2 dividend stocks with strong buy and a 7% yield
Investment firm Morgan Stanley had a year-end target of 3,900 for the S&P 500 – and it’s already out of date. At 4,196, the index is 7.5% above Morgan Stanley’s target. Since the start of the year, the S&P is up nearly 12% despite some volatile trades. Mike Wilson, Chief Investment Officer and US equity strategist at Morgan Stanley, has taken a long look at the current market situation and believes that values have peaked – at least for now. “We continue to believe that valuations are too high and will decrease significantly over the next six months. We left the early cycle part of that recovery. The reopening of the economy is likely to put upward pressure on costs and downward pressure on the margins. From our point of view, this will come as a surprise to the now high earnings estimates, ”said Wilson. Tax policy is also getting no help from the markets. Wilson notes that the Biden administration is pushing to raise the corporate tax rate to 28%, and while it is likely to compromise at a slightly lower rate, Wilson sees increased corporate tax as a headwind for the S&P This environment is looking for defensive stocks to protect the portfolio from stock depreciation and this will of course raise the issue of dividend stocks. The dividend payment provides a steady stream of income that can make up for lower stock gains when markets plateau. With that in mind, we used the TipRanks database to zero two stocks with high dividend yields, on the order of 7%. Each stock also has a strong buy consensus rating. Let’s see what makes it so appealing to Wall Street analysts. Hercules Capital (HTGC) We’re starting with Hercules Capital, a business development company that is changing its niche – it specializes in venture capital. Hercules finances and supports science-oriented client companies in the early stages. The company has $ 2.6 billion under management and has raised $ 11.6 billion in 18 years of operation to more than 530 clients. For the first quarter of this year, Hercules reported record levels of new debt and equity commitments of $ 530.9 million. The company had $ 550 million in available cash at the end of the quarter and net investment income of 30 cents per share based on a total of $ 34.6 million. During the quarter, Hercules also declared its regular dividend of 32 cents per common share. After that, the company added an additional dividend of 7 cents per share, bringing the total payment for the current quarter to 39 cents. This payment gives a return of 7.5%. On RBC Capital’s stock, 5-star analyst Kenneth Lee said, “HTGC’s first private loan fund could potentially expand opportunities across the board. The pipeline of potential investments looks robust. We continue to prefer HTGC’s specialized niche for direct lending to growth-oriented, technology-driven companies, well-supported dividends, and above-average ROE generation potential. The analyst added, “We continue to believe that HTGC’s joint dividends will be well supported. Our forecast NII / sh for FY21 / FY22 remains above the base dividend level. Additionally, the spillover earnings of 94c / sh additional support. ” To do this, Lee rates HTGC as outperforming (i.e. buying) and its price target of $ 19 implies a year upside of ~ 14%. Based on the current dividend yield and the expected price increase, the stock has a potential total return profile of ~ 21%. (To see Lee’s track record, click here.) Wall Street analysts are in complete agreement on this. All 10 recent HTGC stock ratings are positive, so the consensus rating for strong buy is unanimous. The stock is selling for $ 17.03 and the average target price of $ 18.13 suggests upside potential of ~ 12%. (See HTGC stock analysis on TipRanks) Gladstone Commercial (GUT) We’re going to change gears slightly for our next stock – but stay in the financial sector. Gladstone Commercial is a Real Estate Investment Trust (REIT). As the name suggests, the company focuses on commercial real estate. Gladstone’s portfolio consists primarily of industrial and office properties, both as single tenants and as anchored multiple tenants. The portfolio includes 120 properties in 27 states with a total of 107 tenants. Gladstone boasts that real estate occupancy has never dropped below 95% since the company went public in 2003. The current utilization is 95.5%. Another feature of Gladstone’s portfolio is the long-term nature of the leases. This helps to secure the flow of income and maintain constant profits even when the macroeconomic situation is unstable. Gladstone posted revenue between $ 33 million and $ 34.6 million for the past five quarters. For the last quarter, the first quarter of 21, Gladstone had total sales of $ 34.6 million. The company collected 98% of rents due during the quarter and renewed leases for more than 200,000 square feet of property with leases ranging from 6.6 to 11.8 years. Gladstone, which is important to investors, has also declared its dividend for the quarter. The company pays monthly and in April declared a payment of 12.5 cents for each of the months of April, May and June. That adds up to 37.5 cents per quarter, or $ 1.50 per common share on an annual basis. At that rate, the dividend is 7.2%. Craig Kucera, 5-star analyst at B. Riley Securities, wrote of the company: “GOOD utilization is improving and acquisition volume is expected to increase later in 2021. GOOD continues to focus on investing in smaller industrial properties in secondary markets In order to generate returns on acquisitions ahead of the company’s cost of capital, we find stocks attractive that trade at 100% of our NAV estimate … priced at a target price of $ 23, which indicates an uptrend of 10%. (To see Kucera’s track record, click here.) While there are only three recent reviews on this stock, all of them are positive, making analysts’ consensus rating a strong buy. GOOD has an average price target of $ 23, which is the same as Kucera’s above, and a current trading price of $ 20.92. (See GOOD Stock Research on TipRanks.) To find great ideas for trading dividend stocks at attractive valuations, visit TipRanks ‘Best Stocks to Buy, a newly launched tool that brings together all of the insights into TipRanks’ stocks. Disclaimer: The opinions expressed in this article are solely those of the presented analysts. The content is intended to be used for informational purposes only. It is very important that you do your own analysis before making any investment.