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2 “Strong Buy” Dividend Shares Yielding at least 7%
A number of factors are coming together in the market framework and indicate a possible change in conditions in the medium term. This includes increases in commodity prices, specifically in oil prices, which have recently risen. In addition, the job numbers for January, released earlier this month, were disappointing at best – and dismal at worst. They do, however, increase the chance that President Biden and the Democratic Congress will successfully complete a large-scale COVID aid package. These factors tend to pull in several directions. The increase in oil prices suggests a tightening of supply, while the possibility of further cash stimulus bodes well for fans of market liquidity. These developments, however, point to a possible climate of price inflation. Given this scenario, some investors are looking for ways to rebuild and defend their portfolios. And that will pay us dividends. By providing a stable income stream, regardless of market conditions, a reliable stock of dividends provides a cushion for your investment portfolio when the stock stops valuing. And so, we opened the TipRanks database and pulled the details of two stocks with high yield – at least 7%. Better yet, these stocks are seen as strong purchases by Wall Street analysts. Let’s find out why. Williams Companies (WMB) The first action we will examine is Williams Companies, an Oklahoma-based natural gas processing company. Williams controls pipelines for natural gas, natural gas liquids and oil collection, on a network that stretches from the Pacific Northwest, through the Rocky Mountains to the Gulf Coast, and from the south to the Mid-Atlantic. Williams’ main business is the processing and transportation of natural gas, with crude oil and power generation as secondary operations. The company’s footprint is huge – it handles almost a third of all natural gas use in the United States, both residential and commercial. Williams will present its 4Q20 results later this month – but a look at the third quarter results is informative. The company posted $ 1.93 billion in revenue, down 3.5% year-on-year, but up 8.4% quarter-on-quarter, and the highest quarterly revenue so far reported for 2020. Net profit was 25 cents per share, stable in the second quarter, but increased 38% year on year. The report was widely regarded as meeting or exceeding expectations, and the shares gained 7% in the two weeks after their launch. In a move that may indicate solid fourth-quarter earnings on the way, the company declared its next dividend, due on March 29. The payment of 41 cents per common share increased 2.5% over the previous quarter and is annualized to $ 1.64. At this rate, the dividend yields 7.1%. Williams has a 4-year history of growing and maintaining dividends and typically increases payment in the first quarter of the year. Covering RBC’s shares, 5-star analyst TJ Schultz wrote: “We believe that Williams may reach the lower limit of its EBITDA projection for 2020. While we expect short-term growth in the NE to be moderate, we believe that the WMB should benefit from less associated Permian gas than expected. Given our long-term view, we estimate that Williams can comfortably remain within the investment grade credit metrics during our forecast period and keep dividends intact. To this end, Schultz classifies the WMB as Outperform (ie purchase), and its target price of $ 26 suggests a 13% rise in the next 12 months. (To view Schultz’s history, click here) With 8 recent reviews recorded, including 7 purchases and just 1 wait, the WMB has earned its strong buying analyst consensus rating. Although the stock has appreciated in recent months, reaching $ 23, the average target price of $ 25.71 implies that there is still room for ~ 12% growth this year. (See WMB stock analysis at TipRanks) AGNC Investment (AGNC) Next comes AGNC Investment, a real estate investment fund. It is no surprise to find a REIT as a dividend champion – these companies are required by tax codes to return a high percentage of profits directly to shareholders and often use dividends as a vehicle for compliance. Maryland-based AGNC focuses on MBSs (mortgage-backed securities) endorsed and guaranteed by the United States government. These bonds represent about two-thirds of the company’s total portfolio, or $ 65.1 billion out of a total of $ 97.9 billion. AGNC’s most recent quarterly returns for 4Q20 showed US $ 459 million in net revenue and net income per share of US $ 1.37. Although the EPS fell in the annual comparison, it was the strongest recorded in 2020. For the entire year, AGNC reported $ 1.68 billion in total revenues and $ 1.56 per share paid in dividends. The current dividend, 12 cents per common share paid monthly, will be annualized to $ 1.44; the difference from last year’s highest annualization rate is due to a dividend cut implemented in April in response to the coronavirus crisis. At the current rate, the dividend gives investors a robust 8.8% return and is easily accessible to the company given the current income. Among the bulls at AGNC is Maxim analyst Michael Diana, who wrote: “AGNC maintained a competitive return on book value compared to other mortgage FIIs (mREITS), even though they had earned their dividends and repurchased shares. While the turmoil in the mortgage markets in late March resulted in losses and lower book values for all mortgage FIIs, AGNC was able to handle all of its margin calls and, more importantly, assume relatively less realized losses and therefore retain more earning power after turbulence. ”Based on all of the above, Diana values AGNC as a Buy, along with a target price of $ 18. This figure implies a potential increase of ~ 10% from current levels. (To see Diana’s history, click here) Wall Street is on the same page. In the past few months, AGNC received 7 purchases and a single wait – all added up to a strong consensus purchase rating. However, the average price target of $ 16.69 suggests that the shares will remain in the limited range in the near future. (See AGNC’s stock analysis at TipRanks) To find good ideas for trading dividend stocks with compelling valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that brings together all of TipRanks stock insights. Disclaimer: The opinions expressed in this article are exclusively those of the analysts presented. The content should be used for informational purposes only. It is very important to do your own analysis before making any investments.