TipRanks
Raymond James: 2 major stocks with 7% dividend to buy now
Looking at the markets with an eye on the main chance, Raymond James strategist Tavis McCourt sees risk and opportunity in current market conditions. The opportunity, in his view, stems from obvious factors: Democrats won both seats in the Georgia Senate in the second round, giving the next Biden government majority support in both houses of Congress – and increasing the chances of significant fiscal support being signed law in the short term. Most importantly, the coronavirus vaccination program is underway and reports show that the Pfizer vaccine, one of two approved in the United States, is effective against the new strain of the virus. A successful vaccination program will accelerate the economic recovery, allowing states to loosen blocking regulations – and get people back to work. The risks also come from the political and public health spheres. House Democrats approved impeachment articles against President Trump, despite the impending natural termination of his term, and this approval reduces the chances of political reconciliation in a strongly polarized environment. And although the COVID strain is equated with current vaccines, there is still a risk that a new strain will develop that is not covered by existing vaccines – which could restart the cycle of blockages and economic decline. Another risk that McCourt sees, besides these two, would be a strong increase in inflation. He does not rule this out, but finds it unlikely to happen soon. “… inflation of products / services is really only a possibility AFTER reopening, so the market feels a little bulletproof in the short term and, therefore, the continuous rise, with Dems winning the GA races just adding fuel to the stimulus fire, ”McCourt noted. Some of McCourt’s colleagues among Raymond James analysts are keeping these risks in mind and endorsing strong dividend stocks. We analyzed Raymond James’ recent calls and, using the TipRanks database, chose two stocks with high yield dividends. These tickers classified as Buy bring a dividend yield of 7%, a strong attraction for investors interested in using the current good times to create a defensive firewall in case the risks materialize. Enterprise Products Partners (EPD) We will start in the energy sector, a business segment that has long been known for high cash flows and high dividends. Enterprise Products Partners is an intermediary company, part of the network that moves hydrocarbon products from wellheads to storage farms, refineries and distribution points. The company controls more than 50,000 miles of pipelines, shipping terminals on the Texas Gulf coast and storage facilities for 160 million barrels of oil and 14 billion cubic feet of natural gas. The company suffered from low prices and low demand in 1H20, but partially recovered in the second half. Revenues recovered, growing 27% sequentially to reach $ 6.9 billion in the third quarter. This number fell year on year, falling 5.4%, but it was more than 6% above the forecast for the third quarter. Third quarter earnings, at 48 cents per share, were slightly below forecast, but increased 4% year over year and 2% sequentially. EPD recently declared its dividend distribution for 4Q20, at 45 cents per common share. This amount is higher than the previous payment of 44 cents and marks the first increase in two years. At $ 1.80 annualized, the payment yields 7.9%. Among the bulls is Justin Jenkins of Raymond James, who classified EPD as Strong Buy. The analyst gives the stock a target price of $ 26, which implies a 15% rise from current levels. (To see Jenkins’ history, click here) Supporting his optimistic stance, Jenkins noted: “In our opinion, EPD’s unique combination of integration, balance sheet strength and ROIC history remains the best in the category. We see EPD as arguably the best positioned to withstand the volatile scenario … With the EPD footprint, demand gains, project growth and contracted ramps should more than offset supply headwinds and reduce annual marketing results. . “It is not always that analysts agree on a stock, so when that happens, take note. EPD’s strong purchase consensus rating is based on 9 unanimous purchases. The average price target of $ 24.63 per share suggests a 9% increase from the current share price of $ 22.65. (See EPD’s stock analysis at TipRanks) AT&T, Inc. (T) AT&T is one of the immediately recognizable stocks on the market. The company is a longtime member of the S&P 500 and has a reputation as one of the best dividend payers in the stock market. AT&T is a true big-cap industry giant, with a market value of $ 208 billion and the largest fixed and mobile phone service network in the United States. The acquisition of TimeWarner (now WarnerMedia), in a process that ran from 2016 to 2018, gave the company a large stake in the mobile content streaming business. AT&T saw its revenues and profits drop in 2020, under the pressure of the corona pandemic – but the decline was modest, as the same pandemic also valued telecommunications and network systems, which tended to support AT&T’s business. Revenue in 3Q20 was $ 42.3 billion, 5% below the previous year’s quarter. On positive notes, free cash flow increased from $ 11.4 billion to $ 12.1 billion, and the company reported a net gain of 5.5 million new subscribers. Subscriber growth was driven by the launch of the new 5G network – and by premium content services. The company maintained its reputation as a dividend champion and made its most recent dividend declaration for payment in February 2021. The payment, of 52 per common share, is the fifth consecutive payment at the current level and annualized to $ 2.08, giving a 7.2% yield. For comparison, the average dividend between similar companies in the technology sector is only 0.9%. AT&T has kept its dividends high for the past 12 years. Raymond James analyst Frank Louthan sees AT&T as a classic defensive stock and describes the current state of T as the one with the “built-in” bad news. “[We] believe that there are more things that can work out in the next 12 months than can get worse for AT&T. Add the fact that the shares are heavily sold, and we believe that this is a recipe for the positive side. It is difficult to find big cap value names, and we think that investors who can wait a few months for a reversal to the average while fixing a 7% yield should be rewarded for buying AT&T at current levels, ”said Louthan. According to these comments, Louthan classifies T as Outperform (ie Buy), and its target price of $ 32 implies room for a 10% growth from current levels. (To see Louthan’s history, click here) What do the rest of the Street think? Looking at the breakdown of consensus, the opinions of other analysts are more dispersed. 7 purchase reviews, 6 suspensions and 2 sales add up to a moderate purchase consensus. In addition, the average price target of $ 31.54 indicates a potential increase of ~ 9%. (See AT&T stock analysis on TipRanks) To find good ideas for trading dividend stocks with attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that brings together all TipRanks stock perceptions. 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.