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3 “Strong Buy” dividend shares yielding approximately 7%
Over the past 12 months, the S&P 500 has achieved its best performance ever – a gain of 80% by the end of March. But are the good times at the end? Some historical data suggests that the bulls will continue to run. Since 1950, the market has had 9 sustained, year-long runs with a return of 30% or better on the S&P 500. These periods have an average one-year profit of 40% (the median was 34%) – and none of these bull markets did not end in the second year. According to Callie Cox, a senior investment strategist at Ally Invest, investors should not expect the same sky-high returns in the next twelve months as they have recently seen. “[I]It is typical that the bull market loses a little steam in the second year … The expectations start to increase and make it harder for the market to … beat everyone’s expectations. And that leaves a greater chance of disappointment. And to be clear, we are not asking for ruin and gloom. We just think the market should take a breather in the next quarter or two, “Cox said. For returns-focused investors, the prospect of a lower sustained rise in stock valuation will, of course, take a look at Reliable, high-dividend payers offer a second income stream to supplement the stock valuation and ensure a solid return for investors. To this end, we used the TipRanks database to indicate three stocks that profile meets: a strong buy rating from Wall Street analysts and a dividend yield of around 7% Trinity Capital (TRIN) We start with Trinity Capital, a venture capital firm that makes capital available to businesses, with a total of $ 494 million in Trinity’s investment portfolio , spread over 96 companies. the public markets earlier this year, with the closing of the stock exchange in early February. The opening made 8.48 million shares available for trading, and has more a raised $ 105 million after expenses. In its 4Q20 report – the company’s firs t quarterly report as a public entity, covering the last quarter as a private enterprise – Trinity showed a net investment income of $ 5.3 million, with earnings per share of 29 cents. That was more than enough to fund the dividend, which was paid at 27 cents a share in December. Since then, Trinity has declared its 1Q21 dividend, which increased the payment by one cent to 28 cents per ordinary share. Trinity has announced a policy to pay between 90% and 100% of the taxable quarterly income in the dividend. At the current rate, the payment is given up to $ 1.12 per share annually, yielding a return of 7.6%. This is significantly higher than the average return of 1.78% found among peers in the financial sector. In his note on the stock, Compass Point analyst Casey Alexander states that he believes Trinity has a clear path to lucrative returns. “TRIN works within the attractive, growing corporate debt ecosystem. As such, we expect strong net portfolio growth, followed by improved NII and increasing dividend payouts, with potential upward gains from equity investments, ” Alexander noted. Alexander rated TRIN a buy, and its price target of $ 16.75 implies an increase of ~ 14% for the next 12 months. (To see Alexander’s record, click here.) This new public share has already garnered five analyst ratings – and it’s at 4 Buys and 1 Hold, which garnered a strong consensus rating. Trinity shares sold for $ 14.74; their average price target of $ 16.46 indicates that the stock has ~ 12% upside potential. (See TRIN stock analysis on TipRanks) Energy Transfer LP (ET) With our second stock, Energy Transfer, we are moving into the energy midstream universe. Midstream is the necessary sector that connects hydrocarbon exploration and production to the end markets; midstreamers control the transportation networks that move oil and gas products. ET has a network of assets in 38 states that connect three major oil and gas regions: North Dakota, Appalachia and Texas-Oklahoma-Louisiana. The company’s assets include pipelines, terminals and storage facilities for both crude oil and natural gas products. The big news for energy transfer, over the past few weeks, comes from two sources. First, there were reports on April 9 that the U.S. Army Corps of Engineers was unlikely to recommend shutting down the Dakota Access Pipeline (DAPL). This project will complete oil from Alberta’s oil sands region across the US to the Gulf Coast; the Biden administration wants to close it for environmental reasons, but the industry is fighting to keep it. And second, two major shareholders of Enable Midstream have approved a proposed merger through which ET will acquire Enable. The merger is expected to cost $ 7 billion. Earlier this year, Energy Transfer reported 4Q20 EPS of 19 cents per share, with revenue of $ 509 million. While it was a year-on-year decline from the 38 percent EPS reported in 4Q19, the recent result was a sharp reversal of the 29 percent net loss reported in Q3. The company’s revenue supports the current dividend of 15.25 cents per ordinary share. It is 61 cents annually and yields 7.7%. The company has paid out a dividend every quarter since the second quarter of 2006. Spiro Dounis, an analyst at Credit Suisse, writes of these stocks: ‘We have updated our model to reflect a mid-2021 completion of the Enable Midstream acquisition. We consider the agreement to be attractive and see additional potential benefits due to operational / commercial synergies. ET highlighted potential synergies around ENBL’s natural gas and NGL assets, pointing out that gas synergies can materialize fairly quickly, while NGL opportunities are more long-term as heritage contracts roll. In our opinion, more than ~ $ 100 mm NGL removal over the next few years does not seem unreasonable. Dounis also notes that the biggest risk for the company is due to DAPL, which can still be closed by the Biden administration. Nevertheless, he rates the stock as a better performer (ie buy), with a price target of $ 11 indicating an upward one percent of 39%. (To see Dounis’ record, click here.) Wall Street analysts may be a controversial lot, but if they agree on a stock, it is a positive sign for investors to take note. This is the case here, as all recent reviews on ET are Buys, making the consensus rating a unanimous Strong Buy. The analysts set an average price target of $ 11.60, indicating an increase of ~ 47% over the current share price of $ 7.94. (See ET Share Analysis on TipRanks) Oaktree Specialty Lending (OCSL) Last but not least is Oaktree Specialty Lending. This company is one of the many specialty finance providers that make loans and credits in the mid-market segment available to smaller businesses that would otherwise struggle to access capital. Last month, Oaktree Specialty Lending completed a merger with Oaktree Strategic Income Corporation (OCSI). The combined company, which uses OCSL’s name, has assets of more than $ 2.2 billion. Oaktree’s investment portfolio amounts to more than $ 1.7 billion, mainly in first and second liens, which make up 85% of the company’s investment grants. Oaktree ended 2020 with its fiscal first quarter, which ended on 31 December. In that quarter, the company increased its dividend payment by 9% to 12 cents per share, or 48 cents per share on an annual basis. At this rate, the dividend yields 7.25% – and this is the third quarter in a row of a dividend increase. Oaktree has been maintaining reliable dividend payments for more than three years. Among the bulls is Kyle Joseph, a 5-star analyst at Jefferies, who sets a Buy rating and a $ 8 price target on this stock. Its target implies room for 20% upward potential in the next 12 months. (To view Joseph’s record, click here) “OCSL’s conservative strategy in recent years has finally paid off, as the BDC uses dry powder in higher-yield investments. The credit performance has remained good by the MRQ, while the basic factors are encouraging … We believe that the BDC has sufficient liquidity to support short-term opportunities and believes that the company is able to take advantage of the recent economic volatility , which is particularly emphasized by the recent 9% increase in quarterly distribution … In the longer term, we believe OCSL is an attractive investment, ‘Joseph wrote. Overall, OCSL has received three recent Buy reviews, making the analyst’s consensus rating a strong buy. The stock is currently trading at $ 6.66 and its average price target of $ 7.33 indicates ~ 10% upside from that level. (See OCSL stock analysis on TipRanks.) To find great ideas for dividend stocks at attractive valuations, visit TipRanks ‘best-selling stocks, a newly launched tool that combines all the insights of TipRanks’ stocks. Disclaimer: The opinions expressed in this article are those of the proposed analysts only. The content is for informational purposes only. It is very important to do your own analysis before investing.