Dividend stocks are the Swiss army knives of the stock market.
When dividend stocks increase, you earn money. When they don’t go up– you still make money (from the dividend). Heck, even when a dividend stock decreases in cost, it’s not all problem, since the dividend yield (the absolute dividend quantity, divided by the stock price) gets richer the more the stock falls in price.
Knowing all this, would not you like to find fantastic dividend stocks? Naturally you would.
Raymond James experts have chimed in– and they are recommending 2 high-yield dividend stocks for investors seeking to discover protection for their portfolio. These are stocks with a specific set of clear characteristics: a dividend yield of 10% and Strong Buy ratings.
Kimbell Royalty Partners (KRP).
We’ll begin with Kimbell Royalty Partners, a land investment firm operating in a few of the United States’ significant oil and gas making areas: the Bakken of North Dakota, Pennsylvania’s Appalachian region, the Colorado Rockies, and several formations in Texas. Kimbell owns mineral rights in more than 13 million acres across these areas, and collects royalties from over 95,000 active wells. Over 40,000 of those wells are in the Permian Basin of Texas, the well-known oil formation that has, in the previous decade, assisted turn the United States from a net importer of hydrocarbons to a net exporter.
The coronavirus crisis hit Kimbell directly in the wallet, knocking down share costs and incomes as economic constraints, social lockdowns, and the financial decline all struck at production and demand. The circumstance has only begun to revive, with the Q3 incomes growing 44% sequentially to reach $24.3 million.
Kimbell has long been a reliable dividend payer, with a twist. Where most dividend stocks keep their payments stable, normally making just modification in a year, Kimbell has a history of reviewing its dividend payment every quarter. The outcome is a dividend that is seldom foreseeable– but is always budget friendly for the company. The last statement, for the third quarter, was 19 cents per common share, or up 46% from the previous quarter. At that rate, the dividend yields ~ 10%,.
Covering the stock for Raymond James, analyst John Freeman kept in mind, “In spite of a strong quarterly performance and an almost 50% distribution raise in 3Q, the marketplace continues to under value the unique value proposition of Kimbell’s properties, in our view. Kimbell has a best-in-class 13% base decline, exposure to every significant basin and product, along with an extremely manageable leverage profile …”.
Relating to the possible anti-hydrocarbon position of a Biden Administration, Freeman sees little reason for concern, stating, “Investors concerned about a possible Biden presidency (which appears increasingly likely) have little to fear in KRP. The business has less than ~ 2% of acreage on federal lands, implying a frac ban on those homes would not have a product effect on KRP’s service and may really help them if it enhanced the overall supply effect.”.
In line with these comments, Freeman rates KRP a Strong Buy, and his $9 rate target indicates it has room for 25% growth going forward. (To see Freeman’s performance history, click here).
Wall Street appears to concur with Freeman, and the expert consensus view is likewise a Strong Buy, based upon 5 consentaneous favorable evaluations. This stock is priced at $7.21, and its $11 average target is a lot more bullish than Freemans, recommending a 1 year advantage of ~ 52%. (See KRP stock analysis on TipRanks).
NexPoint Real Estate Financing (NREF).
NexPoint populates the property trust niche, purchasing mortgage loans on rentals, both single- and multi-family occupancy, along with self-storage units and office spaces. The company operates in the US, throughout significant cosmopolitan hubs.
NexPoint held its IPO in February this year, right before the coronavirus pandemic inspired a recession. The offering saw 5 million shares offer, and brought in some $95 million in capital. Ever since, the shares are down 13%.
Incomes, nevertheless, have posted gains in each full quarter that the company has reported as a public entity, can be found in at 37 cents per share in Q2 and 52 cents in Q3. The Q3 number was 30% above the projection.
The dividend here is also strong. NexPoint started with a 22-cent per share payment in Q1, and raised it in Q2 to its present level of 40 cents per common share. This annualizes to $1.60, making the yield a remarkable ~ 10%.
Stephan Laws, 5-star analyst with Raymond James, is satisfied with what he sees here. Laws writes of NexPoint, “Current financial investments should drive significant core revenues development, which is shown in the increased 4Q assistance series of $0.49-0.53 per share (up from $0.46-0.50 per share). The guidance incorporates the complete quarter effect of the new 3Q financial investments as well as new mezz financial investments made in October. We are increasing our 4Q and 2021 estimates, and we have actually increased confidence in our projection for a 1Q21 dividend increase, which we now anticipate at $0.45 per share …”.
Following these beliefs, Laws puts a Strong Buy score on NREF. His $18 rate target suggest the stock has a 9% upside possible for the year ahead. (To enjoy Laws’ track record, click on this link).
With 2 recent Buy reviews, the expert agreement on NREF shares is a Moderate Buy. The stock’s $18 typical price target matches Laws’, indicating 9% development. (See NREF stock analysis on TipRanks).
To discover excellent ideas for dividend stocks trading at attractive valuations, go to TipRanks’ Best Stocks to Buy, a recently released tool that unites all of TipRanks’ equity insights.
Disclaimer: The viewpoints expressed in this post are solely those of the included analysts. The content is planned to be used for informational functions only. It is very crucial to do your own analysis prior to making any investment.