major intermediary player in the petroleum industry, with more than 10,000 miles of pipeline, along 73 terminals and storage facilities. The relatively low oil prices of the past two years have dented the energy sector’s top and bottom performance – and that’s ignoring the impact of the COVID pandemic on the demand side. These factors are visible in Nustar’s revenue, which fell in the first half of 2019 and has remained low since. The 3Q20 figure, at $ 362 million, is near the median of the past six quarters. Through it all, Nustar has maintained its commitment to a solid dividend payout for investors. In a nod to the pandemic troubles, the company cut its dividend by a third earlier this year, citing the need to keep the payment sustainable. The current payout, last sent in November, is 40 cents per share. At that rate, it annualizes to $ 1.60 and gives a 10% return. Barclays analyst Theresa Chen sees Nustar as a solid addition to the portfolio, writing: “We believe NS offers unique offensive and defensive characteristics that position the stock well relative to its mid-range peers. NS benefits from a resilient refined product footprint, base acreage exposure in the Permian Basin, a foothold in the burgeoning renewable fuels value chain, and strategic export assets of Corpus Christi … we think NS is a compelling investment idea over the next 12 months. Chen sets a target price of $ 20 on the stock, supporting his overweight (ie buy) rating and suggesting an increase of about 27% for the year. (To look at Chen’s track record, click here) Interestingly, unlike Chen’s bullish stance, the streets are currently lukewarm when it comes to the outlook for the midsize company. Based on 6 analysts followed by TipRanks in the past 3 months, 2 rate NS a Buy, 3 suggest Hold and 1 recommend Sell. The 12-month average price target stands at $ 16.40, which is approximately 5% up from current levels. (See NS 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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