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3 “strong buy” shares with a dividend yield greater than 9%
The markets ended 2020 on a high and started 2021 on a bullish path. All three major indices have reached historic levels, with investors apparently looking beyond the pandemic and waiting for signs of a rapid recovery. Veteran strategist Edward Yardeni sees the economic recovery bringing its own slowdown. As COVID’s vaccination program allows for greater economic openness, with more people returning to work, Yardeni predicts a wave of pent-up demand, rising wages and rising prices – in short, a recipe for inflation. “In the second half of the year, we may be looking for some consumer price inflation, which would not be good for overvalued assets,” noted Yardeni. The warning sign to look for is higher yields on the Treasury bond market. If the Fed loosens its low-interest policy, Yardeni sees Treasury bills reflecting the change first. Such a situation is tailor-made for defensive stocks – and this will naturally lead investors to look for stocks with high-yield dividends. Opening the TipRanks database, we found three stocks showing a positive signal trick: a strong buy rating, dividend yields starting at 9% or better – and a recent analysis by analysts pointing to a double-digit rise. We will start with CTO Realty Growth, a Florida-based real estate company that last year made an exciting decision for dividend investors: the company announced that it would change its tax status to a real estate investment fund (REIT) for the fiscal year ended December 31, 2020. REITs have long been known for their high dividend yields, a product of the requirements of the tax code that these companies return a high percentage of their profits directly to shareholders. Dividends are the usual route for this return. For antecedents, the CTO has a varied portfolio of real estate investments. The properties include 27 rental properties in 11 states, totaling more than 2.4 million square feet, along with 18 rental billboards in Florida. Income properties are mainly shopping malls and retail stores. During the third quarter, the most recent reported, CTO sold about 3,300 acres of undeveloped land for $ 46 million, acquired two income properties for $ 47.9 million and collected ~ 93% of basic contractual rent due. The company also authorized a unique special distribution, in connection with its move to REIT status; its goal was to bring the company into compliance with income return regulations during fiscal 2020. The single distribution was made in cash and shares and totaled $ 11.83 per share. The regular dividend paid in the third quarter was 40 cents per common share. This was increased in the fourth quarter to $ 1, a jump of 150%; again, this was done to bring the company into compliance with the REIT status requirements. At the current dividend rate, the yield is 9.5%, much higher than the average among similar companies in the financial sector. B. Riley analyst Craig Kucera believes that the CTO has many options to expand its portfolio through acquisitions: “CTO reached the upper limit of the $ 33M early disposition guidance in 4Q20, bringing YTD provisions to almost $ 85M, with the greater willingness associated with exercising the tenant’s option to purchase a CTO building in Aspen, CO. We published these provisions, we estimate> $ 30 million in cash and restricted cash for additional acquisitions, and we expect the CTO to be active again in 1H21. ”To that end, Kucera classifies the CTO as a purchase along with a target price of $ 67. At current levels, his goal implies a potential 60% increase in one year. (To see Kucera’s track record, click here) Overall, the CTO has 3 recorded reviews from Wall Street analysts, and everyone agrees that this action is a Buy, making the consensus of Strong Buy analysts unanimous. The shares are quoted at $ 41.85, and their average target price of $ 59.33 suggests room for ~ 42% growth in the following year. (See CTO stock analysis at TipRanks) Holly Energy Partners (HEP) The energy sector, with its high cash flows, is also known for its high-paying dividend stocks. Holly Energy Partners is an intermediary transportation player in the industry, providing pipeline, terminal and storage services for producers of crude oil and petroleum distillate products. Holly bases most of its operations in the Colorado-Utah and New Mexico-Texas-Oklahoma regions. In 2019, the last full year for which figures are available, the company saw $ 533 million in total revenue. The company’s revenue in 2020 fell in the first and second quarters, but recovered in the third quarter, reaching $ 127.7 million. Holly reported a distributable cash flow – out of which dividends are paid – of $ 76.9 million, an increase of more than $ 8 million year on year. This supported a dividend payment of 35 percent per regular share, or $ 1.40 annually. At this rate, the dividend yields a strong 10%. Looking at the dividend, Well Fargo analyst Michael Blum wrote: “Our model suggests that distribution is sustainable at this level, because [lost revenue] it is offset by inflation escalators in HEP’s pipeline contracts and contributions from the Cushing Connect JV project. About 80% of the distribution of HEP has deferred taxes. ”Blum gives HEP a price target of $ 20 and an overweight rating (ie buy). Its target implies a 38% increase in the next 12 months. (To view Blum’s track record, click here) “Our rating mainly reflects stable and fee-based cash flows from the partnership, robust yield and conservative balance sheet,” added Blum. For the most part, Wall Street agrees with Blum’s assessment of HEP, as shown by the Strong Buy analyst’s consensus rating. This rating is supported by 6 reviews, divided into 5 for 1 purchases versus waiting. The average target price of $ 18.67 suggests that the stock has room to grow ~ 29% this year. (See HEP stock analysis at TipRanks) DHT Holdings (DHT) Midstreaming is just one part of the global oil industry’s transportation network. Tankers are another, transporting crude oil, petroleum products and liquefied natural gas worldwide, in bulk. Bermuda-based DHT operates a fleet of 27 oil tankers, all classified as VLCC (very large crude carrier). These vessels are 100% owned by the company and vary in tonnage from 298 K to 320 K. VLCCs are the flagship of the global tanker network. four quarters of sequential revenue gain s, even during the ‘corona half’ of 1H20, DHT showed a sequential drop in revenues from 2Q20 to 3Q20. Sales for that quarter dropped from $ 245 million to $ 142 million. It is important to note, however, that the 3Q revenue result was still 36.5% higher than the previous year. Earnings per share, 32 cents, represented a dramatic turnaround compared to the 6 cents loss recorded in 3Q19. DHT has a history of adjusting its dividends, when necessary, to keep it in line with profits. The company did this in the third quarter, and the 20 percent payment per regular share was the first dividend cut in 5 quarters. The general policy is positive for dividend investors, however, since the company has not missed a dividend payment in 43 consecutive quarters – an admirable record. At 80 cents per share annualized, the dividend yields an impressive 14%. Kepler’s analyst Petter Haugen covers DHT and sees potential for greater returns in the company’s contract schedule. Haugen noted, “With 8 out of 16 ships terminating their TC contracts at the end of the first quarter of 2021, we believe DHT is well positioned for when we expect freight rates to rise in the second half of 2021E.” Going into more detail, Haugen adds: “[The] the main underlying engines are still intact: fleet growth will be low (average 1% between 2020-23E) and the US will still be a net offshore exporter of crude oil, further increasing export growth from demand by tankers from the USA. We expect spot rates to improve again during 2021E, just after oil demand normalizes. We expect average VLCC rates of $ 41,000 / day in 2022E and $ 55,000 / day in 2023E. ”In line with his comments, Haugen ranks DHT as Buy. Its $ 7.40 target price suggests that this stock could grow 34% in the coming months. (To see Haugen’s history, click here) The rest of the Street is embarking. 3 purchases and 1 waiting attributed in the last three months add up to a strong buying analyst consensus. In addition, the average price target of $ 6.13 places the potential for high at ~ 11%. (See TipRanks DHT stock analysis) 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. 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.