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2 large dividend stocks with a yield of at least 7%; Raymond James says ‘Buy’
For investors looking for a solid dividend player, certain market segments are known for their high yielding dividends, which makes them logical places to start looking for reliable payers. The hydrocarbons sector, the production and integration of oil and gas, is one of them. The sector is concerned with an essential product – our world runs on oil and its by-products. And while energy companies have high overhead costs, they still have a market for their deliverables, which leads to ready cash flow – which can be used, among other things, to pay dividends. All of this prompts investment firm Raymond James to look to the list of mid-size oil and gas companies for dividend-paying stocks with growth potential. “We are planning the [midstream] The group will add around 1 lap to its average EV / EBITDA multiple this year. This equates to a movement of about 20 to 25% of the value of the shares, ”noted Justin Jenkins, analyst at Raymond James. Jenkins highlighted a series of points leading to an interim recovery in 2021, including the shift from “lockdown” to “reopen” policies; a general boost for commodities as the economy picks up; a political point, that some of DC’s more traditional centrists are unlikely to vote in favor of anti-oil policies and the Green New Deal; and finally, with relatively low stock values, dividend yields are high. A review of the TipRanks database reveals two middleman companies that caught Raymond James’ attention – for all of the points mentioned above. These are stocks with a specific set of clear attributes: a dividend yield of 7% or more and call ratings. MPLX LP (MPLX) MPLX, which separated from Marathon Petroleum eight years ago as a separate flow-through entity, acquires, owns and operates a series of mid-level assets including pipelines, terminals, refineries and of waterways expedition. MPLX’s primary areas of operations are in the northern Rocky Mountains and the Midwest and extend south to the Gulf Coast of Mexico. Revenue reports during the “ corona year ” of 2020 show the potential for oil and gas to be worth halfway. The company reported $ 2.18 billion on the top line in the first quarter, $ 1.99 billion in the second quarter and $ 2.16 billion in the third quarter; revenues turned negative in the first quarter but were positive over the next two quarters. The third quarter report also showed $ 1.2 billion in net cash generated, more than enough to cover the company’s dividend payout. MPLX pays 68.75 cents per common share quarterly, or $ 2.75 annualized, which gives the dividend a high dividend yield of 11.9%. The company has a diverse set of mid-level trades and strong cash generation, factors that led Raymond James’ Justin Jenkins to improve his position in MPLX from neutral to outperform (i.e. buy) . Its price target, at $ 28, implies a 22% year-over-year increase for stocks. (To see Jenkins’ track record, click here) Supporting his position, Jenkins writes, “Given how many ‘boxes’ MPLX history can verify, it’s no surprise that this is a debate. With exposure to sagging G&P trends, an expected recovery in the volume of refined / refined products, the story touches many operational boxes – while also overlapping several financial debates… We also believe that a strong 2020 financial results should give more confidence to more long term… ”Now moving on to the rest of the street, it appears that the other analysts are generally on the same wavelength. With 6 purchases and 2 catches awarded in the last three months, the consensus score presents itself as a strong buy. In addition, the average price target of $ 26.71 places the increase at ~ 17%. (See MPLX stock analysis on TipRanks) DCP Midstream Partners (DCP) Based in Denver, Colorado, the Next Stock is one of the nation’s largest middleman natural gas operators. DCP controls a network of gas pipelines, hubs, storage facilities and factories stretching between the production areas of the Rockies, Midcontinent and Permian Basin and the Gulf Coast of Texas and Louisiana. The company also operates in the Antrim, Michigan gas region. In the most recent quarter – 3Q20 – DCP gathered and processed 4.5 billion cubic feet of gas per day, as well as 375,000 barrels of natural gas liquids. The company also reported $ 268 million in net cash generated, including $ 130 million in free cash flow. The company reduced its debt by $ 156 million in the quarter and posted a 17% reduction in operating costs year over year. All of this helped DCP keep its dividend at 39 cents per share. When the corona crisis started, the company had to reduce this payment – but only once. The recently declared dividend for 4Q20 is the fourth in a row at 39 cents per common share. The annualized rate of $ 1.56 gives a respectable return of 7.8%. This is another stock that is receiving an upgrade from Raymond James. Analyst James Weston is shifting this stock from neutral to outperforming (ie Buy), while setting a target price of $ 24 to imply 20% year-over-year growth. “[We] expects DCP to post another strong quarter thanks to sequential improvements in NGL prices, volatility in the NGL market and positive upstream trends … we are not capitalizing current propane prices and are planning a run solid pricing, but more normalized over the next 12-18 months. In our opinion, this will create a favorable operating environment for DCP’s cash flow that is not currently reflected in Street’s estimates, ”Weston noted. Overall, Moderate Buy’s analyst consensus rating on DCP is based on 7 recent reviews, breaking down 4 to 3 Buy versus Hold. The shares are priced at $ 19.58 and the average target of $ 23 suggests a rise of around 15% from that level. (See DCP Stock Analysis on TipRanks) To get 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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