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3 Big Dividend Stocks Yielding Over 8%; Analysts Say ‘Buy’

3 Big Dividend Stocks Yielding Over 8%; Analysts Say ‘Buy’

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4 years ago

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After a strong day trading, markets are hovering near record levels. The S&P 500 is just 0.5% off its highest level ever. So as far as the stock markets can show, there is no economic recession. Things are looking up.

Of course, we all know that the crises haven’t ended. The coronavirus is still out there. While daily data shows that the number of cases is starting to decline, there remains a strong public fear of the virus. Early efforts to control corona pushed us into an artificial recession – a sort of economic medically induced coma – that we’re now starting to climb out from. Yet, jobs are returning -- the July employment numbers beat the expectations -- so perhaps that stock market optimism is justified after all.

Justified or not, in times like these a smart investor protects his portfolio. You don’t have to go full-on prevent with the defensive plays, but finding some solid dividend stocks will shore up your portfolio’s income stream, making it more resilient against a variety of market pressures.

With this in mind, we used the TipRanks database to pull up the stats on three stocks that analysts have tapped as buying propositions. These are stocks with a specific set of clear attributes, that frequently indicate a strong defensive profile: a high dividend yield — over 8%; and a considerable upside potential.

Holly Energy Partners (HEP)

We’ll start in the energy industry, where Holly Energy Partners provides transportation services – pipelines, terminalling, and storage – for crude oil and petroleum distillates. The company serves the oil industry in the Texas and Rockies regions, with operations in New Mexico-Texas-Oklahoma and Colorado-Utah. Holly has a market cap of $1.65 billion, and saw $533 million in 2019 revenues.

Holly recently reported Q2 earnings, and the results beat the expectation. EPS came in at 48 cents per share, far better than the 29-cent forecast and equal to the Q1 earnings. Where many companies have seen severe dips in earnings during the ‘corona half,’ Holly has managed to avoid that. Revenue for Q2 was down year-over-year and sequentially, coming in at $114.8 million.

While somewhat mixed, the earnings were seen as generally positive, and HEP shares have gained 15% since the release.

On an unequivocally positive note for investors, Holly has maintained its dividend. The company declared its divided last month, for 35 cents per common share, paid on August 13. It’s important to note here that back in April the company slashed its dividend payment by 48%. The cut was made to keep the dividend within the distributable cash flow, affordable for the company – and kept up for shareholders. The July declaration marks the second quarter in a row at the lower rate, and shows that Holly has been able to keep the dividend reliable despite the crisis. Looking at numbers, HEP’s dividend payment offers investors a yield of 8.9%, almost 4.5x higher than the average yield among S&P 500-listed companies.

Raymond James analyst Justin Jenkins is sanguine about HEP’s ability to operate profitably in the current environment. He writes, “HEP's fee-based cash flow profile, backed by substantial MVCs has shielded the partnership from a measure of the macro impact. While continued headwinds to refining runs will drive some y/y earnings degradation this year, we expect the partnership's earnings to mostly recover in 2021 as HEP's downstream-focused operational footprint provides relative insulation from declining U.S. oil & gas production.”

In line with these comments, Jenkins rates the stock Outperform (i.e. Buy), and his $18 target price implies a one-year upside potential of 16%. (To watch Jenkins’ track record, click here)

Overall, Holly Energy Partners has a Moderate Buy rating from the analyst consensus, with 4 Buys and 3 Holds set in recent weeks. The stock is selling for $15.60, and at $17.80 the average price target suggests a 14.5% upside potential. (See HEP stock analysis on TipRanks)

Dynex Capital (DX)

Next on our list, Dynex Capital, comes from the real estate investment trust sector. These companies have long been known as dividend champs, due to a regulation in the tax code which requires them to pay a set portion of profits directly back to shareholders. Dividends are a convenient vehicle for compliance. Dynex invests in mortgage backed securities, and focuses on portfolio stability and long-term returns.

Dynex saw revenues dip into negative territory in Q1, but turn back strongly positive in Q2. The $194.8 million reported was the strongest quarterly revenue of the past year. Dynex shares saw their heaviest trading in two months on the release date, and have kept their share value stable since.

Strong earnings have supported Dynex’s dividend. The company’s profit-sharing payment is unusual in that it is paid out monthly. This tends to result in lower – but more frequent – individual payments. At 13 cents per share, Dynex’s dividend annualizes to $1.56 and offers a robust dividend yield of 10.2%. This is a strong return by any standard.

Once again, it should be noted that this is a company which has recently cut back on the dividend payment. Dynex reduced its monthly common stock dividend from 15 cents per share to the current 13 cents starting with the June payment. The stated reason was to keep the dividend affordable for the company. Dynex appears to have been successful in that, as they’ve now kept the 13-cent payment for three consecutive months.

Christopher Nolan, 4-star analyst from Ladenburg, sees Dynex as a solid REIT with a strong portfolio and steady returns. He raised his outlook on the stock from Neutral to Buy, and set a price target of $17, indicating room for 9% upside growth in the coming year. (To watch Nolan’s track record, click here)

"Following 2Q20 results and DX management increasing its core ROE target range to 8%-10% (from target core ROE of 7%-8% articulated last quarter), we are raising our investment rating to Buy from Neutral," Nolan noted.

The consensus rating on Dynex is a Moderate Buy, but it is unanimous, based on 2 recent Buy ratings, including Nolan’s upgrade. The stock’s $18 average price target suggest it has nearly 16% upside for the year ahead. Shares are currently selling for $15.28. (See Dynex stock analysis on TipRanks)

Gladstone Commercial (GOOD)

The last stock on today’s list is another REIT. Where Dynex, above, focuses on mortgage backed securities, Gladstone get its hands on actual real properties. The company invests in industrial and office properties around the country, both single tenant and anchored multi-tenant types. Gladstone’s portfolio includes 122 properties, in the industrial, medical, and office segments, with locations in 28 states. Occupancy is 95.5% and has remained consistently above 95% since 2003.

Gladstone’s combination of long-term leasing and long-term debt lock has built up a portfolio that provides steady returns. As a result, earnings remained strong despite the corona crisis. Q1 EPS was 40 cents, stable sequentially and beating the forecast. In Q2, the EPS grew modestly to 41 cents and again beat expectations. Revenues were steady at $33 million in both quarters, and significantly higher than the revenues recorded in Q4 2019.

The solid earnings performance underlies Gladstone’s 12.5 cent monthly dividend. The company declared the July/August/September dividends last month, keeping the payment stable. The dividend has been held at its current level for over a year now, and the company has a 16-year history of dividend reliability. At 12.5 cents monthly, the payment annualizes to $1.50 and offers investors a dividend yield of 8.1%. For comparison, S&P-listed companies have an average dividend yield of just about 2%, and the US Treasury bonds are yielding under 1%.

Covering GOOD for B. Riley FBR, 4-star analyst Craig Kucera notes the company’s success in keeping up the income stream. He writes, “While many of GOOD's retail-focused single-tenant net lease peers had challenges collecting 2Q20 rent, GOOD collected 98% of cash rent for the quarter and provided rent deferrals to the remaining 2% of tenants that need to be repaid by 1Q21. July rents have demonstrated similar strength, with 99% collected in 3Q20…”

Kucera rates GOOD shares a Buy, and his $20 price target suggests the stock has room for 9% growth. (To watch Kucera’s track record, click here)

Gladstone has a unanimous Strong Buy from the analyst consensus, based on 3 positive reviews. The stock is selling for $18.49 and the average price target matches Kucera’s, at $20. (See GOOD stock analysis on TipRanks)

To find good ideas for dividend stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

The post 3 Big Dividend Stocks Yielding Over 8%; Analysts Say 'Buy' appeared first on TipRanks Financial Blog.

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Analyst reviews Apple stock price target amid challenges

Here’s what could happen to Apple shares next.

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12 hours ago

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March 12, 2024

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They said it was bound to happen.

It was Jan. 11, 2024 when software giant Microsoft  (MSFT)  briefly passed Apple  (AAPL)  as the most valuable company in the world.

Microsoft's stock closed 0.5% higher, giving it a market valuation of $2.859 trillion. 

It rose as much as 2% during the session and the company was briefly worth $2.903 trillion. Apple closed 0.3% lower, giving the company a market capitalization of $2.886 trillion. 

"It was inevitable that Microsoft would overtake Apple since Microsoft is growing faster and has more to benefit from the generative AI revolution," D.A. Davidson analyst Gil Luria said at the time, according to Reuters.

The two tech titans have jostled for top spot over the years and Microsoft was ahead at last check, with a market cap of $3.085 trillion, compared with Apple's value of $2.684 trillion.

Analysts noted that Apple had been dealing with weakening demand, including for the iPhone, the company’s main source of revenue. 

Demand in China, a major market, has slumped as the country's economy makes a slow recovery from the pandemic and competition from Huawei.

Sales in China of Apple's iPhone fell by 24% in the first six weeks of 2024 compared with a year earlier, according to research firm Counterpoint, as the company contended with stiff competition from a resurgent Huawei "while getting squeezed in the middle on aggressive pricing from the likes of OPPO, vivo and Xiaomi," said senior Analyst Mengmeng Zhang.

“Although the iPhone 15 is a great device, it has no significant upgrades from the previous version, so consumers feel fine holding on to the older-generation iPhones for now," he said.

A man scrolling through Netflix on an Apple iPad Pro. Photo by Phil Barker/Future Publishing via Getty Images.

Future Publishing/Getty Images

Big plans for China

Counterpoint said that the first six weeks of 2023 saw abnormally high numbers with significant unit sales being deferred from December 2022 due to production issues.

Apple is planning to open its eighth store in Shanghai – and its 47th across China – on March 21.

Related: Tech News Now: OpenAI says Musk contract 'never existed', Xiaomi's EV, and more

The company also plans to expand its research centre in Shanghai to support all of its product lines and open a new lab in southern tech hub Shenzhen later this year, according to the South China Morning Post.

Meanwhile, over in Europe, Apple announced changes to comply with the European Union's Digital Markets Act (DMA), which went into effect last week, Reuters reported on March 12.

Beginning this spring, software developers operating in Europe will be able to distribute apps to EU customers directly from their own websites instead of through the App Store.

"To reflect the DMA’s changes, users in the EU can install apps from alternative app marketplaces in iOS 17.4 and later," Apple said on its website, referring to the software platform that runs iPhones and iPads. 

"Users will be able to download an alternative marketplace app from the marketplace developer’s website," the company said.

Apple has also said it will appeal a $2 billion EU antitrust fine for thwarting competition from Spotify  (SPOT)  and other music streaming rivals via restrictions on the App Store.

The company's shares have suffered amid all this upheaval, but some analysts still see good things in Apple's future.

Bank of America Securities confirmed its positive stance on Apple, maintaining a buy rating with a steady price target of $225, according to Investing.com. 

The firm's analysis highlighted Apple's pricing strategy evolution since the introduction of the first iPhone in 2007, with initial prices set at $499 for the 4GB model and $599 for the 8GB model.

BofA said that Apple has consistently launched new iPhone models, including the Pro/Pro Max versions, to target the premium market. 

Analyst says Apple selloff 'overdone'

Concurrently, prices for previous models are typically reduced by about $100 with each new release. 

This strategy, coupled with installment plans from Apple and carriers, has contributed to the iPhone's installed base reaching a record 1.2 billion in 2023, the firm said.

More Tech Stocks:

Apple has effectively shifted its sales mix toward higher-value units despite experiencing slower unit sales, BofA said.

This trend is expected to persist and could help mitigate potential unit sales weaknesses, particularly in China. 

BofA also noted Apple's dominance in the high-end market, maintaining a market share of over 90% in the $1,000 and above price band for the past three years.

The firm also cited the anticipation of a multi-year iPhone cycle propelled by next-generation AI technology, robust services growth, and the potential for margin expansion.

On Monday, Evercore ISI analysts said they believed that the sell-off in the iPhone maker’s shares may be “overdone.”

The firm said that investors' growing preference for AI-focused stocks like Nvidia  (NVDA)  has led to a reallocation of funds away from Apple. 

In addition, Evercore said concerns over weakening demand in China, where Apple may be losing market share in the smartphone segment, have affected investor sentiment.

And then ongoing regulatory issues continue to have an impact on investor confidence in the world's second-biggest company.

“We think the sell-off is rather overdone, while we suspect there is strong valuation support at current levels to down 10%, there are three distinct drivers that could unlock upside on the stock from here – a) Cap allocation, b) AI inferencing, and c) Risk-off/defensive shift," the firm said in a research note.

Related: Veteran fund manager picks favorite stocks for 2024

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Major typhoid fever surveillance study in sub-Saharan Africa indicates need for the introduction of typhoid conjugate vaccines in endemic countries

There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high…

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March 12, 2024

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There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high burden combined with the threat of typhoid strains resistant to antibiotic treatment calls for stronger prevention strategies, including the use and implementation of typhoid conjugate vaccines (TCVs) in endemic settings along with improvements in access to safe water, sanitation, and hygiene.

Credit: IVI

There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high burden combined with the threat of typhoid strains resistant to antibiotic treatment calls for stronger prevention strategies, including the use and implementation of typhoid conjugate vaccines (TCVs) in endemic settings along with improvements in access to safe water, sanitation, and hygiene.

 

The findings from this 4-year study, the Severe Typhoid in Africa (SETA) program, offers new typhoid fever burden estimates from six countries: Burkina Faso, Democratic Republic of the Congo (DRC), Ethiopia, Ghana, Madagascar, and Nigeria, with four countries recording more than 100 cases for every 100,000 person-years of observation, which is considered a high burden. The highest incidence of typhoid was found in DRC with 315 cases per 100,000 people while children between 2-14 years of age were shown to be at highest risk across all 25 study sites.

 

There are an estimated 12.5 to 16.3 million cases of typhoid every year with 140,000 deaths. However, with generic symptoms such as fever, fatigue, and abdominal pain, and the need for blood culture sampling to make a definitive diagnosis, it is difficult for governments to capture the true burden of typhoid in their countries.

 

“Our goal through SETA was to address these gaps in typhoid disease burden data,” said lead author Dr. Florian Marks, Deputy Director General of the International Vaccine Institute (IVI). “Our estimates indicate that introduction of TCV in endemic settings would go to lengths in protecting communities, especially school-aged children, against this potentially deadly—but preventable—disease.”

 

In addition to disease incidence, this study also showed that the emergence of antimicrobial resistance (AMR) in Salmonella Typhi, the bacteria that causes typhoid fever, has led to more reliance beyond the traditional first line of antibiotic treatment. If left untreated, severe cases of the disease can lead to intestinal perforation and even death. This suggests that prevention through vaccination may play a critical role in not only protecting against typhoid fever but reducing the spread of drug-resistant strains of the bacteria.

 

There are two TCVs prequalified by the World Health Organization (WHO) and available through Gavi, the Vaccine Alliance. In February 2024, IVI and SK bioscience announced that a third TCV, SKYTyphoid™, also achieved WHO PQ, paving the way for public procurement and increasing the global supply.

 

Alongside the SETA disease burden study, IVI has been working with colleagues in three African countries to show the real-world impact of TCV vaccination. These studies include a cluster-randomized trial in Agogo, Ghana and two effectiveness studies following mass vaccination in Kisantu, DRC and Imerintsiatosika, Madagascar.

 

Dr. Birkneh Tilahun Tadesse, Associate Director General at IVI and Head of the Real-World Evidence Department, explains, “Through these vaccine effectiveness studies, we aim to show the full public health value of TCV in settings that are directly impacted by a high burden of typhoid fever.” He adds, “Our final objective of course is to eliminate typhoid or to at least reduce the burden to low incidence levels, and that’s what we are attempting in Fiji with an island-wide vaccination campaign.”

 

As more countries in typhoid endemic countries, namely in sub-Saharan Africa and South Asia, consider TCV in national immunization programs, these data will help inform evidence-based policy decisions around typhoid prevention and control.

 

###

 

About the International Vaccine Institute (IVI)
The International Vaccine Institute (IVI) is a non-profit international organization established in 1997 at the initiative of the United Nations Development Programme with a mission to discover, develop, and deliver safe, effective, and affordable vaccines for global health.

IVI’s current portfolio includes vaccines at all stages of pre-clinical and clinical development for infectious diseases that disproportionately affect low- and middle-income countries, such as cholera, typhoid, chikungunya, shigella, salmonella, schistosomiasis, hepatitis E, HPV, COVID-19, and more. IVI developed the world’s first low-cost oral cholera vaccine, pre-qualified by the World Health Organization (WHO) and developed a new-generation typhoid conjugate vaccine that is recently pre-qualified by WHO.

IVI is headquartered in Seoul, Republic of Korea with a Europe Regional Office in Sweden, a Country Office in Austria, and Collaborating Centers in Ghana, Ethiopia, and Madagascar. 39 countries and the WHO are members of IVI, and the governments of the Republic of Korea, Sweden, India, Finland, and Thailand provide state funding. For more information, please visit https://www.ivi.int.

 

CONTACT

Aerie Em, Global Communications & Advocacy Manager
+82 2 881 1386 | aerie.em@ivi.int

Journal

The Lancet Global Health

Method of Research

Observational study

Subject of Research

People

Article Title

Incidence of typhoid fever in Burkina Faso, Democratic Republic of the Congo, Ethiopia, Ghana, Madagascar, and Nigeria (the Severe Typhoid in Africa programme): a population-based study

Article Publication Date

12-Mar-2024

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US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever… And Debt Explodes

US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever… And Debt Explodes

Earlier today, CNBC’s…

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March 12, 2024

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US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever... And Debt Explodes

Earlier today, CNBC's Brian Sullivan took a horse dose of Red Pills when, about six months after our readers, he learned that the US is issuing $1 trillion in debt every 100 days, which prompted him to rage tweet, (or rageX, not sure what the proper term is here) the following:

We’ve added 60% to national debt since 2018. Germany - a country with major economic woes - added ‘just’ 32%.   

Maybe it will never matter.   Maybe MMT is real.   Maybe we just cancel or inflate it out. Maybe career real estate borrowers or career politicians aren’t the answer.

I have no idea.  Only time will tell.   But it’s going to be fascinating to watch it play out.

He is right: it will be fascinating, and the latest budget deficit data simply confirmed that the day of reckoning will come very soon, certainly sooner than the two years that One River's Eric Peters predicted this weekend for the coming "US debt sustainability crisis."

According to the US Treasury, in February, the US collected $271 billion in various tax receipts, and spent $567 billion, more than double what it collected.

The two charts below show the divergence in US tax receipts which have flatlined (on a trailing 6M basis) since the covid pandemic in 2020 (with occasional stimmy-driven surges)...

... and spending which is about 50% higher compared to where it was in 2020.

The end result is that in February, the budget deficit rose to $296.3 billion, up 12.9% from a year prior, and the second highest February deficit on record.

And the punchline: on a cumulative basis, the budget deficit in fiscal 2024 which began on October 1, 2023 is now $828 billion, the second largest cumulative deficit through February on record, surpassed only by the peak covid year of 2021.

But wait there's more: because in a world where the US is spending more than twice what it is collecting, the endgame is clear: debt collapse, and while it won't be tomorrow, or the week after, it is coming... and it's also why the US is now selling $1 trillion in debt every 100 days just to keep operating (and absorbing all those millions of illegal immigrants who will keep voting democrat to preserve the socialist system of the US, so beloved by the Soros clan).

And it gets even worse, because we are now in the ponzi finance stage of the Minsky cycle, with total interest on the debt annualizing well above $1 trillion, and rising every day

... having already surpassed total US defense spending and soon to surpass total health spending and, finally all social security spending, the largest spending category of all, which means that US debt will now rise exponentially higher until the inevitable moment when the US dollar loses its reserve status and it all comes crashing down.

We conclude with another observation by CNBC's Brian Sullivan, who quotes an email by a DC strategist...

.. which lays out the proposed Biden budget as follows:

The budget deficit will growth another $16 TRILLION over next 10 years. Thats *with* the proposed massive tax hikes.

Without them the deficit will grow $19 trillion.

That's why you will hear the "deficit is being reduced by $3 trillion" over the decade.

No family budget or business could exist with this kind of math.

Of course, in the long run, neither can the US... and since neither party will ever cut the spending which everyone by now is so addicted to, the best anyone can do is start planning for the endgame.

Tyler Durden Tue, 03/12/2024 - 18:40

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