3 “ Strong Buy ” stocks with a dividend yield of 8%
Let’s talk about wallet defense. After the manipulation of the social flash mob market last week, this is a topic that should not be ignored. Now that doesn’t mean the markets are crashing. After losses of 2% to close Friday’s session of last week, this week’s trading started on a positive tone, with the S&P 500 rising 1.5% and the Nasdaq rising 2.5%. The underlying bullish factors – a more stable political scene, steadily advancing COVID vaccination programs – are still at play, even if they are not as strong as investors had hoped. While increased volatility may stay with us for a while, it’s time to consider defensive actions. And that will bring us to dividends. By providing a steady stream of income regardless of market conditions, a reliable dividend-paying stock provides a buffer for your investment portfolio when the stock stops appreciating. With that in mind, we used the TipRanks database to extract three stocks with 8% dividends. This is not all they offer, however. Each of these stocks received enough praise from The Street to earn a consensus rating of “Strong Buy”. New Residential Investment (NRZ) We will start by looking at the REIT industry, real estate investment trusts. These companies have long been known for their high yield and reliable dividends – due to compliance with tax rules, which require REITs to return a certain percentage of profits directly to shareholders. NRZ, a mid-sized company with a market capitalization of $ 3.9 billion, has a diverse portfolio of residential mortgage loans, original loans and mortgage management rights. The company is based in New York. NRZ has a $ 20 billion investment portfolio, which has generated $ 3.4 billion in dividends since the inception of the company. The portfolio has shown resilience in the face of the corona crisis, and after a difficult first quarter last year, NRZ recorded increasing gains in Q2 and Q3. The third quarter, the last reported, showed GAAP income of $ 77 million, or 19 cents per share. Although declining year over year, EPS was a strong turnaround from the 21-cent loss in the prior quarter. The increase in income enabled NRZ to increase the dividend. The third quarter payout was 15 cents per common share; the fourth quarter dividend was increased to 20 cents per common share. At that rate, the dividend annualized to 80 cents and pays an impressive 8.5%. In another move to return the profits to investors, the company announced in November that it had approved $ 100 million in share buybacks. BTIG analyst Eric Hagen is impressed with New Residential, in particular the strength of the company’s balance sheet and liquidity. “[We] such as the ability to potentially build capital from retained earnings while maintaining a competitive payout. We believe that the increase in the dividend highlights the strengthening of the liquidity position that the company believes it has right now … we expect NRZ to have been able to release capital as it has secured around $ 1 billion. dollars of securitized debt for its MSR portfolio via two separate transactions since September, ”Hagen said. . As per his comments, Hagen is pricing NRZ a Buy, and his price target of $ 11 implies a 17% hike for the coming year. (To see Hagen’s track record, click here) It’s not often that analysts all agree on a stock, so when it does, take note. NRZ’s Strong Buy consensus rating is based on a consensus of 7 buyings. The average stock price target of $ 11.25 suggests an increase of about 20% from the current stock price of $ 9.44. (See NRZ Stock Market Analysis on TipRanks) Saratoga Investment Corporation (SAR) With the next action we move to the investment management industry. Saratoga specializes in debt, appreciation and mid-market equity investing and has more than $ 546 million in assets under management. Saratoga’s portfolio is broad and includes industry, software, waste disposal and home security, among others. Saratoga has seen a slow – but steady – rebound from the corona crisis. The company’s revenues fell in 1Q20 and have been rising slowly since. The third quarter tax report, released in early January, showed $ 14.3 million in the top line. In adjusted pretax terms, Saratoga’s net investment income of 50 cents per share was 6% above forecast of 47 cents. They say that slowly and steadily wins the race, and Saratoga has shown investors a generally stable hand over the past year or so. The stock rebounded 163% from its post-corona low in March. And the dividend, which the company reduced to CYQ2, has been increased twice since. The current dividend, at 42 cents per common share, was declared for payment on February 10 last month. The annualized payment of $ 1.68 results in a return of 8.1%. Ladenburg Thalmann analyst Mickey Schleien takes an optimistic view of Saratoga, writing: “We think the SAR portfolio is relatively defensive with an emphasis on software, IT services, education services and CLO. .. SAR’s CLO continues to be current and, ”the analyst continued,“ Our model provides that SAR employs cash and SBA debentures to fund the net growth of the portfolio. We believe the board will continue to increase the dividend given the performance of the portfolio, the existence of undistributed taxable income and the economic benefit of the Covid-19 vaccination program. To that end, Schleien evaluates SAR a purchase with a target price of $ 25. This figure implies a 20% increase from current levels. (To look at Schleien’s track record, click here) Wall Street analysts agree with Schleien on this stock – the other 3 criticisms recorded are buys, and the analysts’ consensus rating is a strong buy. Saratoga shares are trading at $ 20.87 and carry an average price target of $ 25.50, which suggests a 22% rise for the next 12 months. (See SAR stock market analysis on TipRanks) Hercules Capital (HTGC) Last but not least is Hercules Capital, a venture capital firm. Hercules offers financial support to small business start-ups with a scientific focus; Hercules customers are in the life sciences, technology and financial SaaS industries. Since its inception in 2003, Hercules has invested more than $ 11 billion in more than 500 companies. The quality of the Hercules portfolio is clear from the company’s recent performance. The stock has fully rebounded from last winter’s corona crisis, rebounding 140% from its low point reached last April. Profits also recovered; for the first nine months of 2020, HTGC posted net investment income of $ 115 million, up 11% from the same period of 2019. For dividend investors, the key point here is that income Net investment covered the distribution – in fact, it totaled 106% of the basic distribution payment. The company was confident enough to boost distribution with an additional payment of 2 cents. The combined payout results in an annualized payout of $ 1.28 per common share and a return of 8.7%. Another sign of confidence, Hercules completed a $ 100 million investment grade bond offering in November, raising capital for debt repayment, new investments and business needs. The bonds were offered in two installments, each of $ 50 million, and the notes are due in March 2026. Covering Piper Sandler’s stock, analyst Crispin Love sees a lot to like in HTGC. “We continue to believe that HTGC’s focus on fast-growing technology and life science companies places the company well in today’s environment. In addition, Hercules is not dependent on a COVID recovery as it does not have investments in “at risk” sectors. Hercules also has a strong liquidity position, which should allow the company to act quickly when it finds attractive investment opportunities, ”commented Love. All of the above convinced Love to rate HTGC as outperforming (i.e. buying). In addition to the call, he set a price target of $ 16, suggesting upside potential of 9%. (To view Love’s track record, click here) Recent equity appreciation has pushed Hercules stock up to the average price target of $ 15.21, leaving only ~ 4% higher than price of $ 14.67. Wall Street doesn’t seem to bother, however, as the analyst consensus rating is a strong unanimous buy, based on 6 recent buy-side reviews. (See HTGC Stock Analysis on TipRanks) To find great ideas for trading dividend stocks at attractive valuations, visit the Best Stocks to Buy from TipRanks, a newly launched tool that brings together all the information about stocks from TipRanks. 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.