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3 large dividend shares yielding at least 8%; Wells Fargo says ‘buy’
With the Georgian election behind us, and the Trump administration on the way out, the near to mid-term political landscape is becoming clearer: the Biden administration will be able to provide its progressive base now that it rests on majorities – thin – in both Houses of Congress. The predictability is good for the markets, and it will probably have us until at least 2022. This makes it time to include the defense portfolio. The research analysts at Wells Fargo searched the markets for the ‘right ones’. buy, and take a closer look at their choices. The tipRanks database sheds some light on three of the companies’ choices – stocks with a dividend of 8% or better. Apollo Investment Corporation (AINV) One great place to pay. the outlook for high-yield dividends is among the market’s business development firms. These companies offer specialty financing to the middle market, which provides credit and financing to small to medium business clients who would otherwise have access to capital markets. Apollo Investment is a typical example with a $ 2.59 billion investment portfolio. Apollo has investments in 147 companies, with an average exposure of $ 15.9 million. The bulk of its portfolio, 86%, is first lien debt. Healthcare, business services, aviation and transportation, and high-tech businesses make up more than half of Apollo’s investment goals. In Q3CY20 (the company’s fiscal quarter of 2021), Apollo posted a profit of 43 cents per share, consecutive but lower than 18% year-on-year. The company boasted $ 268 million in available liquid assets at the end of the quarter, and $ 287 million in available credit under its secured facility. Since then, Apollo has modified its revolving credit facility by extending the term to December 2025. On the dividend front, Apollo has maintained its payments to ordinary shareholders despite the corona pandemic. Apollo’s last payment in November was a regular dividend of 31 cents plus a special dividend of five cents. The current return is an impressive 11.6%. Finian O’Shea, analyst Finian O’Shea’s AINV for Well Fargo, noted: ‘The impact of Legacy has waned, adding just $ 3 million this quarter to an annual return on FV of ~ 5.5%. We think there are very few disadvantages to NOI from the legacy book and view any realizations and redeployments as a major positive factor for the stock. O’Shea gives Apollo an excessive (ie buy) rating and a price target that, at $ 12.50, implies an upward of 12% from current levels. (To view O’Shea’s record, click here.) Apollo generally has two reviews, and it was split – 1 Buy and 1 Hold – for a moderate Buy consensus view. The stock is selling for $ 11.17, and the average price target of $ 11.50 indicates a modest upward 3%. (See AINV stock analysis on TipRanks) Goldman Sachs BDC (GSBD) Goldman Sachs BDS is the banking giant’s entry into the specialty finance segment. GSBD is a subsidiary of Goldman, and focuses on mid-market businesses, which offer investment services for closed management and credit access in the middle market. GSBD’s share performance in 2020 showed a steady upswing from the initial recession caused by the corona crisis last winter. By the end of the year, the stock was trading its levels in January 2020. In November, the company felt confident to price an offer of $ 500 million in unsecured notes, at an interest rate of 2,875% and payable in January 2026. The funds raised will be used to pay off the revolving credit facility , and improve interest rates on existing debt. GSBD also reported 80 cents EPS for the quarter ended 30 September in November. The earnings were strong enough to support a solid dividend of 45 cents per share – and the company has announced a special dividend payout, of 15 cents, will be paid in three installments during 2021. The ordinary dividend currently has a yield of more than 9%. Among the bulls is Finian O’Shea of Wells Fargo, who also covers AINV. The analyst wrote: ‘[We] believes that the high-quality investment platform and the shareholder-friendly structure will still give attractive returns … GSBD is quality at a good price … For those who buy BDCs, GSBD will probably always be in the portfolio discussion as we see it, given its quality of earnings and shareholder orientation. In view of this, O’Shea GSBD is overweight (ie buying), along with a price target of $ 19.50. This figure implies a 5% increase over current levels. (To view O’Shea’s record here, click here) This is once again a stock with an equal split between Buy and Hold reviews, offering a consensus rating from Moderate Buy analysts. The stock costs $ 18.59 and the average price target of $ 19.50 is in line with O’Shea’s. (See GSBD stock analysis on TipRanks) ExxonMobil (XOM) From BDCs we move to the oil industry. Exxon Mobil is one of Big Oil’s players, with a market capitalization of $ 190 billion and revenue for 2019 (the last year for which full annual figures are available) of $ 264.9 billion. The company produces approximately 2.3 billion barrels of oil equivalent daily, placing it in the top five of the global hydrocarbon producers. The low prices in 2H19 and the corona crisis in 1H20 caused revenue to fall in the first half of last year – but it reversed Q3 when XOM reported $ 45.7 billion at the top line. Although lower year-on-year, it rose 40% in a row. Despite all the wind the oil industry has faced over the past 18 months, XOM has kept its dividend reliable and paid out the most recent payout in December 2020. was 87 cents per ordinary share, which was up to $ 3.48 annually and returned 8.4%. In a note on the major oil companies, Roger Read of Wells Fargo writes: ‘In 2021 we expect more supportive macro-backwinds, but we realize that there are major challenges and keep an average Brent price below $ 50 … ‘The analyst has shifted his view to XOM in particular,’ we do not expect production growth and only a minimal free cash flow generation, which includes sales returns. However, this represents a significant change in the last few years from significant cash burns and increased leverage. In our opinion, this is probably enough to make the shares a little higher and reduce the concerns about the sustainability of dividends. ‘In light of its comments, XOM shares an overweight stock (ie buy), and its $ 53 price target indicates room for 17% upward growth in the coming year. (To view Read’s record, click here.) That Wall Street still views the energy industry with a cautious eye is clear from the consensus assessment of XOM’s analyst – Hold. It is based on 10 reviews, including 3 buy, 6 likes, and 1 sell. The shares are selling for $ 45.15, and their average price target of $ 47.33 indicates a modest increase of ~ 5% (see XOM stock analysis on TipRanks). To find great ideas for dividend stocks trading at attractive valuations, visit TipRanks ‘best-selling stocks, a newly launched tool that unites all the insights of TipRanks’ equity. Disclaimer: The opinions expressed in this article are solely those of the proposed analysts. The content is for informational purposes only. It is very important to do your own analysis before investing.