Breaking Stories

2 Dividend Stocks Under $10 With at Least 10% Dividend Yield

S&P 500

3,583.07

-86.84(-2.37%)

 

Dow 30

29,634.83

-403.89(-1.34%)

 

Nasdaq

10,321.39

-327.76(-3.08%)

 

Russell 2000

1,682.40

-46.01(-2.66%)

 

Crude Oil

85.55

-3.56(-4.00%)

 

Gold

1,650.20

-26.80(-1.60%)

 

Silver

18.20

-0.72(-3.80%)

 

EUR/USD

0.9724

-0.0059(-0.60%)

 

10-Yr Bond

4.0100

+0.0580(+1.47%)

 

GBP/USD

1.1180

-0.0150(-1.33%)

 

USD/JPY

148.7300

+1.5480(+1.05%)

 

BTC-USD

19,123.88

-543.46(-2.76%)

 

CMC Crypto 200

435.82

-12.36(-2.76%)

 

FTSE 100

6,858.79

+8.52(+0.12%)

 

Nikkei 225

27,090.76

+853.34(+3.25%)

 

Making investments pay out for the long term is the true challenge in today’s market environment. The series of headwinds piling up – from persistently high inflation to rising interest rates to slowing demand to bureaucratic bloat – are rising to hurricane force, and renewing investors’ attention to defensive stocks.

It’s only logical. The classic defensive stock, the dividend payer, ensures an income stream no matter how the markets move, and if the yield is high enough, these stocks can also generate a real rate of return despite inflation.

Knowing all this, wouldn’t you like to own find great dividend stocks? Of course you would!

Using the TipRanks database, we’ve looked up two stocks that are offering dividends of at least 10% yield – that’s more than 4x higher the average yield found in the markets today. Each of these is Strong Buy-rated, with some positive analyst reviews on record, and best of all, they all offer investors a low cost of entry, under $10 per share. Let’s take a closer look.

Oaktree Specialty Lending (OCSL)

First up on our short list, Oaktree Specialty Lending, is a provider of credit and loan products for mid-market enterprises, the small business segment that long been the engine of American ingenuity and economic success. Oaktree, which has a market cap of $1.14 billion and annual revenues above $230 million, generates its income through the success of its investment portfolio.

As of June 30 this year, Oaktree’s investment portfolio includes 151 companies, into which Oaktree has put more than $2.6 billion. Oaktree’s portfolio is primarily made up of floating-rate investments, which compose 88% of the total. More than 15% of Oaktree’s investment are in the application software segment, with other segments, including pharmaceuticals, data processing, biotech, and health care, making up smaller shares of the total.

It’s a profitable portfolio, and Oaktree’s most recent quarterly financial release, from Q3 of fiscal year 2022 – the quarter ending on June 30 – showed that the company generated solid earnings. By GAAP measures, net investment income was $40.4 million for the quarter, or 22 cents per share, up 10% year-over-year, and well above the 18-cent forecast.

Of particular interest to dividend investors, Oaktree had cash and liquid assets totaling $34.3 million at the end of the quarter, and had undrawn credit up to $455 million. This cash backing made it possible for management to raise the dividend in the Q3 declaration, bumping it up 3% to 17 cents per common share. This was the 9th quarter in a row that the dividend was raised, and the new rate was paid out on September 30.

The dividend annualizes to 68 cents per common share – and while that sounds modest, it represents a solid yield of 10.9%.

Also of note to investors, Oaktree Specialty Lending has entered into an agreement to merge with Oaktree Strategic Income II, subject Board approvals. The merger will create a combined entity, using the OCSL name and stock ticker, with a portfolio valued at more than $3 billion, and with improvements in market cap and credit quality.

JMP analyst Kevin Fultz has delved into this merger, and writes, “We believe the rationale is sound and view the merger as favorable to shareholders of OCSL as the combined company will benefit from: 1) the increased scale of $3.3B of total assets, which would create a top ten publicly traded BDC by total assets; 2) a larger market capitalization which could lead to greater trading liquidity and institutional ownership; 3) the combination of two known, complimentary investment portfolios with significant investment overlap, which we think will result in a seamless portfolio integration; 4) the larger scale of OCSL may improve access to more diverse, lower cost sources of debt capital…”

To this end, Fultz rates OCSL an Outperform (i.e. Buy) along with an $8.50 price target. If achieved, his target could offer a potential total return of ~48% with price appreciation of 37% and an annual yield of 10.9%. (To watch Fultz’s track record, click here)

While this small-cap specialty finance provider has only picked up 3 Wall Street reviews recently, these analysts all agree that this is a stock to buy, giving OCSL a Strong Buy consensus rating. The shares are priced at $6.22 and the $8 average target suggests ~29% upside on the one-year horizon. (See OCSL stock forecast on TipRanks)

Lument Finance Trust (LFT)

Next up is Lument Finance Trust, a micro-cap firm in the real estate investment trust (REIT) niche, investing in various forms of real estate, real property debt, and mortgage loans, primarily in the commercial property market. The company’s portfolio emphasizes mid-market multi-family assets, and includes other commercial property investments, such as mezzanine loans, preferred equity, and commercial MBSs. Lument looks to build a portfolio based on high-quality commercial real estate, and bases its time frame on three-year terms with options for two one-year extensions.

The quality portfolio has brought Lument generally rising revenues over the past two years. In the most recent quarter reported, 2Q22, the company had a top line of $12.6 million, which supported an income attributable to shareholders of $2.15 million – and a total distributable income of $2.45 million.

The distributable income matters to dividend investors, because it’s the metric that supports the quarterly dividend payment. As a REIT, Lument is required by tax regulations to return a high percentage of earnings directly to shareholders, and dividends are the usual mode of compliance. For Lument’s shareholders, this means a reliable long-term payment, with occasional adjustments to keep it affordable for the company. The last dividend declaration, from September 15, was for 6 cents per share, to be paid on October 17. At this rate, the annualized dividend is 24 cents per common share and yields 11.6%.

Among the bulls is Raymond James’s 5-star analyst Stephen Laws, who takes a bullish stance on LFT shares.

“We continue to expect distributable earnings to benefit from 1) increasing interest rates given the floating rate loan portfolio and 2) replenishing loan repayments in the CLO with newly originated, higher spread loans. We are maintaining our Outperform rating given the attractive portfolio characteristics, such as the high mix of multifamily, the floating rate portfolio, and the portfolio financing consisting entirely of CLO debt,” Laws wrote.

That Outperform (i.e., Buy) rating is backed by a $3.25 price target, suggesting a one-year gain of 57%. Based on the current dividend yield and the expected price appreciation, the stock has ~68% potential total return profile. (To watch Laws’ track record, click here)

All in all, five of the Street’s analysts have chimed in on LFT, and their reviews include 4 to Buy and 1 to Hold, for a Strong Buy consensus. The average price target of $3.20 implies ~55% upside from the current trading price of $2.06. (See LFT stock forecast on TipRanks)

To find good ideas for dividend stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

Advertisement

SmartAsset

How to Make $1,000 in Dividends Every Month

Dividends are the bread and butter of income investors. You don’t need to sell your assets or spend hours every day managing your accounts. Instead, dividend stocks simply generate income on their own. Putting together a portfolio that generates at least … Continue reading → The post How to Make $1,000 a Month in Dividends appeared first on SmartAsset Blog.

Benzinga

1 REIT You’ll Wish You Bought In October 2022

The stock market is reeling from the pressures of a potential global recession, and central banks around the world are gearing up for the most aggressive interest rate hikes in history. The United Nations recently warned that the world is “on the edge of a recession,” which will likely be worse than the pandemic-driven recession in 2020 or the global financial crisis of 2008. Understandably, U.S. equities have taken a hit, with the S&P 500 index registering the worst monthly performance in Septe

TipRanks

Time to Bottom Fish? 3 ‘Strong Buy’ Stocks That Are Down Over 40% This Year

Everyone is hoping the market might be bottoming and by the recent actions of Bank of America clients, some evidently think the lows must be in sight. Last week, BofA customers splashed out $6.1 billion on US stocks, in what amounted to the third largest inflow since 2008. While the bank has stated it is not as confident the bottom is quite so close, it’s not hard to see why investors feel the time is right to lean into equities. The widespread losses have left scores of beaten-down stocks looki

TipRanks

Inflation at 8.2%: 2 ‘Strong Buy’ Dividend Stocks to Protect Your Money

Last month, the Federal Reserve implemented its fifth straight interest rate hike this year, and its third consecutive hike at 75 basis points, bringing its key funds rate up to the 3% to 3.25% range. The move showed that the central bank is deadly serious about taking on the stubbornly high inflation that has been plaguing the economy since the middle of 2021. The Fed’s turn toward an aggressive anti-inflationary policy may not be hard enough, however, as the September data, released this morni

Benzinga

These 3 REITs Could See Dividend Increases Soon

In the midst of a bear market, with rising interest rates and the threat of a prolonged recession in the air, real estate investment trust (REIT) stocks have endured tremendous price declines. Given this, it isn’t easy to find REITs that could see dividend increases soon. Two questions come to mind. Why would a company raise its dividend when the yield is already increasing with each drop in price? And how do you find REITs with the dividend well-covered by funds from operations (FFO) and with s

Insider Monkey

Top 10 Stock Picks of Gavin Abrams’ Abrams Bison Investments

In this article, we discuss the 10 top stock picks of Gavin Abrams’ Abrams Bison Investments. If you want to skip reading about Gavin Abram’s investment strategy and his hedge fund’s performance, you can go directly to the Top 5 Stock Picks of Gavin Abrams’ Abrams Bison Investments. Based out of Bethesda, Abrams Bison Investment […]

MarketWatch

These are the types of companies Warren Buffett says you should invest in during times of high inflation

MarketWatch Picks has highlighted these products and services because we think readers will find them useful; the MarketWatch News staff is not involved in creating this content. And at a 2009 shareholder meeting, Buffett noted that the first best thing you can do to protect against inflation is to invest in yourself and your skills: “If you’re the best teacher, if you’re the best surgeon, if you’re the best lawyer, you will get your share of the national economic pie regardless of the value of whatever the currency may be,” he said.

Reuters

Analysis-Kroger looks to fight both inflation and Walmart with new merger

NEW YORK (Reuters) -The $25-billion merger of Kroger and Albertsons could ultimately lead to lower prices for shoppers, at least according to a plan laid out Friday by Kroger’s CEO. In an interview with Reuters, Kroger Co CEO Rodney McMullen said the savings provided by the deal would allow the chains to cut prices for consumers. McMullen said the combined entity could better compete head to head with “larger, non-union” grocers – a reference to players such as Walmart Inc and Target Corp, both of which also sell groceries.

Benzinga

3 Attractive REITs With A Dividend Yield Over 6%

When an entire sector such as real estate investment trusts (REITs) gets trounced, a lot of decent stocks are thrown into the mix along with those that are not very good quality. Higher interest rates this year have slashed prices and subsequently raised the dividends on dozens of quality stocks, with some now beginning to show signs of life. Here are three REITs with dividend yields over 6% that have been gaining momentum this week and could be signaling better times are ahead: Simon Property G

Barrons.com

3 Stocks to Play Higher Diesel Prices

Diesel prices have been rising faster than gasoline. Refiners Valero Energy, Marathon Petroleum, and Phillips 66 could benefit.

Barrons.com

Citigroup Earnings Offer More Signs Turnaround Is On Track

Wall Street got more signs that Citigroup turnaround is on track when the bank posted its latest results Friday. Shares of Citigroup (ticker: C) were up 0.6% in premarket trading Friday. Like all banks, Citigroup has faced challenges this year as it has had to contend with a slowing economy and drying up deal activity.

Zacks

The Zacks Analyst Blog Highlights Microsoft, Alphabet, Eli Lilly, Visa and Morgan Stanley

Microsoft, Alphabet, Eli Lilly, Visa and Morgan Stanley are included in this Analyst Blog.

GOBankingRates

Buy Property in These 6 Up-and-Coming Ski Towns Before Prices Rise

At its best, there’s something magical about snow. It covers over the grime of dirty streets, and offers fun opportunities for play and sport, to adults and children alike. If you’ve always wanted to…

Yahoo Finance

The Fed’s Daly: Hot CPI print shows ‘the data not cooperating’

San Francisco Fed President Mary Daly told Yahoo Finance that she expects the Fed to stay the course when it comes to expectations for interest rate hikes after the latest core inflation reading came in at a 40-year high.

What's your reaction?

Excited
0
Happy
0
In Love
0
Not Sure
0
Silly
0

You may also like

Leave a reply

Your email address will not be published. Required fields are marked *