TipRanks
3 Great Dividend Shares with Yields Over 7% Raymond James Says ‘Buy’
Wall Street investment firms are burning midnight oil as we approach the end of 2020, publishing their year-end notes and their New Year’s predictions, both for building investors. This is the obvious point: we are in a time of booming markets, and investor sentiment is on the rise now that the election has been resolved and COVID vaccines have emergency approval and are entering the distribution networks. However, the blockade policies put in place to combat the virus this winter are slowing the economic recovery. Whether the economy is really going to sink or not is not yet known. Meanwhile, strategist Tavis McCourt, from Raymond James, has published his opinion on the current situation and his comments deserve consideration. First, McCourt notes that investors are focused on the good news: “[The] the stock market is more focused on the rollout of vaccines and full reopening of savings in 2021 and, so far, the negative data points have been largely overlooked. ”Looking to the future, McCourt writes about the next two years:“ We believe the logical result of 2021 (and 2022 for that matter) is a likely “return to normal” with strong EPS growth offset by lower P / Es, preventing a change in vaccine history. We expect cyclical sectors and lower capitalization stocks to continue to outperform, as is typical in early-cycle markets … ”Raymond James research analysts have been looking for the ‘right’ purchases in the markets and their choices deserve a look. more detailed analysis. They have taken advantage of high-yield dividend payers as an investment game of choice. The TipRanks database sheds some additional light on three of JMP’s choices – stocks with dividends yielding 7% or better – and which the investment firm sees with a 10% advantage or better. New Residential Investment (NRZ) The Real Estate Investment Trust (REIT) segment has long been known for its high and reliable dividends, a feature promoted by tax regulations that stipulate that these companies must return a certain proportion of profits directly to investors. Headquartered in New York City, New Residential Investment is typical of its industry. The company’s portfolio includes residential mortgages, mortgage maintenance rights and loan origination. NRZ focuses its operations on the residential housing sector. NRZ is a mid-cap company with a market capitalization of $ 4.13 billion and a portfolio of $ 5.72 billion. The company’s revenues have been increasing since the second quarter of 2020, after sharp losses during the first quarter’s ‘corona recession’. Third-quarter earnings, however, stood at 19 cents per share, down from 54 cents in the same quarter a year ago. But even with this loss, NRZ was careful to maintain the dividend. In fact, it did more than that. The company increased the third quarter dividend to 15 cents per common share, in a continuation of an interesting story. In the first quarter, the company reduced the dividend on common shares to 5 cents, in a move to preserve capital during the corona crisis. Since then, the company has increased the dividend by 5 cents in each subsequent quarter, and the payment for the fourth quarter, announced in mid-December, is 20 cents per common share. At that rate, the dividend annualizes to 80 cents and the yield exceeds 7.87%. In addition to increasing the dividend, NRZ also announced a $ 100 million share buyback program. The repurchase is for preferred shares and follows the existing common share repurchase policy. Analyst Stephen Laws, in his NRZ coverage for Raymond James, writes: “We expect strong origination volumes and attractive gains in sales margins to drive strong near-term results, and we continue to expect dividend growth in 4Q […] For 4Q20, we are increasing our main earnings estimate by $ 0.02 per share to $ 0.35 per share. For 2021, we are increasing our main earnings estimate by $ 0.08 per share to $ 1.31 per share. “In line with these comments, Laws classifies the shares as Outperform (ie Buy). Its target price of $ 11.50 implies a 16% increase in one year. (To view Laws history, click here) No it’s always that analysts agree on a stock, so when that happens, take note. NRZ’s strong buy consensus rating is based on a unanimous 8 purchases. The average share is $ 11.36 the target of price suggests 14% and a change from the current stock price of $ 9.93. (See NRZ stock analysis at TipRanks) Fidus Investment Corporation (FDUS) Next up is a business development corporation, Fidus This company is one of many in the midsize business financing niche, offering debt solutions and access to capital to smaller companies that may not be able to secure loans from larger markets.The Fidus portfolio focuses on senior guaranteed debt and mezzanine debt for endorsement companies between US $ 10 million and US $ 150 million. Fidus has investments in 68 companies with an aggregate value of $ 697 million. Most of this portfolio, 59%, is secondary debt, with the remainder divided mainly between subordinated debt, primary debt and equity-related securities. The company saw revenue gains during the second and third quarters of 2020, after negative results in Q1. Net revenue for the third quarter was ~ $ 21 million, an impressive increase of 129% sequentially. Since the third quarter, Fidus has declared its dividend for the fourth quarter, at 30 cents per common share, the same as in the previous two quarters, plus an extra special dividend of 4 cents authorized by the Board of Directors. This brings the total payment for the quarter to 34 cents per common share and puts the yield at 9.5%. Raymond James analyst Robert Dodd likes what he sees at Fidus, especially dividend prospects. “We continue to see risk / reward as attractive at current levels – with shares traded below book value, solid dividend coverage from the predicted NII base … We projected the FDUS solidly outperforming its quarterly base dividend of $ 0.30 / action during our projection period. As a result, we do modest supplementary projects … ”Dodd assigns an Outperform rating (ie Buy) to the stock and sets a target price of $ 14. At current levels, this target indicates a 10.5% increase in the next few months. (To see Dodd’s history, click here) Wall Street is a little more divided into FDUS shares, a circumstance reflected in the consensus rating of moderate buying analysts. This rating is based on 4 reviews, including 2 purchases and 2 retentions. The shares are quoted at $ 12.66, and the average price target of $ 13.33 suggests a modest 5% increase from current levels. (See FDUS stock analysis at TipRanks) TPG RE Finance Trust (TRTX) Going back to the REIT sector, we looked at the TPG RE Finance Trust, the real estate financing arm of the global asset company TPG. This REIT, with a market capitalization of $ 820 million, built a portfolio of commercial mortgage loans for a total aggregate value of $ 5.5 billion. The company is a provider of original commercial mortgage loans starting at $ 50 million, primarily in the primary markets of the United States. Most of the company’s loans and properties are concentrated in the East. Like many financial companies, TPG RE Finance had serious losses in the first quarter due to the corona pandemic crisis – but since then it has largely recovered. Third quarter revenue reached $ 48 million, an increase of 9% year-over-year. During the quarter, TPG received loan payments totaling $ 199.6 million, a solid result, and when the quarter ended the company had $ 225.6 million in cash or cash equivalents. The company was able to easily finance its dividends, of 20 cents per common share, in the third quarter. For the fourth quarter, the company recently declared not only a regular payment of 20 cents, but also a special non-recurring cash dividend of 18 cents. Together, the dividends provide a yield of 7.5%, almost 4x higher than the average found among companies listed on the S&P. Returning to Raymond James’s REIT expert Stephen Laws, we find that he is also optimistic about TRTX. “TRTX underperformed since the 3Q earnings report, which we believe will create an attractive buying opportunity … We expect major profits to continue to benefit from LIBOR floors in loans and we expect new investments to resume in 1Q21. The company’s portfolio combined a retail and hotel exposure of 14%, which is below the industry average of 19% … ”To this end, Laws classifies TRTX as a strong purchase and its target price of $ 13 suggests an increase ~ 22% in 2021. (To see Laws history, click here). This share also has a strong analyst consensus buy rating, based on 3 unanimous buy reviews defined in the past few weeks. The shares cost $ 10.67 and the average target of $ 11.00 suggests a modest 3% increase from current levels. (See the TRTX stock analysis at TipRanks) To find good ideas for trading dividend stocks in 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 only 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.