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3 Large dividend shares yield at least 9%; BTIG says ‘buy’
How important are dividends for the profit of an investor? Investment guru John Bogle told the Financial Industry Regulatory Authority (FINRA) on October 15, 2007: ‘Over the past 81 years, reinvested dividend income has been about 95 percent of the composite long-term return earned by companies in the S&P 500. It looks like these amazing figures require mutual funds to emphasize the importance of dividend income. So in other words, dividends are pretty important! At present, the average share on the S&P 500 pays only about 2% dividend yield, which is not much. However, if you want to do better, the REIT sector is a great place to start looking for high-yield dividend stocks. REITs are companies that acquire, own, manage and manage real estate portfolios, usually a combination of residential or commercial real estate, or their associated mortgage loans and mortgage securities. Tax legislation requires these companies to return profits directly to shareholders, and most of them choose dividends as their own choice for compliance, which often results in high dividend yields in the sector. The slowly declining COVID pandemic has been difficult for property managers as tenants have had difficulty making rent and landlords are struggling to rent vacant homes. However, BTIG analyst Tim Hayes believes there are reasons to hold CRE properties specifically. “Although we recognize the setbacks to the basic principles of commercial real estate (CRE) and the potential risk to equity / earnings, we believe that there are several reasons to be constructive, especially as the sector is trading at a discount at historical levels. and offers attractive dividend yields. at a wide spread to the norm rates, ‘Hayes said. Against this background, we opened the TipRanks database to get the latest statistics on Hayes’ CRE choices. These are stocks on which analyst Buy- ratings are starting, pointing to their high dividend yield.We are talking about at least 9% Ares Commercial Real Estate (ACRE) The first dividend option we are looking at is Ares Commercial Real Estate, a company that focuses on the commercial real estate sector Ares boasts a diversified portfolio – with office space, apartments, hotels and mixed-use properties – mainly in the Southeast and West, with more than $ 2 billion d invests in 49 separate loans, of which 95% are senior mortgage loans. At the end of October, the company released 3Q20 earnings (last reported quarter), which showed $ 22.4 million in total revenue, up 13% year-on-year. Earnings of 45 cents per ordinary share have increased by 40% since the previous year. In addition, Ares entered into a $ 667 million loan commitment for commercial real estate, financing 23 senior loans. On the dividend front, Ares declared its 4Q20 dividend in December. The payment, at 33 cents per ordinary share, was paid out on January 15 – and is fully covered by current income levels. At current rates, the dividend is given up to $ 1.32 annually, yielding an impressive return of 10.50%. Among the bulls is Hayes, who wrote: “We believe that shares of ACRE are being unfairly discounted compared to other commercial mREITs, with a strong Ares sponsorship, a very healthy balance sheet and limited exposure to risk assets.” According to him, this leaves the company ‘well positioned to tackle the headwinds of COVID-19′. Consistent with these comments, Hayes ACRE is reviewing a buy, and its $ 13.50 price target implies an upward surge of 10% from current levels. (Click here to view Hayes’ record.) Only one other analyst posted a recent ACRE review, which also calls the stock a ‘buy’, making the analyst a moderate buy here. Shares are priced at $ 12.28, and their average price target of $ 12.75 indicates room for moderate growth of ~ 4%. (See ACRE stock analysis on TipRanks) KKR Real Estate Finance Trust (KREF) Next, we have KKR, which operates in the commercial real estate sector, with almost half of its holdings in the states of New York, Illinois, Pennsylvania and Massachusetts. . The company owns and finances commercial properties; 83% of its operations are apartment buildings and office spaces in popular urban areas. The quality of KKR can be seen in the company’s quarterly results. The liquidity position was strong – KKR reported $ 700.6 million at the end of the third quarter, the last quarter reported. The 56-cent return rose by 7% successively and by 36% year-on-year. Further evidence of KKR’s sound position came at the beginning of January when the announcement that it had closed 7 new commercial loans in the fourth quarter, totaling $ 565.4 million. This level of activity is a clear sign that KKR is recovering from the pandemic-related economic downturn. The solid foundation has enabled the company to continue its dividend – which has now been kept reliable for four years. The most recent statement, made in December, was for a dividend of 43 cents per ordinary share paid out in mid-January. The rate yields an annual payout of $ 1.72 per ordinary share, and a solid return of 9.7%. As for KREF, Hayes is most impressed by the return to the company’s proactive loan, saying: ‘We view the origins of 4Q20 in line with the production of pre-pandemic, and show a shift from’ defense ‘to’ offense ‘as a transaction activity has taken over and the capital markets remain accommodating. We expect increased capital deployment to support earnings and dividend coverage, and this may justify an increase in the dividend as the macroeconomic outlook improves. For this, Hayes KREF gives a buy and sets a price target of $ 19.50 which indicates a growth of ~ 6% from current levels. (Click here to see Hayes’ record.) Wall Street has kept quiet about all things KREF, and the only other recent review also recommends a buy. Overall, the stock has a moderate buying consensus rating. Meanwhile, the average price target stands at 19.26 and implies a modest upside ~ 5%. (See KREF stock analysis on TipRanks) Starwood Property Trust (STWD) For the third stock on Hayes’ list, we select Starwood, a commercial mortgage REIT with a varied portfolio of first mortgage loans and mezzanine loans, in the $ 50 million to $ 500 million range. The company operates in the US and Europe, has a market capitalization of $ 5.9 billion and has offices in New York, London and San Francisco. Starwood’s excellent portfolio delivered good earnings, even during the ‘corona recession’ of 2020. The company achieved $ 152 million in GAAP earnings for the third quarter, reaching 53 cents per share, with a profit of 8% consecutive and 6% per annum -over-year. With that in mind, we can take note of the company’s dividend, which has been at 48 cents a share for more than two years. The last statement was made in December and the dividend was paid out on 15 January. At the current rate, it becomes $ 1.92 annually and the return is 9.23%. Again, we look at a stock that Hayes recommends buying. We regard STWD as one of the few “blue chips” in the commercial mREIT sector given its size, liquidity, best management team, strong balance sheet and diversified investment platform that have consistently yielded stronger ROEs than peers. That is why STWD is one of the few commercial enterprises that has not restructured its burdens with expensive resilience and has not reduced its dividend since the inception of COVID-19, ”says Hayes. Overall, there is currently little action on STWD’s path, with only one other analyst joining in view of the company’s prospects. An additional buy rating means STWD qualifies as a moderate buy. However, the average price target of $ 21 indicates that equities will remain limited for the foreseeable future. (See STWD stock analysis on TipRanks) Visit TipRanks ‘best-selling stocks, a newly launched tool that combines all of TipRanks’ equity insights to find great ideas for dividend stocks at attractive valuations. 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.