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3 large dividend shares with a minimum yield of 8%; Wells Fargo says “buy”
With the Georgia election behind us and the Trump administration in decline, the political landscape in almost the medium term is becoming clearer: the Biden government will be able to serve its progressive base, now that it rests on the majority – however thin – in both Houses of Congress. Predictability is good for markets and we are likely to have it, at least until 2022. This makes it time to stop the defensive moves in the portfolio. Wells Fargo research analysts have been looking for the ‘right’ buy in the markets, and their choices deserve a closer look. 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 the company’s choices – shares with dividends yielding 8% or more. Apollo Investment Corporation (AINV) A good place to look for high return dividends is among the business development companies in the market. These companies offer specialized financing for the midsize market, providing credit and financing to customers of small and medium-sized companies that would otherwise have difficulty accessing the capital markets. Apollo Investment is a typical example, with an investment portfolio valued at $ 2.59 billion. Apollo has investments in 147 companies, with an average exposure of R $ 15.9 million. Most of its portfolio, 86%, is composed of debts with real guarantee. Healthcare, commercial services, aviation and transportation and high-tech companies account for more than half of Apollo’s investment goals. In Q3CY20 (the company’s second fiscal quarter of 2021), Apollo posted EPS of 43 cents per share, steady sequentially, but down 18% year on year. The company had $ 268 million in available liquid assets and $ 287 million in available credit on its guaranteed credit facility at the end of the quarter. Since then, Apollo has changed its revolving credit line by extending the maturity until December 2025. In terms of dividends, Apollo has kept its payments to regular shareholders despite the corona pandemic. Apollo’s most recent payment in November was a regular dividend of 31 cents plus a special dividend of 5 cents. The current yield is an impressive 11.6%. Covering AINV for Well Fargo, analyst Finian O’Shea noted: “Legacy’s impact has diminished, adding just $ 3 million to revenue this quarter, for an annualized PV yield of ~ 5.5%. We think there is very little disadvantage for NOI in the legacy book and we see any achievements and reimplementations as a big positive factor for the stock. O’Shea gives Apollo an overweight rating (ie buy) and a target price that, at $ 12.50, implies a 12% increase from current levels. (To view O’Shea’s history, click here) In general, Apollo has two recorded records, and they are divided – 1 Purchase and 1 Retention – for a view of Moderate Purchase consensus. The stock is selling for $ 11.17, and its average target price of $ 11.50 suggests a modest 3% rise. (See AINV stock analysis at TipRanks) Goldman Sachs BDC (GSBD) Next, Goldman Sachs BDS, is the banking giant’s entry into the specialized financial business development segment. GSBD is a subsidiary of Goldman and focuses on midsize companies, providing closed-end management investment services and access to midsize credit. The performance of GSBD’s shares in 2020 showed a steady recovery from the initial recession caused by the crown crisis last winter. At the end of the year, the shares were trading at their January 2020 levels. In November, the company felt confident enough to price an offer of $ 500 million in unsecured notes, with interest of 2.875% and maturing in January. 2026. The proceeds will be used to pay the revolving credit line, improving interest on existing debt. Also in November, the GSBD reported 80 cents in earnings per share in the quarter ended September 30. The gains were strong enough to support a solid dividend of 45 cents per share – and the company announced a special dividend payment, of 15 cents, to be paid in three installments during 2021. The regular dividend currently has a yield of more than 9 %. Among the bulls is Finian O’Shea of Wells Fargo, which also covers AINV. The analyst wrote: “[We] we believe that the high quality investment platform and the shareholder friendly structure will continue to generate attractive future returns … GSBD is quality at a good price … For those who buy BDCs, GSBD will probably always be in the discussion of the portfolio as the we see, given its quality of earnings and guidance for shareholders. With that in mind, O’Shea classifies GSBD as Overweight (ie Buy), along with a target price of $ 19.50. This figure implies an increase of 5% in relation to the current levels. (To view O’Shea’s history, click here) Once again, this is an action with a uniform split between purchase and wait assessments, resulting in a moderate purchase analyst consensus rating. The shares are quoted at $ 18.59 and the average target price of $ 19.50 corresponds to that of O’Shea. (See the GSBD stock analysis at TipRanks) ExxonMobil (XOM) From BDCs, we will move on to the oil industry. Exxon Mobil is one of the Big Oil companies, with a market capitalization of $ 190 billion and revenues in 2019 (the last year for which annual data are available) of $ 264.9 billion. The company produces approximately 2.3 billion barrels of oil equivalent per day, placing it among the top five global hydrocarbon producers. Low prices in 2H19 and the crown crisis in 1H20 reduced revenues in the first part of last year – but this reversed in Q3 when XOM reported $ 45.7 billion on the top line. Although it fell year after year, this increase was 40% sequentially. Despite all the headwinds the oil industry has faced in the past 18 months, XOM has maintained its reliable dividends and paid the most recent distribution in December 2020. That payment was 87 cents per regular share, annualizing to $ 3 , 48 and yielding 8.4%. In a note on large oil companies, Roger Read of Wells Fargo writes: “In 2021, we expect more favorable macro winds, but we realize that there are significant challenges and maintaining an average Brent price below $ 50 …” Changing its vision for XOM in particular, the analyst adds: “We do not expect growth in production and only minimal generation of free cash flow, which includes disposal resources. However, this represents a significant change from the past few years of significant cash burn and greater leverage. In our opinion, this is probably enough to raise shares a little and lessen concerns about the sustainability of dividends. ”In light of his comments, Read values XOM shares an Overweight (ie Buy), and its $ 53 target price indicates room for 17% positive growth next year. (To read Read’s history, click here) That Wall Street still views the energy sector with a cautious eye is clear from the XOM – Hold analyst consensus rating. This is based on 10 reviews, including 3 purchases, 6 holds and 1 sale. The shares are selling for $ 45.15, and their average price target of $ 47.33 suggests a modest increase of ~ 5% (see XOM stock analysis at TipRanks). newly launched tool that brings together all TipRanks heritage 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.