When the market moves, investors make decisions. As we near the end of the third quarter of 2019, Savita Subramanian of Merrill Lynch said that after results that exceeded all expectations, a new sense of optimism appeared.
According to the analyst, companies that have already reported earnings received “much more optimistic profits than in recent quarters,” with 43% of companies using the words “optimistic” or “optimistic” during their reports. This is above the average of 37% in the previous two quarters.
So how investors can take advantage of this new economic outlook? Wall Street professionals recommend paying attention to companies that are able to bring stable payments in the form of dividends. However, not all stocks may interest an investor who prefers dividend yield, only some can boast significantly higher dividend payments than others.
With this in mind, I focused on stocks with a dividend yield of more than 9%. This is not so bad if we compare the average dividend yield of the S & P 500 for the 2nd quarter of 2019 at 1.92%.
Energy Transfer (ET) Dividend Yield ~10%
Energy Transfer LP (NYSE: ET) is one of the largest and most diversified mid-sized energy companies in the United States. After publishing the company's profit in the third quarter on November 6, all attention was paid to Energy Transfer.
Elvira Scotto, chief analyst at RBC Capital, believes the company intends to achieve approximately 4.5x EBITDA by the end of this calendar year. It is expected that this will be achieved by increasing cash flows from Rover, Revolution, ME2 / 2X and several other growth projects, as well as distribution payments planned for the end of 2021.
“With the advent of a large number of large-scale, primarily paid, growth projects that will appear on the network and which we will increase, we expect that the growth of cash flows will lead to a significant reduction in leverage in the coming years, which should allow Energy Transfer to return more money to shareholders “, She commented.
This led to the conclusion that Energy Transfer LP could continue to reward investors with stable dividends. We mean the annual payment of $ 1.22 per share, which is 9.7%. Based on the foregoing, a five-star analyst predicts that stocks can soar 88% over the next twelve months.
Since seven purchase ratings have been assigned over the past three months compared to the absence of deductions or sales, this suggests that Energy Transfer LP is attractive to buy. Not to mention the $ 21 target price, growth potential is 70%!
Marathon Petroleum (MPC), MPLX L.P. (MPLX) Dividend yield ~ 11%
Marathon Petroleum owns and manages energy logistics and infrastructure assets, and provides fuel distribution services.
Generating profits and revenues in the third quarter, Marathon Petroleum is apparently designed to generate huge profits. Net income was $ 629 million, compared with $ 510 million the previous year. In addition to the good news, further growth is expected to be provided by the acquisition of Andeavor Logistics, the transaction was completed in late July.
CEO Gary R. Heminger says: “In addition, we have moved forward with a high rating of our growth investment portfolio and today announced a target capital growth rate of approximately $ 2.0 billion for 2020.”
As management has set a clear path for growth, the company is likely to remain a company with high-yield dividends, or more precisely, 10.3% year on year.
With this in mind, analyst T.J. Schulz supported the bullish thesis. Although he lowered the target price from $ 38 to $ 33, the five-star analyst still sees the energy company's growth potential by 31%.
Like Schulz, other analysts are optimistic about Marathon Petroleum. Seven purchase ratings and one retention received over the past three months add up to a strong buy analyst consensus. Its average price of $ 34 suggests stocks may rise 33% next year.
New York Mortgage Trust Inc. (NYMT) Dividend yield ~ 13%
New York Mortgage Trust Inc. manages an asset portfolio that provides stable returns for its investors. Real Estate Investment Trust (REIT) invests in and manages mortgage assets.
NYMT has long been rewarding investors with a dividend of $ 0.80. As a result, the dividend yield is 12.8%. This is nothing short of an impressive result!
According to Maxim Group analyst Michael Diana, the company, with its book value and credit strategies, can strengthen its status as a reliable source of profit and dividends.
“In our opinion, New York Mortgage Trust Inc. deserves a premium rating due to its strong track record of maintaining book value and its focus on credit strategies in conditions that we consider favorable, ”he explained.
In general, the opinion about the company is ambiguous. His consensus rating, Moderate Purchase, is based on 1 Buy and 1 NYMT Hold for the previous three months. Nevertheless, stocks may rise 14% over the next twelve months.
Two Harbors (TWO) Dividend yield ~ 11.3%
Two Harbors Investment Corporation (NYSE: TWO) is REIT, its main focus is mortgage-backed mortgage-backed securities (RMBS). Despite fierce competition in the financial sector, the company has an advantage due to its limited sensitivity to interest rates. Louis Navelier, the legendary investor in himself, calls such stocks "bulletproof."
“Two Harbor is a REIT hybrid mortgage with lower sensitivity to rates due to the differentiated pairing strategy of the MBS / MSR agency, as well as a unique, inherited loan-oriented portfolio,” said RBC Capital analyst Kenneth Lee.
Given its ability to generate profits regardless of the current macroeconomic background, this is a positive sign that TWO can continue to pay huge dividends. We are talking about 40 cents paid each quarter, with the result that the annual amount is $ 1.60 per share or a yield of 11.5%.
Looking at a consensus analysis, many analysts have high hopes for Two Harbors, the stock gets a strong buy status.
Oasis Midstream Partners LP (OMP) Dividend yield ~ 11.4%
Oil and gas producer Oasis Midstream Partners LP (NYSE: OMP) caught Wall Street's attention after posting profit in the third quarter on November 5.
Investors were pleased to know that the quarterly distribution of cash increased by 5% compared with the previous quarter. In addition to the good news, Oasis Midstream Partners LP has signed additional third-party agreements in the Delaware and Williston basins.
The dividend yield of 11.4% cannot but rejoice, Oasis Midstream Partners LP reliably pays 49 cents per share each quarter, which is $ 1.96 on an annualized basis. With a payout ratio of 61.7%, the energy company is ready to continue to offer large returns to investors.
All this supports the assumption of analyst T.J. Schulz that Oasis Midstream Partners LP will remain a strong company for growth. Although he lowered the target price from $ 25 to $ 22, the growth potential is still 20%.
In general, other analysts share Schultz’s opinion. In addition to the “Strong Buy” status, his goal at an average price of $ 23 sets a potential twelve-month increase of 23%.
Ellington financial Inc. (EFC) Dividend yield ~ 9%
Ellington financial Inc. (NYSE: EFC) is a specialized finance company that serves clients located throughout the United States. Ellington financial Inc. plans to increase its already impressive dividends, it is not surprising that investors were fascinated by this action.
Although some investors initially expressed concern about how the transition of Ellington Financial Inc. to REIT will affect its ability to make consecutive payments, one of the leading analysts reassures investors.
“We believe the recent transformation of Ellington Financial Inc. in REIT, combined with our projected growth from a diversified business model, should raise the stock to a premium to its forward book value and in accordance with its core competitor group, Mortgage REIT.
In addition, Ellington Financial Inc. seeks to increase dividends as the lending business grows, increase the return on investment in the agency’s MBS strategy and the REIT tax requirements, which increase the distribution among shareholders, ”commented Matthew Howlett of Nomura.
This is incredibly exciting news, as a financial services company is already steadily paying $ 1.68 per share per year, or 9%.
All of the above factors prompted Howlett to begin his coverage at Ellington Financial Inc. By publishing a bullish forecast. Not to mention the fact that the target price forecast for a four-star analyst at $ 20 suggests that stocks may jump 9% over the next twelve months.
Based on 100% approval by Street, Ellington Financial Inc. is an attractive company to buy. Upside potential of 9%should also be taken into account.
Black Stone Minerals L.P. (BSM) Dividend yield ~ 11.3%
This oil and gas company has something to boast about. Not only that, Black Stone Minerals LP (NYSE: BSM) have a Strong Buy consensus rating and 45% upside, but it also has stunning dividends.
Profitability of Black Stone Minerals LP is 11.3% as a result of an annual payment of $ 1.48 per share. With high productivity in the third quarter, the company is able to continue to pay such payments in the form of dividends.
According to the published profit and loss statement dated November 4, production during the quarter reached 49.0 million barrels of oil per day, which was due to an increase in royalties by 14% year on year. Black Stone Minerals LP also acquired real estate in East Texas for $ 2.3 million this quarter, bringing the total acquisition costs in 2019 to $ 43.9 million.
If this is not enough, Black Stone Minerals LP has provided substantial support to Wall Street over the past three months.
JonesTrading analyst Eduardo Seda says: “We note that Black Stone Minerals LP recently increased its production performance for the whole of 2019 by 5% more than the midpoint to the midpoint compared to the previous management,” commented the four-star analyst. With this in mind, he reiterated his Buy recommendation and a target price of $ 22, indicating 69% increase over current stock price.