Investing

5 Wall Street Out-of-Favor Stocks With Massive Dividends and Upside

courtesy of AT&T Inc.

If there is any place where the herd mentality is most prominent it is on Wall Street. There are numerous reasons why. Portfolio managers and traders talk and shares ideas and data. Algorithm programs target high-volume stocks that continue to be bought when seemingly overbought. Plus, one of the biggest reasons may be that once a sector gets hot, the money pours in from retail investors, and that’s when the institutions start to sell.

We all know what’s been hot. The FANG stocks are a great example. But how much upside is left? Maybe a lot, then perhaps maybe not. We screened our 24/7 Wall St. research database for companies that have big dividends, and also seem to be way out-of-favor on Wall Street. We found five rated Buy that could be good ideas for aggressive accounts.

AT&T

This stock has bounced off the lows but is still down from highs printed in January. AT&T Inc. (NYSE: T) is the world’s largest provider of pay TV, with TV customers in the United States and 11 Latin American countries. In the United States, the AT&T wireless network has the nation’s self-described strongest 4G LTE signal and most reliable 4G LTE. The company also helps businesses worldwide serve their customers better with mobility and highly secure cloud solutions.

With its shares trading at a very cheap 12.8 times estimated 2018 earnings, the company continues to expand its user base, and strong product introductions from smartphone vendors have not only driven traffic but increased device financing plans.

AT&T has several major catalysts that will likely drive strong network traffic demand: DirecTV Now and Mobile, “Data-Free TV” for DirecTV/U-verse subscribers, and increasing penetration of unlimited data plans. Many on Wall Street believe that the company is well-positioned to address ongoing traffic requirements, with additional LTE capacity available and the ability to leverage small cell deployments.

The company posted solid numbers for the third quarter, but between concerns over the Time Warner deal risk and the overhang from the arbitrage accounts, the stock has been in a funk.

AT&T investors receive a 5.84% dividend. Nomura has a big $45 price target, and the Wall Street consensus target is $39.68. The shares traded Thursday morning at $33.45.

Golar LNG Partners

This is a liquefied natural gas (LNG) shipping and storage play that holds a big distribution for shareholders and is the top pick across Wall Street. Golar LNG Partners L.P. (NASDAQ: GMLP) owns and operates floating storage regasification units (FSRUs) and LNG carriers under long-term charters in Brazil, the United Arab Emirates, Indonesia and Kuwait. The company also engages in the leasing of its fleets.

The Marshall Islands based company has a fleet of six FSRUs and five LNG carriers, a combined average remaining useful life of 25 years, and an average remaining charter duration of five-plus years. The company posted solid second-quarter results and also was successful in lowering leverage.

Golar LNG Partners has a diverse pipeline that includes its FLNG projects and, as a result, some Wall Street analysts feel the company has the largest growth potential over its peer group, with potential drop-downs/newbuilding inventories of 16 vessels.

Golar shareholders receive a 10.74% distribution. Merrill Lynch has set its price target at $25. The posted consensus target is $23, and shares traded at $21.40.


Alcentra Capital

Shares of this business development company (BDC) make sense for aggressive accounts. Alcentra Capital Corp. (NASDAQ: ABDC) is an externally managed BDC that primarily invests in the debt of companies operating in the lower middle market. The company typically aims to invest $5 to $25 million per transaction.

The company has covered its dividend from net investment income since the initial public offering, but the analysts at Raymond James feel that it has a slight under-earn for the third quarter. In addition, the stock may have been sold from Unit Investment Trusts that have matured, and that may be putting pressure on the shares as it is very thinly traded, with the 50-day average volume of less than 70,000 shares.

Shareholders receive a 15.54% dividend. The Raymond James price target is posted at $13. The consensus estimate is $12.38. The stock traded on Thursday at $8.60 per share.

Seagate Technology

This probably is one of the most disliked tech stocks now, and it is down over 40% since April. Seagate Technology PLC (NASDAQ: STX) designs, manufactures and sells electronic data storage products in the Asia-Pacific, the Americas and EMEA (Europe, Middle East and Africa) countries.

The company provides hard disk drives, solid state hybrid drives, solid state drives, PCIe cards and serial advanced technology architecture controllers that are designed for enterprise servers and storage systems in mission critical and nearline applications, as well as for client compute applications comprising desktop and mobile computing.

One of Wall Street’s biggest activist investors, ValueAct Capital, became one of Seagate’s largest shareholders last year with a 9.5 million share stake. The firm reported in August that it owned a 7.2% stake in the company at 13.82 million shares.

Seagate shocked Wall Street when it posted results that blew away estimates and sent the share rocketing higher. The posted earnings per share for its fiscal first quarter of 2018 were less than in the same period last year, but it came in well above the Wall Street earnings estimate for the quarter. The company also reported revenue that was lower than in its fiscal first quarter of 2017, but again much better than the analysts expected.

Investors receive a 6.82% dividend, but that is subject to being cut. Jefferies has a $40 price target, which compares with the consensus target of $37.48. The shares were last seen trading at $36.50.

Qualcomm

This top technology stock was hit hard earlier this year and is still offering investors a great entry point. Qualcomm Inc. (NASDAQ: QCOM) designs, develops and supplies semiconductors and collects royalties on wireless handheld devices and infrastructure based on its dominant position in CDMA and other related technology patents.

In addition, Qualcomm provides systems software and components to wireless handset vendors and promotes applications and services that run on high-speed wireless networks. The company operates primarily through two segments: CDMA Technologies and Technology Licensing.

The company reported quarterly earnings and revenue that beat analysts’ expectations, even as the company remains entangled in a costly legal battle with Apple over licensing terms for chips used in the iPhone and iPad. The chipmaker has alleged that technology purchased by Apple from its rival Intel violated six of Qualcomm’s patents. This is a dispute that could go on for some time.

Investors still receive a 4.26% dividend. The $66 Merrill Lynch price objective is higher than the consensus price target of $59.44. The shares were trading at $54.85.

While none of these top stocks have the upside potential of a Google or Amazon from back in the day, the companies do have solid business models and their shares make sense for accounts looking for bounce-back potential.

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