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3 ‘Strong Buy’ shares with 8% dividend yield
Let’s talk about portfolio protection. After last week’s manipulation of the social flash mob market, that’s a topic that shouldn’t be ignored. This is not to say that the markets are collapsing. After losing 2% to close out last week’s Friday session, this week’s trading started on a positive note as the S&P 500 rose 1.5% and the Nasdaq 2.5%. The underlying bullish factors – a more stable political scene, steadily advancing COVID vaccination programs – still play a role, even if they aren’t as strong as investors hoped. While the increased volatility may stay with us for a while, it’s time to consider defensive stocks. And that will pay us dividends. By providing a steady stream of income regardless of market conditions, a reliable dividend stock provides support for your investment portfolio when the stock stops growing in value. With this in mind, we used the TipRanks database to pull up three dividend stocks yielding 8%. However, that’s not all they offer. Each of these stocks has received enough praise from the streets to earn the consensus rating of “Strong Buy”. New Residential Investment (NRZ) We start by researching the REIT sector, real estate investment funds. These companies have long been known for their dividends that are both high-yielding and reliable – as a result of companies complying with tax rules, which require REITs to pay back a certain percentage of profits directly to shareholders. NRZ, a midsize company with a market capitalization of $ 3.9 billion, owns a diverse portfolio of home mortgages, original loans and mortgage loan redemption rights. The company is based in New York City. NRZ has a $ 20 billion investment portfolio that has delivered $ 3.4 billion in dividends since the company’s inception. The portfolio has proven resilient in the face of the corona crisis, and after a difficult first quarter last year, NRZ saw rising profits in Q2 and Q3. The third quarter, the last quarter reported, showed GAAP income of $ 77 million, or 19 cents a share. While this year-on-year profit was lower than last year, it was a strong reversal of the 21-cent loss reported in the previous quarter. Due to the rising income, NRZ is able to increase the dividend. The payment for the third quarter was 15 cents per common share; the fourth quarter dividend was increased to 20 cents per common share. At this rate, the annual dividend will be raised to 80 cents, yielding an impressive 8.5%. In another effort to return profits to investors, the company announced in November that it had approved $ 100 million in stock repurchases. BTIG analyst Eric Hagen is impressed with New Residential – especially the healthy balance sheet and liquidity of the company. “[We] such as the ability to potentially build some capital through retained earnings while maintaining a competitive payout. We think the rise in the dividend highlights the strengthening of the liquidity position the company is seeing at the moment … we expect NRZ to have been able to release capital as it has had roughly $ 1 billion in securitized debt since September. for its MSR portfolio through two separate deals, ”said Hagen. . In line with his comments, Hagen rates NRZ as a buy, and his $ 11 price target implies a 17% rise for the coming year. (Click here to view Hagen’s track record) It is not often the analysts all agree on a stock, so watch when it happens. NRZ’s Strong Buy consensus rating is based on a unanimous 7 Buys. The $ 11.25 average price target suggests a ~ 20% increase from the current share price of $ 9.44. (See NRZ Stock Analysis on TipRanks) Saratoga Investment Corporation (SAR) With the following stocks, we move into the asset management industry. Saratoga specializes in mid-market debt, appreciation and equity investments and has more than $ 546 million in assets under management. Saratoga’s portfolio is broad and includes industry, software, waste management and home security. Saratoga saw a slow but steady recovery from the corona crisis. The company’s revenues fell in 1Q20 and have been growing slowly since then. The fiscal Q3 report, released in early January, showed $ 14.3 million on the top line. Adjusted for tax, Saratoga’s net investment income of 50 cents per share exceeded the forecast of 47 cents by 6%. They say slow and steady wins the race, and Saratoga has generally shown a steady hand to investors over the past year. The stock rebounded 163% from its low after the corona crash in March last year. And the dividend, which the company has scaled back in CYQ2, has since increased twice. The current dividend, 42 cents per common share, was paid last month on February 10. The annualized payout of $ 1.68 gives a return of 8.1%. Ladenburg Thalmann analyst Mickey Schleien has an optimistic view of Saratoga, writing, “We believe SAR’s portfolio is relatively defensive with a focus on software, IT services, education services and the CLO … SAR’s CLO remains current and is performing, and the company is trying to refinance / increase it, which we think can improve our forecast. The analyst continued, “Our model expects SAR to use cash and SBA bonds to fund the net growth of the portfolio. We believe that the Board of Directors will continue to increase the dividend given the performance of the portfolio, the existence of undistributed taxable income and the economic benefit of the Covid-19 vaccination program. To this end, Schleien assesses SAR per purchase, along with a price target of $ 25. This figure implies a 20% increase from current levels. (To view Schleien’s track record, click here) The Wall Street analysts are the Schleien agrees on this stock – the 3 other reviews recorded are Buys and the analysts’ consensus rating is a Strong Buy. Saratoga’s stock is trading at $ 20.87 and has an average price target of $ 25.50, which is up from 22% suggest for the next 12 months. (See SAR stock analysis on TipRanks) Hercules Capital (HTGC) Last but not least is Hercules Capital, a venture capital firm. Hercules provides financing support to small, early stage client companies with a scientific streak; Hercules’ clients are located in the life sciences, technology and financial SaaS Since its inception in 2003, Hercules has invested more than $ 11 billion in more than 500 companies. ives. The quality of Hercules’ portfolio is evident in the company’s recent performance. The stock has fully recovered from last winter’s corona crisis, recovering 140% from last April’s low. Revenues have also recovered; for the first nine months of 2020, HTGC posted net investment income of $ 115 million, or 11% higher than the same period of 2019. For dividend investors, the key point is that net investment income covered the distribution – in fact amounted to 106% of the basic distribution payout. The company was confident enough to boost distribution with an additional 2 cents payment. The combined payout gives an annual payment of $ 1.28 per common share and a yield of 8.7%. Another sign of confidence was that Hercules completed a $ 100 million investment-grade bond issue in November, raising capital for debt repayment, new investment and corporate purposes. The bonds were offered in two tranches, each of $ 50 million, and the bonds are due in March 2026. Analyst Crispin Love sees the stock for Piper Sandler and sees plenty to love in HTGC. “We continue to believe that HTGC’s focus on fast-growing technology and life science companies positions the company well in today’s environment. Moreover, Hercules is not dependent on a COVID recovery as it has no investment in “at-risk” sectors. Hercules also has a strong liquidity position, which allows the company to act quickly when it finds attractive investment opportunities, ”said Love. All of the above convinced Love to rate HTGC an Outperform (i.e. Buy). In addition to the call, he set a target price of $ 16, suggesting upside potential of 9%. (Click here to view Love’s track record) The recent appreciation of the stock has pushed Hercules’ stock up to the $ 15.21 average price target, leaving it only ~ 4% above the $ 14.67 trading price . However, Wall Street doesn’t seem to mind as the analyst consensus is a unanimous Strong Buy based on 6 recent Buy-side reviews. (See HTGC Stock Analysis on TipRanks) To find great ideas for dividend stocks trading at attractive valuations, check out TipRanks ‘Best Stocks to Buy, a recently launched tool that brings together all of TipRanks’ insights on stocks. Disclaimer: The opinions expressed in this article are solely those of the recommended analysts. The content is provided for informational purposes only. It is very important to conduct your own analysis before making an investment.