For those who thought stocks were leaving bear market territory behind, Friday’s session delivered a rude awakening. In contrast to the market’s recent violent swings in either direction, last week saw the S&P 500 land in the green three days in a row. While briefly inspiring optimism among some Wall Street observers, it rounded out the week by slumping back into the red on March 27. It closed trading yesterday in the green, as the U.S. became the COVID-19 pandemic’s new global epicenter.
Against this backdrop, investors have been scrambling to protect their portfolios, seeking out the names that can still hand out steady returns amid persistent volatility or even a recession. Sure, these types of investments aren’t always easy to spot, but that doesn’t mean it’s an impossible job.
According to the pros, high-yield dividend stocks can represent compelling plays in the current economic climate. A reliable dividend name can provide a stable profit, insulating a portfolio even if share price appreciation comes to a halt.
With the knowledge that not all dividend tickers are created equal, we turned to TipRanks’ database to pinpoint seven high-yielding dividend stocks. Not to mention each “buy”-rated ticker boasts some impressive upside. Let’s jump right in on the following seven high-yield dividend stocks to buy.
High-Yield Dividend Stocks: Suncor Energy (SU)
The first in this list of high-yield dividend stocks is Suncor Energy Inc. (NYSE:SU). Operating as an integrated energy company, Suncor has placed a significant focus on sustainability, with its renewable energy portfolio comprised of wind farms and an ethanol plant. While shares have taken an intense beating in 2020, it offers return-minded investors an impressive dividend.
For three years in a row, the company has been steadily bumping up its annualized payouts, with the figure now landing at $1.39, or 35 cents on a quarterly basis. Even more impressive is the yield, which comes in at 10.9% compared to the sector average of 0.06%.
Turning now to the analysts, Wells Fargo’s Roger Read points to the company’s integrated model as being an encouraging sign. This model could help cushion Suncor from drops in absolute oil prices. However, it should be noted that this might not completely insulate the energy company during the second quarter as refined product demand is expected to take a hit due to the likely coronavirus-driven downturn.
That being said, Read argues that demand for refined product could improve by mid-2020, with its operating and financial performances also slated for a boost, especially compared to its pure play E&P peers. It should come as no surprise, then, that the analyst left his Overweight rating as is. Even though the price target was reduced to $17.62, this still leaves room for a possible twelve-month gain of 31%.
Out of nine recent reviews, eight were bullish, making the consensus rating a “strong buy.” Adding to the good news, the $25.20 average price target brings the upside potential to a whopping 88%. See the SU stock analysis.
Williams Companies (WMB)
Williams Companies, Inc. (NYSE:WMB) is another player in the energy industry, finding, producing, gathering, processing and transporting natural gas. On top of this, it manages a wholesale power business, with operations primarily located in the Pacific Northwest, Rocky Mountains, Gulf Coast, Southern California and Eastern Seaboard. Like fellow energy company Suncor, WMB has attracted significant Wall Street attention thanks to its dividend.
This high-yield dividend stock yields 11.6% and appears that this attention is warranted. In real terms, this amounts to a per-share payment of 40 cents paid out monthly. Annually, the payout is $1.60. Not only does the current yield leave the industry average in the dust, but the company has also been able to increase the annualized payouts for the past two years.
If that wasn’t enough, the stock scored an upgrade from Bernstein analyst Jean Ann Salisbury. Driving his bullish thesis is his assumption that as the yearly reduction in “free” associated gas production should make up for reduced demand, lower oil prices could actually lead to higher gas prices. Salisbury believes this bodes well for Appalachia/Haynesville exploration and production and “arguably other gas-led basins as well.”
Looking at the current weakness in share price, the analyst does acknowledge that there’s material counterparty risk. However, Salisbury doesn’t think that this justifies the recent decline, arguing that its current valuation doesn’t fully reflect WMB as a “safe harbor.”
Bearing this in mind, Salisbury changed his rating from “market perform” to “outperform.” That being said, along with the upgrade, he cut the price target from $25 to $21, but this still implies 52% upside potential.
Looking at the consensus breakdown, the rest of the Street is on the same page. 10 “buys” and “holds” add up to a “strong buy” analyst consensus. At $22.31, the average price target suggests 61% upside growth. See the WMB stock analysis.
Pembina Pipeline (PBA)
As for the next stock on our list of high-yield dividend stocks, Pembina Pipeline Corporation (NYSE:PBA) owns a system of pipelines that transport crude oil, natural gas and natural gas liquids. Sure, 2020 hasn’t been kind to the company, but it compensates with a noteworthy dividend.
Investor focus has locked in on PBA for just that reason. With a yield of 9%, it’s easy to understand why. To top it all off, the pipeline owner has a four-year long history of raising its dividend. Currently, the payout stands at $1.73 annually, with investors earning 43 cents per share each quarter.
Meanwhile, RBC Capital analyst Robert Kwan points to yet another reason to be optimistic about PBA’s long-term growth prospects. Citing the company’s reaction to the elevated levels of uncertainty currently present in the market, he sees substantial long-term value for shares.
This prompted Kwan to continue siding with the bulls, reiterating an “outperform” rating. It should be noted that along with the bullish call, the analyst dropped the price target to $18.33. Should this target be met in the coming twelve months, a modest gain of 9% could be in the cards.
What does the rest of the Street have to say about PBA? It turns out that the stock earns 100% Street support, or 12 “buy” ratings to be exact. The message is clear: PBA is a “strong buy.” At $34.72, the average price target is more aggressive than Kwan’s and puts the upside potential at 107%. See the PBA stock analysis.
Gaming and Leisure (GLPI)
Operating as a real estate investment trust (REIT), Gaming and Leisure Properties Inc. (NASDAQ:GLPI) boasts a portfolio made up of 44 gaming and related facilities. Its properties span 16 states, with its tenants including Penn National Gaming, Casino Queen, Eldorado Resorts and Boyd Gaming Corporation. What does it have in common with the other names on our list? A stellar dividend.
When compared to the financial sector average of 0.06%, GLPI’s 11% dividend yield isn’t too shabby. Not to mention $2.80 per share is handed out to investors annually, a whopping 70 cents on a quarterly basis. The company has a reliable dividend history as well, bumping up the annual payment each year for the last five years.
While some investors have expressed concern about the recent share price decline, members of the analyst community remain unfazed. Weighing in on the stock for Nomura, analyst Daniel Adam argues that the “worst case” is built into the share price, making the risk/reward profile “too compelling.”
According to Adam, investors are undervaluing where the gaming real estate investment trusts rank within their tenants’ capital structure, and thus implies a “fundamental disconnect.” As a result of this ranking, GLPI actually is first-in-line to get paid back if a tenant defaults.
Based on everything the company has going for it, Adam upgraded his call from “neutral” to “buy.” Decreasing the price target from $45 to $29, the potential twelve-month gain still lands at 5%.
The rest of the Street is even more bullish on GLPI. Given the $46.33 average price target, shares could climb 67% higher in the next year. It doesn’t hurt that at 8:1, the ratio of “buys” to “sells” assigned makes the consensus rating a “strong buy.” See the GLPI stock analysis.
DHT Holdings (DHT)
The next of the high-yield dividend stocks on this list, DHT Holdings, Inc. (NYSE:DHT), is an independent crude oil tanker company, with its fleet trading internationally and comprised of crude oil tankers in the VLCC segment. Despite its poor year-to-date performance, DHT makes it up to investors with its strong dividend.
We’re not kidding when we say the dividend is impressive. The yield is a whopping 16.2%, and the quarterly return per share lands at 32 cents, based on a $1.28 yearly payout.
After the cooperation between OPEC, Russia, and a number of other non-OPEC producers fell through, Stifel Nicolaus analyst Benjamin Nolan believes that the amount of crude exports will increase. Additionally, oil prices could experience a sharp drop as inventories build up and the oil curve could see a “contango” develop, which would also cause inventory to grow. According to Nolan, the combination of all of these developments stand to benefit both rates and tanker demand in the near-term.
In line with his bullish approach, Nolan just gave DHT a nod of approval. He upgraded the recommendation from “hold” to “buy” and left a $6.50 price target on the stock.
Judging by the consensus breakdown, other Wall Street analysts are in agreement about this high-yield dividend stock. With four “buys” and one “hold” issued in the last three months, the verdict is that DHT is a “strong buy.” On top of this, the $8.52 average price target implies that shares could surge 10% in the coming months. See the DHT stock analysis.
Outfront Media (OUT)
Formerly known as CBS Outdoor, Outfront Media (NYSE:OUT) operates as an outdoor media advertising company, counting itself as one of the top players in the U.S. and Canadian markets. Through billboards that work alone or in conjunction with TV, radio and other online platforms as well as transit displays, the company connects its customers to their target audiences. With the company soaring 51% in last five days alone, to say that Wall Street is watching is an understatement.
Despite its recent upward momentum, some investors have expressed concern after the company withdrew its guidance for 2020 adjusted funds from operations (AFFO) growth. It should also be noted that Q1 2020 revenue could come in flat or increase in low single-digits. However, when it comes to liquidity, the company is taking steps in the right direction, with it adding a $500 million revolving credit facility to the $59.1 million in cash it had as of Dec. 31, 2019.
Most attractive for investors, though, is its dividend. The yield comes in at 12.8%, and the annualized payout lands at $1.52.
Commenting for Imperial Capital, analyst David Miller doesn’t dispute the fact that the company is facing some intense headwinds. As a result, he reduced his estimates for the company. That being said, shares are trading at book value.
To this end, Miller remains optimistic about OUT. Along with his “buy” call, he trimmed the price target from $35 to $24, suggesting upside potential in the shape of 75%.
OUT’s “strong buy” consensus rating breaks down into five “buys” and a single “hold.” The $27.50 average price target indicates shares could skyrocket 100%, earning it a prime spot on this list of high-yield dividend stocks to buy. See the OUT stock analysis.
Ladder Capital (LADR)
The last on this list of high-yield dividend stocks is Ladder Capital Corporation (NYSE:LADR), a fellow real estate investment trust that is the direct provider of $5 million – $100 million commercial mortgage loans secured by commercial real estate in the U.S. Much like the broader market, shares have taken a nose dive since the start of 2020, but the analysts say there are still plenty of reasons to bet on this name.
One of those reasons is its dividend. At 28%, the yield surpasses the other tickers on our list. In addition, the annual payment comes out to $1.36, or 34 cents every quarter, with the company bumping up this payment for the last four years in a row.
Looking to the Street’s pro, one analyst in particular is singing LADR’s praises. It’s true that the company’s shares have dipped 72% as opposed to the financial sector’s 2.9% during the last six months. However, Deutsche Bank analyst George Bahamondes doesn’t necessarily view this as a negative, as the weakness presents investors with an affordable entry point. He stated at the time, “LADR currently trades at 1.01x of undepreciated book value and pays a well-covered 19.1% dividend yield.”
To top it all off, while CRE transaction volume and other loan originations could decelerate thanks to the current economic uncertainty, its buyback program is a major step in the right direction, in Bahamondes’ opinion.
With this in mind, the analyst just gave LADR a thumbs up, upgrading the stock from a “hold” to a “buy.” The $18 price target conveys his confidence in the stock’s ability to skyrocket 226% in the next twelve months.
Based on 100% analyst community support, the consensus is unanimous: LADR is a “strong buy.” A twelve-month gain of 246% is on the horizon should the $18.67 average price target be met. See the LADR stock analysis.
TipRanks offers investors the latest insight into eight different sectors by tracking the activity of over 5,000 Wall Street analysts. As of this writing, Maya Sasson did not hold a position in any of the aforementioned securities.
