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3 “Strong Buy” Dividend Stocks Yielding At Least 10%

3 “Strong Buy” Dividend Stocks Yielding At Least 10%

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The financial markets shifted into bear territory weeks ago, seeing the worst stock losses since the Great Depression. It’s clear now that the coronavirus pandemic has pushed us into recession; the unanswered question is, how long will it be? For now, though, we have a record to ponder: this has been the worst first quarter for US stocks since record keeping began.

Last week, however, the major indexes have showed some gains. Investors are uncertain if this marks a true turnaround, or just a short-lived rally in a larger bear market. The consensus seems to be toward the latter. Jeffrey Solomon, CEO of the Cowen investment bank, sums it up with great clarity: “I think the activity we’ve seen particularly over the last week has largely been a lot of index rebalancing. Obviously it feels a little bit like a bear market rally. We’ve seen those. They tend to be fast and furious and certainly there for the three days last week…”

Whether this is a short-term rally or the start of something bigger, market expert Jim Cramer believes that now is the time for dividend stocks. Not every stock pays out dividends, but those that do are generally outperforming all other asset returns. Cramer puts it this way: “The idea that you can pick an equity, pick a stock and have a good yield is something that’s very quaint and I think it’s a shame because it’s the way you can really make money now.” In his view, long-term commitment to dividend stocks are the way to go right now.

There are deals to be found in today’s market, and stocks that are practically begging investors to buy then. We’ve opened up the TipRanks database to find three of them, stocks with a combination of attractive features: low cost, high upside, and in a better feature for investors, dividend yields to provide sure returns. Let’s dive in.

Suncor Energy (SU)

We’ll start with a major player in Alberta’s oil industry. Calgary-based Suncor produces synthetic crude oil from the vast oil sands region of the Plains province. The deposits, also known as tar sands, are the world’s largest deposits of bitumen, a form of semi-solid heavy crude oil. Alberta’s oil sands put Canada’s petroleum industry on the global map. Altogether, the oil sands region contains approximately 178 billion barrels of economically recoverable reserves.

SU posted 39 cents EPS in Q4, more than enough to pay out the company’s 35 cent quarterly dividend. That dividend annualizes to $1.40, and like LADR above makes for a high payout ratio of 90%. Suncor has raised its dividend payment three times in the past three years, and has a reliable payment history stretching back to 2011.

The real attraction in SU’s dividend, however, is the yield. SU offers investors a high return of 10.38%. While not off the charts, it is still 5x higher than the 2% average yield among S&P listed companies – and it blows away US Treasure bonds, which are currently averaging below a 1% yield.

Writing on Suncor for Morgan Stanley, analyst Benny Wong sees some cause for concern in current low oil prices, but believes that Suncor has the resources to weather the storm. He says, “We believe the budget update is encouraging for Suncor and should help alleviate some concerns that the company would be unable/unwilling to cut back spending enough. The update brings SU's budget into the C$3.5-4.5 Bn range and in line with the company's disciplined capital allocation framework in a <US$45 WTI environment. However, if low prices continue to persist, we believe expectations for deeper cuts by all companies could start emerging…”

Wong puts a Buy rating on SU shares, with a C$30 (US$21.07) price target that implies an upside here of 34%. (To watch Wong’s track record, click here)

Randy Ollenberger, of BMO capital, puts the situation in simple terms: “Suncor is reducing capital spending and production guidance due to the sharp drop in crude oil prices... The company has available liquidity of roughly $8 billion and no debt maturities in 2020. We believe that the collapse in the company's share price provides an attractive opportunity for long-term investors.”

Ollenberger’s Buy rating is backed by a C$32 (US$22.50) price target, suggesting an upside of 102%. (To watch Ollenberger’s track record, click here)

All in all, Suncor has 9 recent analyst reviews, including 8 Buys and a single Hold, giving the stock a Strong Buy rating from the analyst consensus. Shares are priced at just $15.92, and the average price target of $25.36 indicates room for a 57% potential upside in the coming 12 months. (See Suncor’s stock analysis on TipRanks)

Ladder Capital Corporation (LADR)

Ladder specializes in commercial mortgages, providing loans of $5 million to $100 million for customers in New York, Florida, and California. The company boasts a market cap of $573 million, and $58 million in cash on hand. Ladder holds and services mortgage loans worth more than $3.25 billion. Closing out 2019, Ladder saw $122.6 million in net income, making EPS $1.15. This was down 37% year-over-year. On a positive note, the company saw a return on average equity of 11.6%.

Management announced a boon for investors in Q1, with a dividend of 34 cents per share, for stockholders of record on March 10. This annualizes to $1.36, and gives the stock a powerful yield of 28.7%. That yield is simply stellar – there are few stocks, and few investments of any sort, that approach a yield of that magnitude. The payout ratio is high, however, at 92%, showing that while the company can afford the payment, there is little room for further increases.

Deutsche Bank analyst George Bahamondes writes of LADR, “We are upgrading LADR to Buy following a 19% decline since late last week... LADR currently trades at 1.01x of undepreciated book value and pays a well-covered 9.9% dividend yield. The company has a $41 million share buyback plan in place... In addition to potential buyback support, the current dividend yield provides some embedded downside protection should the stock continue to trade down near-term… we believe LADR's held on balance sheet senior secured loan portfolio, CMBS holdings, and owned properties provide sufficient cash flow to cover the current 34c dividend over the next 12-18 months…”

Bahamondes backs his upgraded Buy rating with a price target of $18, implying an enormous upside of 298%. (To watch Bahamondes’ track record, click here)

5-star analyst Steven Delany, from JMP Securities, is also bullish. He rates the stock a Buy, and his $19 price target indicates an upside potential of 320%. (To watch Delany’s track record, click here)

Backing his stance, Delany says, “Core earnings were also still able to comfortably cover the cash dividend of $0.34/share, with a coverage ratio of ~118%. Core return on average equity for the fourth quarter was 11.5%, which marks the eleventh consecutive quarter with a double-digit core return on average equity.”

Overall, LADR shares have a Strong Buy rating from the analyst consensus, based on 3 recent reviews, all of which are on the Buy-side. The stock is selling for a discount after recent losses, at just $4.52, but the average price target of $18.67 shows a gigantic upside potential of 316%. (See Ladder stock analysis on TipRanks)

Apple Hospitality REIT, Inc. (APLE)

Last stock on our list is a real estate investment trust, which makes sense – these companies are required by tax law in most jurisdictions to return a high percentage of their income to shareholders, and dividends are a common vehicle for that return. APLE inhabits the commercial sector of its industry, owning, operating, and leasing hotels and other hospitality-related properties. The company’s properties boast over 30,000 guest rooms in more than 80 markets across 34 states.

The current downturn has not been good for APLE, as quarantines and lockdowns are hitting the hospitality industry harder than most other sectors. APLE’s last quarterly report covered Q4, just as the coronavirus was starting to spread, and showed FFO (funds from operations, the REIT equivalent to EPS) of 32 cents. This was 1 cent below the estimates, and down 11% year-over-year. Revenues were also down yoy, at $290 million, but edged over the forecast by 0.5%.

APLE shares bottomed out last week at just $4.84, but have since bounced back 89%. Where the shares really excel for investors, however, is in the dividend. The stock returns a 13% yield, based on an annualized payment of $1.20. The dividend is paid out monthly, at 10 cents, and the company shows a typically high – for REITs – payout ratio of 93%.

Analyst Brian Maher, of B Riley FBR, puts a $12 price target on this stock, implying a strong upside of 38% and backing his reiterated Buy rating. (To watch Maher’s track record, click here)

In his comments on the stock, Maher writes, “We are lowering our estimates and price target on Apple Hospitality REIT (APLE) to better reflect the impact of COVID-19… Given APLE's portfolio positioning and strong balance sheet entering 2020, we believe it will be one of the more insulated hotel REITs… We believe APLE will perform better than most lodging REITs in 2020…”

APLE shares keep a Strong Buy consensus rating, based on 4 reviews that break down to 3 Buys and 1 Hold. The stock is bargain priced at $8.72, while the average target of $12.50 suggests a 44% upside potential. (See Apple Hospitality’s stock analysis at TipRanks)

The post 3 “Strong Buy” Dividend Stocks Yielding At Least 10% appeared first on TipRanks Financial Blog.

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Key shipping company files for Chapter 11 bankruptcy

The Illinois-based general freight trucking company filed for Chapter 11 bankruptcy to reorganize.

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The U.S. trucking industry has had a difficult beginning of the year for 2024 with several logistics companies filing for bankruptcy to seek either a Chapter 7 liquidation or Chapter 11 reorganization.

The Covid-19 pandemic caused a lot of supply chain issues for logistics companies and also created a shortage of truck drivers as many left the business for other occupations. Shipping companies, in the meantime, have had extreme difficulty recruiting new drivers for thousands of unfilled jobs.

Related: Tesla rival’s filing reveals Chapter 11 bankruptcy is possible

Freight forwarder company Boateng Logistics joined a growing list of shipping companies that permanently shuttered their businesses as the firm on Feb. 22 filed for Chapter 7 bankruptcy with plans to liquidate.

The Carlsbad, Calif., logistics company filed its petition in the U.S. Bankruptcy Court for the Southern District of California listing assets up to $50,000 and and $1 million to $10 million in liabilities. Court papers said it owed millions of dollars in liabilities to trucking, logistics and factoring companies. The company filed bankruptcy before any creditors could take legal action.

Lawsuits force companies to liquidate in bankruptcy

Lawsuits, however, can force companies to file bankruptcy, which was the case for J.J. & Sons Logistics of Clint, Texas, which on Jan. 22 filed for Chapter 7 liquidation in the U.S. Bankruptcy Court for the Western District of Texas. The company filed bankruptcy four days before the scheduled start of a trial for a wrongful death lawsuit filed by the family of a former company truck driver who had died from drowning in 2016.

California-based logistics company Wise Choice Trans Corp. shut down operations and filed for Chapter 7 liquidation on Jan. 4 in the U.S. Bankruptcy Court for the Northern District of California, listing $1 million to $10 million in assets and liabilities.

The Hayward, Calif., third-party logistics company, founded in 2009, provided final mile, less-than-truckload and full truckload services, as well as warehouse and fulfillment services in the San Francisco Bay Area.

The Chapter 7 filing also implemented an automatic stay against all legal proceedings, as the company listed its involvement in four legal actions that were ongoing or concluded. Court papers reportedly did not list amounts for damages.

In some cases, debtors don't have to take a drastic action, such as a liquidation, and can instead file a Chapter 11 reorganization.

Truck shipping products.

Shutterstock

Nationwide Cargo seeks to reorganize its business

Nationwide Cargo Inc., a general freight trucking company that also hauls fresh produce and meat, filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Northern District of Illinois with plans to reorganize its business.

The East Dundee, Ill., shipping company listed $1 million to $10 million in assets and $10 million to $50 million in liabilities in its petition and said funds will not be available to pay unsecured creditors. The company operates with 183 trucks and 171 drivers, FreightWaves reported.

Nationwide Cargo's three largest secured creditors in the petition were Equify Financial LLC (owed about $3.5 million,) Commercial Credit Group (owed about $1.8 million) and Continental Bank NA (owed about $676,000.)

The shipping company reported gross revenue of about $34 million in 2022 and about $40 million in 2023.  From Jan. 1 until its petition date, the company generated $9.3 million in gross revenue.

Related: Veteran fund manager picks favorite stocks for 2024

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Key shipping company files Chapter 11 bankruptcy

The Illinois-based general freight trucking company filed for Chapter 11 bankruptcy to reorganize.

Published

on

The U.S. trucking industry has had a difficult beginning of the year for 2024 with several logistics companies filing for bankruptcy to seek either a Chapter 7 liquidation or Chapter 11 reorganization.

The Covid-19 pandemic caused a lot of supply chain issues for logistics companies and also created a shortage of truck drivers as many left the business for other occupations. Shipping companies, in the meantime, have had extreme difficulty recruiting new drivers for thousands of unfilled jobs.

Related: Tesla rival’s filing reveals Chapter 11 bankruptcy is possible

Freight forwarder company Boateng Logistics joined a growing list of shipping companies that permanently shuttered their businesses as the firm on Feb. 22 filed for Chapter 7 bankruptcy with plans to liquidate.

The Carlsbad, Calif., logistics company filed its petition in the U.S. Bankruptcy Court for the Southern District of California listing assets up to $50,000 and and $1 million to $10 million in liabilities. Court papers said it owed millions of dollars in liabilities to trucking, logistics and factoring companies. The company filed bankruptcy before any creditors could take legal action.

Lawsuits force companies to liquidate in bankruptcy

Lawsuits, however, can force companies to file bankruptcy, which was the case for J.J. & Sons Logistics of Clint, Texas, which on Jan. 22 filed for Chapter 7 liquidation in the U.S. Bankruptcy Court for the Western District of Texas. The company filed bankruptcy four days before the scheduled start of a trial for a wrongful death lawsuit filed by the family of a former company truck driver who had died from drowning in 2016.

California-based logistics company Wise Choice Trans Corp. shut down operations and filed for Chapter 7 liquidation on Jan. 4 in the U.S. Bankruptcy Court for the Northern District of California, listing $1 million to $10 million in assets and liabilities.

The Hayward, Calif., third-party logistics company, founded in 2009, provided final mile, less-than-truckload and full truckload services, as well as warehouse and fulfillment services in the San Francisco Bay Area.

The Chapter 7 filing also implemented an automatic stay against all legal proceedings, as the company listed its involvement in four legal actions that were ongoing or concluded. Court papers reportedly did not list amounts for damages.

In some cases, debtors don't have to take a drastic action, such as a liquidation, and can instead file a Chapter 11 reorganization.

Truck shipping products.

Shutterstock

Nationwide Cargo seeks to reorganize its business

Nationwide Cargo Inc., a general freight trucking company that also hauls fresh produce and meat, filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Northern District of Illinois with plans to reorganize its business.

The East Dundee, Ill., shipping company listed $1 million to $10 million in assets and $10 million to $50 million in liabilities in its petition and said funds will not be available to pay unsecured creditors. The company operates with 183 trucks and 171 drivers, FreightWaves reported.

Nationwide Cargo's three largest secured creditors in the petition were Equify Financial LLC (owed about $3.5 million,) Commercial Credit Group (owed about $1.8 million) and Continental Bank NA (owed about $676,000.)

The shipping company reported gross revenue of about $34 million in 2022 and about $40 million in 2023.  From Jan. 1 until its petition date, the company generated $9.3 million in gross revenue.

Related: Veteran fund manager picks favorite stocks for 2024

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Tight inventory and frustrated buyers challenge agents in Virginia

With inventory a little more than half of what it was pre-pandemic, agents are struggling to find homes for clients in Virginia.

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No matter where you are in the state, real estate agents in Virginia are facing low inventory conditions that are creating frustrating scenarios for their buyers.

“I think people are getting used to the interest rates where they are now, but there is just a huge lack of inventory,” said Chelsea Newcomb, a RE/MAX Realty Specialists agent based in Charlottesville. “I have buyers that are looking, but to find a house that you love enough to pay a high price for — and to be at over a 6.5% interest rate — it’s just a little bit harder to find something.”

Newcomb said that interest rates and higher prices, which have risen by more than $100,000 since March 2020, according to data from Altos Research, have caused her clients to be pickier when selecting a home.

“When rates and prices were lower, people were more willing to compromise,” Newcomb said.

Out in Wise, Virginia, near the westernmost tip of the state, RE/MAX Cavaliers agent Brett Tiller and his clients are also struggling to find suitable properties.

“The thing that really stands out, especially compared to two years ago, is the lack of quality listings,” Tiller said. “The slightly more upscale single-family listings for move-up buyers with children looking for their forever home just aren’t coming on the market right now, and demand is still very high.”

Statewide, Virginia had a 90-day average of 8,068 active single-family listings as of March 8, 2024, down from 14,471 single-family listings in early March 2020 at the onset of the COVID-19 pandemic, according to Altos Research. That represents a decrease of 44%.

Virginia-Inventory-Line-Chart-Virginia-90-day-Single-Family

In Newcomb’s base metro area of Charlottesville, there were an average of only 277 active single-family listings during the same recent 90-day period, compared to 892 at the onset of the pandemic. In Wise County, there were only 56 listings.

Due to the demand from move-up buyers in Tiller’s area, the average days on market for homes with a median price of roughly $190,000 was just 17 days as of early March 2024.

“For the right home, which is rare to find right now, we are still seeing multiple offers,” Tiller said. “The demand is the same right now as it was during the heart of the pandemic.”

According to Tiller, the tight inventory has caused homebuyers to spend up to six months searching for their new property, roughly double the time it took prior to the pandemic.

For Matt Salway in the Virginia Beach metro area, the tight inventory conditions are creating a rather hot market.

“Depending on where you are in the area, your listing could have 15 offers in two days,” the agent for Iron Valley Real Estate Hampton Roads | Virginia Beach said. “It has been crazy competition for most of Virginia Beach, and Norfolk is pretty hot too, especially for anything under $400,000.”

According to Altos Research, the Virginia Beach-Norfolk-Newport News housing market had a seven-day average Market Action Index score of 52.44 as of March 14, making it the seventh hottest housing market in the country. Altos considers any Market Action Index score above 30 to be indicative of a seller’s market.

Virginia-Beach-Metro-Area-Market-Action-Index-Line-Chart-Virginia-Beach-Norfolk-Newport-News-VA-NC-90-day-Single-Family

Further up the coastline on the vacation destination of Chincoteague Island, Long & Foster agent Meghan O. Clarkson is also seeing a decent amount of competition despite higher prices and interest rates.

“People are taking their time to actually come see things now instead of buying site unseen, and occasionally we see some seller concessions, but the traffic and the demand is still there; you might just work a little longer with people because we don’t have anything for sale,” Clarkson said.

“I’m busy and constantly have appointments, but the underlying frenzy from the height of the pandemic has gone away, but I think it is because we have just gotten used to it.”

While much of the demand that Clarkson’s market faces is for vacation homes and from retirees looking for a scenic spot to retire, a large portion of the demand in Salway’s market comes from military personnel and civilians working under government contracts.

“We have over a dozen military bases here, plus a bunch of shipyards, so the closer you get to all of those bases, the easier it is to sell a home and the faster the sale happens,” Salway said.

Due to this, Salway said that existing-home inventory typically does not come on the market unless an employment contract ends or the owner is reassigned to a different base, which is currently contributing to the tight inventory situation in his market.

Things are a bit different for Tiller and Newcomb, who are seeing a decent number of buyers from other, more expensive parts of the state.

“One of the crazy things about Louisa and Goochland, which are kind of like suburbs on the western side of Richmond, is that they are growing like crazy,” Newcomb said. “A lot of people are coming in from Northern Virginia because they can work remotely now.”

With a Market Action Index score of 50, it is easy to see why people are leaving the Washington-Arlington-Alexandria market for the Charlottesville market, which has an index score of 41.

In addition, the 90-day average median list price in Charlottesville is $585,000 compared to $729,900 in the D.C. area, which Newcomb said is also luring many Virginia homebuyers to move further south.

Median-Price-D.C.-vs.-Charlottesville-Line-Chart-90-day-Single-Family

“They are very accustomed to higher prices, so they are super impressed with the prices we offer here in the central Virginia area,” Newcomb said.

For local buyers, Newcomb said this means they are frequently being outbid or outpriced.

“A couple who is local to the area and has been here their whole life, they are just now starting to get their mind wrapped around the fact that you can’t get a house for $200,000 anymore,” Newcomb said.

As the year heads closer to spring, triggering the start of the prime homebuying season, agents in Virginia feel optimistic about the market.

“We are seeing seasonal trends like we did up through 2019,” Clarkson said. “The market kind of soft launched around President’s Day and it is still building, but I expect it to pick right back up and be in full swing by Easter like it always used to.”

But while they are confident in demand, questions still remain about whether there will be enough inventory to support even more homebuyers entering the market.

“I have a lot of buyers starting to come off the sidelines, but in my office, I also have a lot of people who are going to list their house in the next two to three weeks now that the weather is starting to break,” Newcomb said. “I think we are going to have a good spring and summer.”

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