The S&P 500 is up 27% over the last 6 months, and Wall Street’s analyst class is starting to point out that we might be due for some deceleration. In part, this may be an application of physics to market activities– what increases should come down– however it might also be tied to an old market stating, ‘Buy in May and disappear.’ It’s a long-recognized pattern that the warmer months tend to see a downturn in market activity.
Among the skeptics is Stifel strategist Barry Bannister, who thinks the great times might not remain through 2021.
” When you think of it, the stock exchange is usually very strong from the 1st of November to the 30th of April. That’s the seasonality impact … [The S&P 500] went to right where it was supposed to at 4,200, it appears like it’s going to be. But it also argues that the summer of 2021 will be tough … That can be brought on by China tightening, which they’re doing, Europe being reluctant on fiscal, which they’re doing, and the US dollar perhaps enhancing a little bit, which weighs on global liquidity growth. So I think it’s been a fun ride, and it’s usually strong in November to April, but it sometimes fades,” Bannister opined.
If Bannister’s views come close to the actual occasions, then it makes now the time to approach a more diversified, protective portfolio. Dividend stocks are a conventional protective play. A reputable dividend payer normally gains less in a bullish market, however makes up for that with a stable dividend payment.
With this in mind, we have actually used the TipRanks’ database to find three stocks offering dividend payment of 7% or much better, together with a Buy rating from the Street. Let’s take a closer look.
Rural Propane Partners (SPH).
The energy industry isn’t all Big Oil. Households require fuel, too, which’s where Rural Propane comes in. The company got its start marketing lp for house usage, and has actually considering that broadened to provide a variety of fuels and fuel oils, in addition to gas and electric utility services, to the domestic, business, and farming markets. The business is headquartered in New Jersey and boasts 3,300 workers and operations in 41 states to more than 1 million clients through some 700 areas.
Suburban’s organization reveals a strong seasonal pattern, with the first and 2nd quarters of the year having greater incomes and revenues than the 3rd and fourth quarters. This was clear in the current 1Q21 report, with the pattern overlaid by losses due to the now-receding COVID pandemic. Q1 incomes was available in at $305.2 million, listed below the agreement estimates and also down 8.5% from the prior-year Q1. EPS was available in at 61 cents, below 64 cents one year ago.
On a positive note, revenues are more than adequate to pay the regular dividend, which the business has just recently stated for payment on Might 4. The dividend, at 30 cents per typical share annualizes to $1.20 and gives a yield of 8.2%. Suburban Lp has a long history of keeping the dividend payment reputable– and of changing the payment when required to keep it in-line with revenues.
Covering SPH for Argus, 5-star expert David Coleman acknowledges the company’s powerlessness, however sees it as a general growth proposition.
” Although Rural posted weaker-than-expected fiscal 1Q21 revenues, showing unseasonably warm weather condition and the impact of the pandemic, we keep in mind that market patterns for lp companies are now enhancing. The company cut its quarterly dividend in half, to $0.30 per system, in July 2020; nevertheless, our company believe that the cut was prudent and note that the stock still yields about 8%, which is attractive in a low-interest-rate environment,” Coleman wrote.
To this end, Coleman rates SPH shares a Buy, and his $18 rate target suggests an upside of 21% for the year ahead. (To view Coleman’s performance history, click here).
SPH has slipped under most analysts’ radar; the stock’s Moderate Buy agreement is based upon just two current Buy scores. The shares are selling for $14.85, and the $18 typical price target matches Coleman’s. (See SPH stock analysis on TipRanks).
Rattler Midstream (RTLR).
Rattler Midstream, like Suburban Gas, resides in the energy universe– however Rattler is a midstream company, spun off of Diamondback Energy in 2018 to develop, run, and obtain midstream assets in the parent company’s operating areas of the Midland and Delaware developments of Texas’ Permian Basin.
Rattler has actually been climbing, for several months, out of a deep hole triggered by the COVID pandemic and depressed need. Higher oil rates are helping the business, and in Q4 Rattler reported $109.2 million in earnings, up from $96.5 million in Q3, but still down 12.8% from the year-ago quarter. EPS showed the same pattern; at 21 cents, it was up from 19 cents in the previous quarter, but down 25% year-over-year.
Even with revenues and revenues not completely recovered from the pandemic hit, Rattler maintained its commitment to returning earnings to financiers. The company bought back 1.65 million typical shares during Q4, at a cost of $14.7 million, and approved a Q4 dividend of 20 cents per share. The existing payment annualizes to 80 cents per share, and provides a yield of 7.3%.
Covering Rattler for Raymond James, Justin Jenkins keeps in mind, “While RTLR has only one main customer, it is an investment grade large-cap near pure-play Permian manufacturer with scale. We also expect RTLR to hire slightly more generalist interest relative to peer MLPs thanks to its participation with FANG.”.
Jenkins goes on to describe why he thinks Rattler is sound proposal: “Once we move past the 1Q21 noise, we expect 2021 to be a fairly quiet period of solid execution for RTLR. While the potential for a dropdown might produce some headings, we expect a reasonably little, take advantage of neutral, and moderately valued transaction that does little to move the overall story. Increasing confidence in the FANG outlook will improve the relative standing of RTLR on a comparable basis.”.
Based upon the above, Jenkins rates RTLR an Outperform (i.e. Buy), and sets a $13 cost target, showing ~ 19% advantage for the next 12 months. (To enjoy Jenkins’ track record, click on this link).
Overall, there are 6 analyst evaluations on record here, including 2 to Purchase and 4 to Hold, for an expert consensus of Moderate Buy. The typical price target is $12, suggesting ~ 9% upside from the $10.97 trading rate. (See RTLR stock analysis on TipRanks).
Broadmark Real Estate Capital (BRMK).
Shifting gears, we’ll move over to the Real Estate Financial investment Trust sector. In such a way, this is inevitable; REIT companies are known for their high yielding, reputable dividend payments, determined at least in part by tax policies that require them to return a high share of revenues direct to investors. Broadmark Realty Capital holds a portfolio of home loans and mortgage-backed securities, with a focus on construction and development. The company has actually funded over 1,200 loans over the past decade, for an aggregate of more than $2.8 billion.
In its latest quarterly report, for 4Q20, Broadmark reported making $194.8 million in loan commitments, and generating $32.5 million in top line earnings. The profits was up 8.3% from the $30 million reported in the year-ago quarter, as well as up 12.4% from Q3. EPS was 17 cents per share, a far cry from the 5-cent loss tape-recorded in 4Q19. The company reported completing 2020 with over $223 million in money on hand.
Plenty of money and rising profits and revenues means that Broadmark can afford its dividend. The business pays this out monthly, and in April declared the May payment for 7 cents per typical share. This annualizes to 84 cents per share, and offers investors a yield of 7.8%.
B. Riley analyst Randy Binner, ranked 5-stars by TipRanks, sees a clear path ahead for Broadmark’s ongoing development.
” Our view is that FY21 ought to see credit patterns revert back to more normalized levels, which should be an added tailwind to net interest income … we see possible benefit to the stock as the business continues to solve defaults, grows the general public REIT portfolio and personal AUM, and gets the dividend growth story back on track in FY21,” the expert kept in mind.
In line with those remarks, Binner puts a Buy score on BRMK, along with a $12.50 cost target, suggesting 15% advantage in the year ahead. (To watch Binner’s track record, click on this link).
In general, BRMK gets a Moderate Buy ranking from the analyst consensus, based on 2 Buys and 1 Hold. The reasonably small number of evaluations shows the ‘under the radar’ profile of most REITs in the markets. Shares in BRMK sell for $10.87, and the $11.75 typical price target suggests an 8% upside prospective. (See BRMK stock analysis on TipRanks).
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Disclaimer: The viewpoints expressed in this article are entirely those of the included experts. The material is planned to be utilized for educational purposes only. It is really important to do your own analysis before making any investment.