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2 large dividend shares with a minimum yield of 10%; Here’s what you need to know
Stock markets are booming and staying close to record levels, a condition that would normally make life difficult for investors in dividends. High market values usually lead to lower dividend yields – but even in today’s climate, it is still possible to find a high yield dividend payer. You need to look carefully, however. The history of the market last year was unusual, to say the least. Last winter saw the sharpest and deepest recession in the market’s history – but it was followed by a rapid recovery that is only now slowing down. Many companies have cut their dividends at the height of the corona panic, but are now finding that yields are too low to attract investors and are looking to start raising payments again. In short, the stock market valuation balance is unbalanced and stocks are still trying to recover it. This is leaving an obscure image for investors as they try to navigate these muddy waters. Wall Street analysts and the TipRanks database together can make some sense of the seemingly non-standard situation. Analysts review the shares and explain how they are doing; TipRanks data provides an objective context and you can decide whether these 10% dividend yields are suitable for your portfolio. Ready Capital Corporation (RC) We will start with a real estate investment fund (REIT) that focuses on the commercial market segment. Ready Capital buys commercial real estate loans and securities backed by them and originates, finances and manages these loans. The company’s portfolio also includes multifamily housing. Ready Capital presented solid results in its last quarterly balance sheet, referring to 3Q20. Profit reached 63 cents per share. The result exceeded expectations by 75% and grew 133% year on year. The company ended the third quarter with more than $ 221 million in cash and liquidity available. During the fourth quarter of 2020, Ready Capital closed loans totaling $ 225 million for projects in 11 states. Projects include refinancing, redevelopment and renovations. The full results for the fourth quarter will be released in March. The extent of Ready Capital’s confidence can be seen in the company’s recent announcement that it will merge with Anworth Mortgage into a deal that will create a combined $ 1 billion entity. However, investors should be aware that Ready Capital has announced its 4Q20 dividend, and the payment has been increased for the second consecutive time. The company cut dividends in the second quarter, when COVID crashed, as a precaution against depressed profits, but has been paying up as pandemic fears start to subside. The current dividend of 35 cents per share will be paid later this month; it is annualized to $ 1.40 and gives a very high 12% yield. Covering Raymond James’ shares, 5-star analyst Stephen Laws writes: “Recent results have benefited from non-interest income and strength in the loan origination segment and we expect high contributions to continue in the short term. This perspective gives us greater confidence around the sustainability of dividends, which we believe justifies a higher assessment multiple ”. Laws sees the merger of the company with Anworth as a positive outcome and, referring to the combination, says: “[We] expects the RC to redeploy the capital currently invested in ANH’s portfolio in new investments in the targeted asset classes of the RC. ”According to his comments, Laws classifies RC shares as Outperform (ie Buy) and sets a target price of $ 14.25. Its target implies an increase of 23% in the next 12 months. (To view Laws history, click here) There are two recent reviews of Ready Capital and both are Buys, giving the shares a Moderate Purchase consensus rating. The shares in this REIT are being sold for $ 11.57, while the average target price is at $ 13.63, indicating room for ~ 18% upward growth next year. (See the analysis of RC shares in TipRanks) Nustar Energy LP (NS) The energy and liquid chemicals markets may not seem like natural partners, but they see a lot of overlap. Crude oil and natural gas are highly dangerous for transport and storage, an important attribute they share with industrial chemicals and products like ammonia and asphalt. Nustar Energy is an important intermediary in the oil industry, with more than 10,000 miles of pipelines, across 73 terminals and storage facilities. The relatively low prices of oil in the past two years have affected the profits and results of the energy sector – and this without taking into account the impact of the COVID pandemic on the demand side. These factors are visible in Nustar’s revenues, which fell in the first half of 2019 and have remained low since then. The 3Q20 figure, of $ 362 million, is close to the median of the last six quarters. With all this, Nustar maintained its commitment to a solid dividend payment for investors. In a nod to pandemic problems, the company reduced its dividends earlier this year by a third, citing the need to maintain sustainable payment. The current payment, last sent in November, is 40 cents per share. At this rate, it is annualized to $ 1.60 and yields 10%. Theresa Chen, an analyst at Barclays, sees Nustar as a solid portfolio addition, writing: “We believe that NS offers unique offensive and defensive characteristics that position stocks well compared to their intermediate peers. NS benefits from a resilient refined product footprint, exposure to central areas in the Permian basin, a base in the growing renewable fuel value chain, as well as strategic export assets Corpus Christi … we think NS is an investment idea attractive over the next 12 months. Chen sets a price target of $ 20 for the stock, supporting his overweight rating (ie buying) and suggesting a ~ 27% rise for the year. (To see Chen’s track record, click here) Interestingly, in contrast to Chen’s optimistic stance, the street is currently warm in relation to the midstream company’s prospects. Based on 6 analysts followed by TipRanks in the last 3 months, 2 classify NS as Buy, 3 suggest Hold and one recommends Sell. The average 12-month target price is $ 16.40, marking a ~ 5% increase from current levels. (See NS Stock Analysis on 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 of 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.