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2 dividend stocks with a “strong buy” and a return of at least 7%
A number of factors come together in the market picture and indicate a possible medium-term change in conditions. These include increased commodity prices, particularly oil prices, which have recently recovered. In addition, January job numbers released earlier this month were disappointing at best – and bleak at worst. However, they increase the chance that President Biden and the Democratic Congress will put a major COVID relief package into action. These factors are likely to pull in different directions. The surge in oil prices suggests an impending supply shortage, while the possibility of further cash incentives for fans of market liquidity bodes well. However, these developments point to a possible price inflationary climate. With this in mind, some investors are looking for ways to rebuild and defend their portfolios. And that will bring us to dividends. By providing a steady stream of income regardless of market conditions, a reliable dividend stock provides a pad for your investment portfolio when the stock ceases to appreciate. So we opened the TipRanks database and got the details on two stocks with high yielding – at least 7%. Better still, these stocks are viewed as strong buying by Wall Street analysts. Let’s find out why. Williams Companies (WMB) The first stock we’ll look at is Williams Companies, an Oklahoma-based natural gas processing company. Williams controls natural gas, natural gas liquids and oil collection pipelines on a network that stretches from the Pacific Northwest to the Rocky Mountains to the Gulf Coast and south to the Central Atlantic. Williams’ core business is the processing and transportation of natural gas, with the production of crude oil and energy being secondary. The company’s footprint is huge – it processes nearly a third of all natural gas consumption in the United States, both residential and commercial. Williams will publish its fourth quarter results later this month – however, a look at the third quarter results is informative. The company reported profits of $ 1.93 billion, a decrease of 3.5% year over year but an increase of 8.4% from the previous quarter and the highest quarterly revenue ever released for 2020. Net income was unchanged at 25 cents per share from the second quarter, but up 38% year over year. The report was widely viewed as met or exceeded expectations, and the stock rose 7% in the two weeks following its release. In a move that could indicate a solid fourth quarter profit, the company announced its next dividend, due to be paid on March 29th. Paying 41 cents per common share is up 2.5% from the previous quarter and is annualized to $ 1.64. At this rate, the dividend is 7.1%. Williams has a 4-year history of dividend growth and maintenance and typically increases payment in the first quarter of the year. The 5-star analyst TJ Schultz reported on the stock of RBC: “We believe that Williams can reach the lower end of its EBITDA forecast for 2020. While we anticipate short-term growth in the Northeast to slow, we believe that WMB should benefit from less Permian gas than previously expected. From our long-term perspective, we estimate Williams can comfortably stay within investment grade credit metrics and keep the dividend intact over our forecast period. “To this end, Schultz rates WMB as outperforming (ie buying) and his target price of $ 26 indicates an upward movement of 13% over the next 12 months. (To view Schultz’s track record, click here.) With 8 recent ratings, including 7 buys and only 1 hold, WMB has earned Strong Buy’s consensus analyst rating. While the stock has soared to $ 23 in the past few months, the average price target of $ 25.71 implies that it still has room for ~ 12% growth this year. (See WMB stock analysis on TipRanks) AGNC Investment (AGNC) Next up is AGNC Investment, a real estate investment trust. It’s no surprise to find a REIT to be a dividend champion. These companies are tax code required to return a high percentage of profits directly to shareholders and often use dividends as a means of regulatory compliance. Maryland-based AGNC focuses on mortgage-backed securities (MBS) with government support and guarantees. These securities account for approximately two-thirds of the company’s total portfolio, or $ 65.1 billion out of a total of $ 97.9 billion. AGNC’s latest quarterly returns for the fourth quarter of 20 showed net sales of $ 459 million and net earnings per share of $ 1.37. Year-over-year, earnings per share were the strongest in 2020. For the full year, AGNC posted total revenue of $ 1.68 billion and a dividend of $ 1.56 per share. The current dividend of 12 cents per common share paid monthly is annualized to $ 1.44. The difference from the higher annual rate of the previous year is due to a dividend cut that was implemented in April in response to the coronavirus crisis. At the current rate, the dividend offers investors a robust 8.8% return and is easily affordable for the company given the ongoing income. AGNC’s bulls include Maxim analyst Michael Diana, who wrote: “AGNC has maintained a competitive return on book value compared to other mortgage REITs (mREITS) despite outperforming its dividend and shares repurchased. While the turmoil in the mortgage markets led to losses and lower book values for all mortgage REITs at the end of March, AGNC was able to fulfill all margin calls and, importantly, accept relatively fewer realized losses and thus retain more profitability after the purchase. Turmoil. “Based on all of the above, Diana rates AGNC with a Buy and a target price of $ 18. That figure implies an upside potential of ~ 10% from current levels. (To view Diana’s track record, click here.) Wall Street is on the same page. In the past few months, AGNC has received 7 buys and a single hold – all adding up to a strong consensus buy rating – but the average target price of $ 16.69 suggests the stocks are for the foreseeable future (See AGNC stock analysis on TipRanks.) To find great ideas for trading dividend stocks at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that has all the insights into the stocks United by TipRanks Disclaimer: The opinions expressed in this article are solely those of the analysts featured, and the content is for informational purposes only will end. It is very important that you do your own analysis before making any investment.
