(BofA) – Streaming Stock Executing Properly, With Enticing Valuation
3 ‘Strong Buy’ Stocks with Over 7% Dividend Yield
It’s been up, up, and away for the markets for the reason that finish of September. Each the NASDAQ and S&P 500 are buying and selling inside 3% of their current file excessive ranges, after counting for every day fluctuations. It’s a transparent signal of a bullish temper amongst traders.And that bullish temper is discovering fertile soil amongst Wall Street’s stock analysts, who aren’t hesitant to make buy-side calls. There are some indications that the analysts are hedging their bets, nonetheless, as among the many current Purchase opinions revealed a number of additionally provide robust dividend yields.Return-minded traders can discover a diploma of security in high-yielding equities. The benefit of such a basically defensive technique is clear: stocks which might be rising now will carry the fast good points of share appreciation, whereas robust dividends will present a gradual revenue stream no matter market circumstances.Utilizing the info out there within the TipRanks database, we’ve pulled up three stocks with excessive yields – from 7% to 9%. Even higher, these stocks are seen as Robust Buys by Wall Street’s analysts. Let’s discover out why.Vitality Switch LP (ET)First up is Vitality Switch, a significant identify in North America’s hydrocarbon midstream sector. The corporate’s major community of belongings covers 38 states and hyperlinks three main oil and fuel manufacturing areas – within the Midwest-Appalachian and Texas-Oklahoma-Louisiana areas, together with North Dakota. Vitality Switch has smaller belongings within the Colorado Rockies, Florida, and northern Alberta. These belongings embody pipelines, terminals, and storage tanks for pure fuel and crude oil. The value of ET’s companies is obvious from the corporate’s $18 billion market cap and $54 billion in annual revenues.That value, together with the results of the well being and financial crises of 2020, are additionally clear from the corporate’s current third quarter earnings launch. On the damaging facet, revenues have been down 26% from the year-ago quarter, whereas EPS was down 18%. In absolute numbers, the highest line got here in at $9.96 million whereas the underside line was reported at 30 cents per share. Each figures beat the forecasts by a large margin.Beating the forecasts was a optimistic observe. On one other, the corporate reported $400 million in value financial savings year-to-date, on account of initiatives to regulate and streamline bills. Whole debt long-term debt remained secure at $54 million.In an announcement on the finish of October, Vitality Switch declared its Q3 dividend, at 15.25 cents per widespread share. This was a 50% discount from earlier funds, and carried out for a number of causes. Chief amongst these causes is releasing cash for debt discount. The dividend discount additionally retains the dividend yield according to historic values (with the shares down this 12 months, the yield was artificially inflated), and inexpensive at present revenue ranges. The brand new dividend cost annualizes to 61 cents per widespread share, and – even after the discount – offers a excessive yield of 8.8%.Masking the stock for Raymond James, analyst Justin Jenkins famous, “We still see ET’s top-tier integrated midstream footprint as a big positive, but risks are high and will remain so. Ultimately, we believe the core business and long-term free cash flow generation (which will improve dramatically in 2021) will help ET differentiate itself within the midstream space… ET’s large valuation discount to peers is unlikely to completely narrow in the near-term, we see the risk/reward as skewing positive in most scenarios.”According to these feedback, Jenkins charges ET a Robust Purchase, and his $9 price goal suggests it has room for 26% development within the 12 months forward. (To look at Jenkins’ monitor file, click on right here)Wall Street seems to be in broad settlement with Jenkins, as ET shares preserve a Robust Purchase ranking from the analyst consensus. There have been Eight current opinions, together with 7 Buys and a single Maintain. The stock’s $9.29 common price goal is barely extra bullish than the Raymond James place, implying ~31% upside potential from the $7.09 buying and selling price. (See ET stock evaluation on TipRanks)Omega Healthcare (OHI)REITs are regularly identified for high-yielding dividends, as tax laws require these firms to return a minimal share of earnings again to traders. Omega Healthcare, an actual property funding belief, is not any totally different from its friends in that regard, nevertheless it does provide traders a twist. The corporate’s portfolio consists of expert nursing amenities and senior housing amenities, in an 83% to 17% break up. The portfolio is valued at greater than $10 billion. It totals 957 amenities in 40 states plus the UK.On the prime line, Omega reported declines in Q3 revenues. The $119 million reported was down 53% sequentially and 16% year-over-year. That was the dangerous information. Adjusted funds from operations (FFO), a standard metric used to evaluate REITs’ revenue ranges, beat the forecast by 5%, coming in at 82 cents per share. In different optimistic notes this 12 months, Omega has reported collected 99% of rents due in every quarter of 2020, and efficiently issued, this previous October, $700 million in Senior Notes at 3.375% and due in 2031. The corporate goals to make use of the funds raised to, first, repay current debt, and second, to cowl basic operations.Omega at present pays out a 67-cent dividend per widespread share, and as held that cost regular for almost three years. The corporate has a 6-year historical past of dependable dividend funds. The annualized cost is $2.68 per widespread share, making the yield 7.1%. This firm’s efficiency, together with the dependable dividend, prompted JMP analyst Aaron Hecht to charge OHI an Outperform (i.e. Purchase). His $43 price goal signifies a 14% upside over the following 12 months. (To look at Hecht’s monitor file, click on right here)Backing his stance, Hecht writes, “We consider COVID-19 vaccine deliveries will start to reach inside the subsequent two weeks and expert nursing facility residents will likely be prioritized, based mostly on vulnerability. We view this as a significant optimistic for OHI as the biggest proprietor of expert nursing amenities in the USA. Though OHI’s tenants have typically carried out nicely through the pandemic, a rise in demand could be a derisking occasion… We consider OHI deserves a slight premium to its three-year, pre-pandemic comps given demand tailwinds. We’re consumers of the stock…” Within the meantime, OHI has a Robust Purchase ranking from the analyst consensus, based mostly on Eight opinions breaking down to six Buys and a couple of Holds. Omega’s share price has risen 28% for the reason that first week of November, within the wake of the Q3 earnings. This has pushed the stock’s buying and selling price, at present $37.69, barely above the $36.88 common price goal. (See OHI stock evaluation on TipRanks)Owl Rock Capital Company (ORCC)Final however not least is Owl Rock Capital, a specialty finance firm based mostly in New York. Owl Rock works within the middle-market finance sector, providing entry to capital for mid-market firms to make acquisitions, fund operations, and conduct recapitalizations. The corporate’s portfolio boasts $10.2 billion in complete belongings, of which 97% are senior secured belongings. Owl Rock has present investments in 110 firms.Owl Rock’s third quarter earnings got here in barely beneath expectations. EPS was 33 cents per share, down 3% sequentially and lacking the estimates by 2 cents. Web asset value per share elevated 1% quarter-over-quarter, from $14.52 on the finish of June to $14.67 on the finish of September. In a transfer to shore up liquidity, Owl Rock priced a public providing of $1 billion in 3.4% notes within the first week of December. The difficulty is due in 2026, and gives funds to paydown current debt within the revolving credit score facility and to fund basic operations.Additionally within the first week of this month, Owl Creek confirmed that it’s discussions to amass Dyal Capital. The transfer would mix Owl Creek’s direct lending platform with Dyal’s entry to capital options.Owl Creek has an everyday share dividend cost of 31 cents quarterly, which has been supplemented since May 2019 by a sequence of 6 particular 8-cent dividend funds. Calculating the yield by the common dividend, we discover it at 9.6%, based mostly on an annualized charge of $1.24 per widespread share. For comparability, the common dividend amongst S&P-listed firms stands at 2%.The assessment right here was written by Devin Ryan, 5-star analyst with JMP Securities. Specializing in the Dyal Capital announcement, Ryan famous, “Whereas you will need to distinguish that this merger is between the administration firms, not the BDC instantly, and finally we don’t count on a lot change, we do suppose a transaction might signify a optimistic final result for ORCC shareholders over time.””We proceed to view the chance in ORCC shares as engaging on account of: 1) robust credit score efficiency and expectations; 2) a well-positioned steadiness sheet; 3) the earnings scale-up as leverage strikes to the goal 1.0x by 2H21; and 4) a rise within the yield profile of the portfolio via the next mixture of unitranche loans,” the analyst concluded. To this finish, Ryan charges Owl Creek’s shares an Outperform (i.e. Purchase), and his $14.50 price goal suggests a 13% upside within the coming 12 months. (To look at Ryan’s monitor file, click on right here)Owl Creek’s Robust Purchase consensus ranking is predicated on 6 opinions. These present a 5 to 1 break up between Buys and Holds. ORCC is buying and selling at $12.78, and its $13.90 common price goal implies ~9% upside. (See ORCC stock evaluation on TipRanks)To search out good concepts for dividend stocks buying and selling at engaging valuations, go to TipRanks’ Finest Stocks to Purchase, a newly launched instrument that unites all of TipRanks’ fairness insights.Disclaimer: The opinions expressed on this article are solely these of the featured analysts. The content material is meant for use for informational functions solely. It is rather necessary to do your personal evaluation earlier than making any funding.