TipRanks
3 “strong buy” dividend shares that produce about 7%
In the last 12 months, the S&P 500 has returned to its best performance – an 80% gain since the end of March. But are the good times over? Some historical data would suggest that bulls will continue to run. Since 1950, the market has recorded 9 sustained prices throughout the year with a continuous return of 30% or better on the S&P 500. These periods recorded an average gain of 40% per year (the median was 34%) – and none of these bull markets ever ended in the second year. But investors shouldn’t expect the same returns in the last 12 months they’ve seen in the last 12 months, according to Callie Cox, senior investment strategist at Ally Invest. “[I]It is typical for the bull market to lose some steam in the second year … Expectations are starting to rise and making it harder for the market to … exceed everyone’s expectations. And that leaves a greater chance of disappointment. And, to be clear, again, we do not resort to condemnation and darkness. We just think the market is due for a revival in the next quarter or two, “said Cox. For yield-oriented investors, the prospect of lower sustained gains in stock appreciation will naturally lead to a look at dividend stocks. Reliable, high – Dividend payers cede a second stream of income, to complete the appreciation of the shares and to ensure a solid return for investors.In view of this, we used the TipRanks database to identify three shares that meet a profile: a Strong Buy rating from Wall Street analysts and a dividend yield of around 7% Trinity Capital (TRIN) We will start with Trinity Capital, a risky debt company that makes capital available to start-ups. Trinity totaled $ 494 million across 96 public markets earlier this year, closing its IPO in early February. The opening saw 8.48 million shares available for trading and raised over $ 105 million after expenses. In its 4Q20 report – the first Quarterly Report as a public entity, covering the last quarter as a private company – Trinity reported net investment income of $ 5.3 million, with earnings per share of 29 cents. This was more than enough to finance the dividend, paid in December at 27 cents per share. Since then, Trinity has declared its dividend in the first quarter, increasing the payment by a penny to 28 cents per common share. Trinity has announced a payment policy of between 90% and 100% of the quarterly taxable dividend income. At the current rate, the payment is annualized at $ 1.12 per share and offers a return of 7.6%. This is significantly higher than the average return of 1.78% found among colleagues in the financial sector. In his note on shares, Compass Point analyst Casey Alexander is convinced that Trinity has a clear path to profitable returns. “TRIN operates in the attractive growing ecosystem of risk debt. As such, we expect a strong increase in the net portfolio, followed by an improvement in the NII and an increase in the distribution of dividends, with potential increases in equity / warrant investments “, mentioned Alexander. To this end, Alexander evaluates TRIN a Buy, and its price target of 16.75 USD implies an increase of ~ 14% for the next 12 months. (To follow Alexander’s track record, click here) This new public stock has already received 5 analyst reviews – and those break down into 4 Purchases and 1 Retention, for a strong buy rating. Trinity shares sell for $ 14.74; their average price of $ 16.46 suggests that the stock has a growth potential of ~ 12%. (See TRIN Stock Analysis on TipRanks) LP Energy Transfer (ET) With the second stock, Energy Transfer, we move into the midstream energy universe. Midstream is the necessary sector linking hydrocarbon exploration and production with final markets; midstreams control the transportation networks that move oil and gas products. ET has a network of assets in 38 states, connecting three major oil and gas regions: North Dakota, Appalachia and Texas-Oklahoma-Louisiana. The company’s assets include pipelines, terminals and storage facilities for both crude oil and natural gas products. The big news for energy transfer in recent weeks comes from two sources. First, on April 9, there were reports that the U.S. Army Corps of Engineers did not recommend closing the Dakota Access Pipeline (DAPL). This project, when completed, will move oil from the U.S. Alberta oil sands region to the Gulf Coast; The Biden administration wants to shut it down for environmental reasons, but the industry is struggling to keep it. Second, Enable Midstream’s two largest shareholders approved a proposed merger, through which ET will acquire Enable. The merger is expected to be worth $ 7 billion. Earlier this year, Energy Transfer reported 4Q20 EPS of 19 cents per share, with revenue of $ 509 million. Although it fell year-on-year from the 38-cent EPS reported in 4Q19, the recent result was a strong change from the net loss of 29 cents reported in Q3. The company’s revenues support the current dividend of 15.25 cents per common share. It is annualized at 61 cents and offers a yield of 7.7%. The company paid a dividend every quarter of the second quarter of 2006. Covering these shares for Credit Suisse, analyst Spiro Dounis writes: “We have updated our model to reflect the mid-2021 completion of the Enable Midstream acquisition. We consider the transaction to be accretive and see additional positive potential resulting from operational / commercial synergies. ET highlighted the potential synergies for both ENBL’s natural gas assets and NGL’s assets, noting that gas synergies could be achieved fairly quickly, while NGL’s opportunities are more long-term as old contracts are concluded. In our opinion, an increase of about 100 mm NGL dollars in the next few years does not seem unreasonable. Dounis also notes that the main risk for the company comes from the DAPL, which can still be closed by the Biden Administration. Even so, it evaluates the shares with a higher performance (ie Buy), with a price target of 11 USD indicating an increase of 39% per year. (To follow Dounis’s track record, click here) Wall Street analysts can be a controversial lot – but when they agree on a stock, it’s a positive sign for investors to take note. This is the case here, as all recent reviews on ET are Purchases, which makes the consensus rating a strong unanimous Buy. Analysts gave an average target price of $ 11.60, indicating an increase of ~ 47% over the current share price of $ 7.94. (See ET stock analysis on TipRanks) Oaktree Specialty Lending (OCSL) Last but not least is Oaktree Specialty Lending. This company is one of many specialized finance providers, offering loans and credits available in the middle market segment, smaller companies that would otherwise have difficulty accessing capital. Last month, Oaktree Specialty Lending completed a merger with Oaktree Strategic Income Corporation (OCSI). The combined company, using the name OCSL, has assets of over $ 2.2 billion. Oaktree’s investment portfolio totals more than $ 1.7 billion, mainly in the first and second seizure rights, which account for 85% of the company’s investment allocations. Oaktree ended 2020 with the first fiscal quarter, which ends on December 31. In that quarter, the company increased its dividend payment by 9% to 12 cents per share or 48 cents per share annualized. At this rate, the dividend produces 7.25% – and marks the third quarter in a row with an increase in the dividend. Oaktree has maintained reliable dividend payments for more than three years. Among the bulls is Kyle Joseph, a 5-star analyst with Jefferies, who puts a buy rating and a target price of $ 8 on this stock. Its target involves room for 20% growth potential in the next 12 months. (To follow Joseph’s track record, click here) “OCSL’s conservative strategy in recent years has paid off, as BDC implements dry powder in higher-yield investments. Credit performance has remained strong through MRQ, while fundamentals are encouraging … We believe that BDC has sufficient liquidity to support short-term opportunities and we believe that the company is positioned to take advantage of recent economic volatility, which has been highlighted in particular. of the recent 9% increase in the quarterly distribution … In the longer term, we believe that OCSL is an attractive investment “, wrote Joseph. Overall, the OCSL received 3 recent purchase reviews, making the analyst’s consensus assessment a strong buy. The stock is currently trading at $ 6.66 and its average target price of $ 7.33 indicates a 10% increase over that level. (See OCSL stock analysis on TipRanks) To find good ideas for trading dividend stocks at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that brings together all the information about TipRanks shares. Disclaimer: The opinions expressed in this article are only those of the analysts presented. The content is intended for informational purposes only. It is very important to do your own analysis before making any investment.