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 latest document excessive ranges, after counting for each day fluctuations. It’s a transparent signal of a bullish temper amongst buyers.And that bullish temper is discovering fertile soil amongst Wall Street’s stock analysts, who are usually not hesitant to make buy-side calls. There are some indications that the analysts are hedging their bets, nonetheless, as among the many latest Purchase critiques printed a number of additionally provide sturdy dividend yields.Return-minded buyers can discover a diploma of security in high-yielding equities. The benefit of such a essentially defensive technique is apparent: stocks which are rising now will deliver the quick good points of share appreciation, whereas sturdy dividends will present a gentle revenue stream no matter market circumstances.Utilizing the information obtainable within the TipRanks database, we’ve pulled up three stocks with excessive yields – from 7% to 9%. Even higher, these stocks are seen as Sturdy Buys by Wall Street’s analysts. Let’s discover out why.Power Switch LP (ET)First up is Power Switch, a serious identify in North America’s hydrocarbon midstream sector. The corporate’s main community of belongings covers 38 states and hyperlinks three main oil and gasoline manufacturing areas – within the Midwest-Appalachian and Texas-Oklahoma-Louisiana areas, together with North Dakota. Power Switch has smaller belongings within the Colorado Rockies, Florida, and northern Alberta. These belongings embody pipelines, terminals, and storage tanks for pure gasoline and crude oil. The value of ET’s companies is evident 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 latest third quarter earnings launch. On the unfavourable facet, revenues had 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 constructive notice. On one other, the corporate reported $400 million in price financial savings year-to-date, resulting from initiatives to regulate and streamline bills. Whole debt long-term debt remained steady at $54 million.In an announcement on the finish of October, Power Switch declared its Q3 dividend, at 15.25 cents per widespread share. This was a 50% discount from earlier funds, and applied 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 reasonably priced at present revenue ranges. The brand new dividend cost annualizes to 61 cents per widespread share, and – even after the discount – provides 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 Sturdy Purchase, and his $9 price goal suggests it has room for 26% progress within the 12 months forward. (To observe Jenkins’ monitor document, click on right here)Wall Street seems to be in broad settlement with Jenkins, as ET shares preserve a Sturdy Purchase score from the analyst consensus. There have been Eight latest critiques, 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 incessantly recognized for high-yielding dividends, as tax laws require these corporations to return a minimal proportion of income again to buyers. Omega Healthcare, an actual property funding belief, is not any completely different from its friends in that regard, however it does provide buyers a twist. The corporate’s portfolio consists of expert nursing amenities and senior housing amenities, in an 83% to 17% cut 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 unhealthy information. Adjusted funds from operations (FFO), a typical metric used to guage REITs’ revenue ranges, beat the forecast by 5%, coming in at 82 cents per share. In different constructive 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 present debt, and second, to cowl normal 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 price OHI an Outperform (i.e. Purchase). His $43 price goal signifies a 14% upside over the subsequent 12 months. (To observe Hecht’s monitor document, 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 might be prioritized, based mostly on vulnerability. We view this as a serious constructive for OHI as the most important proprietor of expert nursing amenities in the US. Though OHI’s tenants have typically carried out effectively in the course of 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 patrons of the stock…” Within the meantime, OHI has a Sturdy Purchase score from the analyst consensus, based mostly on Eight critiques breaking down to six Buys and a pair 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 corporations 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 corporations.Owl Rock’s third quarter earnings got here in barely under expectations. EPS was 33 cents per share, down 3% sequentially and lacking the estimates by 2 cents. Internet 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 offers funds to paydown present debt within the revolving credit score facility and to fund normal operations.Additionally within the first week of this month, Owl Creek confirmed that it’s discussions to accumulate Dyal Capital. The transfer would mix Owl Creek’s direct lending platform with Dyal’s entry to capital options.Owl Creek has a daily 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 price of $1.24 per widespread share. For comparability, the typical dividend amongst S&P-listed corporations stands at 2%.The overview right here was written by Devin Ryan, 5-star analyst with JMP Securities. Specializing in the Dyal Capital announcement, Ryan famous, “Whereas it is very important distinguish that this merger is between the administration corporations, not the BDC immediately, and in the end we don’t count on a lot change, we do suppose a transaction might symbolize a constructive end result for ORCC shareholders over time.””We proceed to view the chance in ORCC shares as engaging resulting from: 1) sturdy 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 by means of 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 observe Ryan’s monitor document, click on right here)Owl Creek’s Sturdy Purchase consensus score relies on 6 critiques. These present a 5 to 1 cut 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’ Greatest Stocks to Purchase, a newly launched device 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 essential to do your individual evaluation earlier than making any funding.