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3 High Yield Dividend Actions with Street Improvement Score
We have just received a practical lesson in preparing for evil when times are good. Last month, several Wall Street analysts were optimistic about high-yield dividend stocks – recommending defensive moves, even with the bullish trend in the market. And … then we had the short squeeze frenzy to end January, leading to the worst month for the main stock indexes since October. Current market conditions remain generally optimistic, but the events of the past 10 days have reminded us of the value of maintaining a defensive segment for the portfolio. In this context, we used the TipRanks database to point out three high-yield dividend shares that share some important characteristics; They are paying reliable dividends with more than 5% income. And in each case, at least one of the Wall Street analysts has become optimistic (that is, it has raised the stock). Given that analysts often reiterate the recommendations, the updates are a clear sign of increased confidence in the company’s prospects. Regency Centers Corporation (REG) We will start with Regency Centers, a Florida-based real estate investment fund (REIT). It is not surprising to find a REIT in a list of shares with high yield dividends; these companies are obliged, by complying with the tax code, to return a high percentage of profits to their shareholders and frequently use dividends as a vehicle. Regency has a diverse portfolio of desirable retail locations, 408 in total in 30 states, with 56 million square feet of leasable space. Even with the decline in brick and mortar retail due to the ongoing corona crisis, this portfolio proved to be a continuing asset. The spaces are mainly shopping centers, located in rich urban areas and anchored by reliable supermarket chains. In the third quarter of 2020, the last with available figures, the company reported that its properties had an occupancy rate of 93.4%, with 98% of the rent due being charged. Thereafter, the company reported an EPS of 7 cents per share. Although positive, this represents a serious decline year after year, mainly attributable to causes related to the pandemic. Although revenue declined, Regency maintained its dividends during the health crisis. The company’s most recent payment, which came out in early January, was 59.5 cents per share – the same as in the previous three quarters. Regency has a dividend increase pattern for distribution in the first quarter and has a 12-year track record of reliable dividend growth. 2020 dividends are annualized to $ 2.38 and yield 5.07%. Covering the shares of Compass Point, analyst Floris van Dijkum writes: “[REG] fully covered its 2020 dividend, based on our estimates, and is expected to hold approximately $ 75 million in cash after dividends in 2021 … REG Shares Appear [to be a] value at the moment. The REG is traded at a 20% discount to the NAV, broader than its industry peers … In an implicit cap rate spread, the REG is traded at 1.1% above its guaranteed cap rate of 5 , 5% … We recommend that investors capture this relative valuation spread … by swap exposure in the REG. ”Showing the extent of his optimism, van Dijkum updated his position from REG to Buy and increased his target price to $ 54. At current levels, his target implies a 15% increase in one year. (To see van Dijkum’s history, click here) So, this is the Compass Point view, let’s turn our attention now to the rest of the street: 4 REG purchases, 1 wait and 1 sale come together in a purchase classification moderate. Meanwhile, the average price target is $ 50.75 and implies an 8% increase from current levels. (See REG stock analysis at TipRanks) Vornado Realty (VNO) Next, Vornado is another REIT, based in New York City. The company is known for having sophisticated locations in the city, including the Crowne Plaza Hotel and One Penn Plaza. In addition to the properties it owns, Vornado also owns 70% of 1260 Avenue of the Americas and 555 California Street in San Francisco; in each of these cases, the remaining 30% is tied to former President Trump. These latter properties are widely seen as trophy assets and were on sale in early 2020. They were withdrawn from the market as the ‘corona recession’ deepened – and luxury real estate became a kind of white whale. Both buildings remain valuable, however, in the $ 5 billion range. Vornado is expected to locate new tenants or resume sales efforts later this year. Vornado’s finances fell dramatically in 2020, when the corona crisis hit, but profits turned positive in the third quarter. The company reported $ 53.2 million in net profit attributable to ordinary shareholders, or 28 cents per share, which was above a net loss of $ 1.04 per share in the second quarter. The company attributes the falls year after year to the closing of buildings and the reduction in rent collection due to the ongoing pandemic – but notes that financial results should improve as the city’s economic reopening accelerates. Vornado was forced to reduce its dividends from the third quarter of 2020, from 66 cents per common share to 53 cents, but has kept paying since then. The next payment was declared for February 12. At the current rate, the dividend is annualized to $ 2.12 and yields 5.5%. Truist analyst Michael Lewis covers the VNO and he sees the company’s potential opening up again now that 2020 has passed. “We like to enter 2021 more, after profits fell in 2020 … we think that the narrative during the second half of this year will be the reopening of New York and obtaining a recovery path after the distribution of the vaccine,” he noted the analyst. Turning to specific buildings and the revenue they generate, Lewis wrote: “PENN1 and PENN2 are expected to gradually contribute to the growth of 2022-2024 – and the success of 220 condo sales in Central Park means that the financing has already has been raised and is waiting to earn a return. ”In line with his optimistic outlook, Lewis raised the VNO from Hold to Buy and raised his target price to $ 46, which implies a 24% increase in the next 12 months. (To see Lewis’ track record, click here) Looking at the consensus split, analysts are split in the middle when it comes to VNO. 2 purchases, 2 suspensions and 2 sales add up to a waiting consensus rating. In addition, the $ 40.80 average price target implies a ~ 10% increase from current levels. (See VNO stock analysis at TipRanks) Chevron Corporation (CVX) From REITs, we will move on to the oil industry. This is another area rich in dividend potential, as Big Petroleum is never lacking for customers when it faces headwinds. These headwinds last year included lower demand and lower prices during the COVID-19 recession – but as the coronavirus recedes, vaccines are launched in greater availability and economies reopen, the price of oil has gone up. Since the end of October, WTI has gained 55% while Brent has risen 54%. The oil price gain cannot come at a better time for Chevron, whose operations include, among other concerns, 11,000 oil wells in the Texas Permian Basin, Australia’s $ 43 billion Gorgon Gas Project and a stake in 40% in 13 of Nigeria’s Niger Delta oil concessions. In 2H20, the company’s revenues recovered from sharp declines in the second quarter, reaching US $ 23.9 billion in the third quarter and US $ 24.8 billion in the fourth quarter. Earnings per share are still negative, but with an upward trend. Many oil companies reduced dividend payments in 2020 – but not Chevron. The oil giant has a 12-year history of maintaining its payments to shareholders and has kept its common stock dividends at $ 1.29 per share during the difficult year. Last month, the company announced its first dividend payment of CY21 common shares, also at $ 1.29. At this rate, the annual payment is $ 5.16 per share and the yield is 5.9%. To this end, analyst Paul Cheng, of Scotiabank of Canada, thought it best to raise the CLC rating from Neutral to Outperform (ie, Buy), while raising the target price to $ 110 (from $ 95). This figure suggests an increase of 23% over current levels. (To view Cheng’s track record, click here) “As a result of the recent strong stock performance, we think the company’s relative valuation has become attractive. Although we don’t think CVX will perform as well as some of the big E & Ps … we do think they will have a solid superior performance among the super majors and a good long-term participation with a solid management team focused on their model return business, ”commented Cheng. Overall, Wall Street seems optimistic about Big Oil. CVX has 14 recent analyzes, dividing 10 to 4 in favor of purchases and causing the analyst’s consensus to classify a moderate purchase. The shares are quoted at $ 89 and the average target price of $ 105.08 suggests that the shares have room for ~ 18% growth this year. (See TipXanks CVX stock analysis) To find good ideas for trading dividend stocks with attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that gathers all the information about TipRanks stock. Disclaimer: The opinions expressed in this article are exclusively those of the analysts presented. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investments.