Investing
Yields Have Totally Collapsed: 7 'Strong Buy' Stocks With Huge Dividends to Grab Now
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Even though the Federal Reserve has raised interest rates from 0% to 4.35% over the past year, longer rates on the 10-year and 30-year benchmark notes and bonds have collapsed. In fact, due to the huge drop in rates, potential homebuyers have seen the biggest decline in mortgage rates in 14 years as the 30-year U.S. mortgage rate has moved from 7.08% to 6.15% in the past 10 weeks. That is the biggest 10-week drop in rates (almost 1%) since January 2009.
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While great for potential home buyers, or those looking to refinance, it is not so great for those looking for dependable dividends. The thought of buying a 30-year bond with a puny 3.62% yield does not make sense for growth and income investors looking for yield.
We screened our 24/7 Wall St. research database for well-known stocks that have been hammered for one reason or another, looking for solid ideas for investors. We found seven well-known companies that look ripe for the picking and all their stocks are rated Buy on Wall Street. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Blackstone
Shares of this top money management company make sense for more aggressive growth and income investors. Blackstone Group L.P. (NYSE: BX) is one of the largest global alternative asset managers. Blackstone manages investments and provides services across four operating segments: Private Equity, Real Estate, Credit and Hedge Fund Solutions.
Blackstone launches and manages private equity funds, real estate funds, funds of hedge funds and credit-focused funds for its clients. It invests in private equity, public equity, fixed-income and alternative investment markets.
Jefferies noted this about the company: “Blackstone Group has been steadily building out longer-duration permanent capital vehicles, to add earnings stability and higher multiple fee-paying assets under management.”
Blackstone stock investors receive a 5.81% distribution. Piper Sandler’s $111 price target is well above the consensus target of $99.53 and Friday’s closing price of $85.02, which was up close to 6% on the day.
24/7 Wall St.Energy Transfer
The top master limited partnership is a very safe way for investors looking for energy exposure and income. Energy Transfer L.P. (NYSE: ET) owns and operates approximately 11,600 miles of natural gas transportation pipeline, as well as natural gas storage facilities in Texas and Oklahoma, and it has 19,830 miles of interstate natural gas pipeline. It also sells natural gas to electric utilities, independent power plants, local distribution and other marketing companies and industrial end-users.
The company owns and operates natural gas gathering and natural gas liquid (NGL) pipeline, processing plant, and treating and conditioning facilities in Texas, New Mexico, West Virginia, Pennsylvania, Ohio, Oklahoma, Arkansas, Kansas and Louisiana; natural gas gathering, oil pipeline, and oil stabilization facilities in South Texas; and a natural gas gathering system in Ohio, as well as transport and supplies water to natural gas producer in Pennsylvania.
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Energy Transfer owns approximately 5,215 miles of NGL pipeline; NGL and propane fractionation facilities; NGL storage facilities with working storage capacity of approximately 50 million barrels (MMBbls); and other NGL storage assets and terminal with an aggregate storage capacity of approximately 17 MMBbls.
It provides crude oil transportation, terminalling, acquisition and marketing activities, and it sells and distributes gasoline, middle distillate and motor fuels and other petroleum products. It offers natural gas compression service; carbon dioxide and hydrogen sulfide removal, natural gas cooling, dehydration and British thermal unit management service, and it manages coal and natural resources properties, as well as sells standing timber, leases coal-related infrastructure facilities, collects oil and gas royalty and generates electrical power.
Investors receive an 8.31% distribution. Morgan Stanley has an $18 price target on Energy Transfer stock. The consensus target is $16.44, and shares were last seen on Friday at $12.76.
Gaming and Leisure
This stock is a unique and interesting way to play the gaming sector and generate income. Gaming and Leisure Properties Inc. (NASDAQ: GLPI) is engaged in the business of acquiring, financing and owning real estate property to be leased to gaming operators in triple net lease arrangements, in which the tenant is responsible for all facility maintenance, insurance required in connection with the leased properties and the business conducted on the leased properties, taxes levied on or with respect to the leased properties and all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties.
The company expects to continue to grow its portfolio by pursuing opportunities to acquire additional gaming facilities to lease to gaming operators. It also intends to diversify the corporate portfolio over time, including by acquiring properties outside the gaming industry to lease to third parties. The company’s current portfolio consists of 44 casinos, including two TRS properties and the real property associated with 42 facilities spread around the United States.
The yield here is 5.40%. The Truist Securities price target is $60, while the consensus target is $56.13. The shares ended Friday’s trading session at $52.20.
24/7 Wall St.Leggett & Platt
While somewhat off the radar, this stock has almost been cut in half over the past year and offers massive upside potential. Leggett & Platt Inc. (NYSE: LEG) designs, manufactures and markets engineered components and products worldwide.
The company offers steel rods, drawn wires, foam chemicals and additives, innersprings, specialty foams, private label finished mattresses, mattress foundations, wire forms for mattress foundations, adjustable beds, industrial sewing and quilting machines, and mattress packaging and glue drying equipment, as well as machines to produce innersprings for industrial users of steel rods and wires, manufacturers of finished bedding, big box and e-commerce retailers, bedding brands and mattress retailers, department stores and home improvement centers.
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Leggett & Platt also provides mechanical and pneumatic lumbar support and massage systems for automotive seating; seat suspension systems, motors and actuators and cables; titanium, nickel and stainless-steel tubing, formed tubes, tube assemblies and flexible joint components for fluid conveyance systems; and engineered hydraulic cylinders to automobile original equipment manufacturers (OEMs) and Tier 1 suppliers, aerospace OEMs and suppliers, and mobile equipment OEMs.
Shareholders receive a 5.17% dividend. Goldman Sachs has set its target price at $40. The consensus target is $33.33, but Leggett & Platt stock closed on Friday at $34.03.
Newell Brands
This top consumer goods stock is a safe play for investors worried about a toppy market, and it has backed up recently. Newell Brands Inc. (NASDAQ: NWL) is a manufacturer and marketer of consumer products with six reporting segments: Writing (Sharpie, Paper Mate, Waterman, Parker), Home Solutions (Rubbermaid, Calphalon, Goody), Tools (Irwin, Lenox), Commercial Products (Rubbermaid Commercial Products, Rubbermaid Healthcare), Baby & Parenting (Graco, Aprica) and Jarden (Yankee Candle, Jostens, Oster, Sunbeam, Mr. Coffee, K2, Marmot, Rawlings, Coleman, First Alert and many more).
Consumer staples stocks like Newell tend to be solid ideas in times of inflation and rising rates. In 2021, the company’s cash distributions to shareholders were close to $400 million. During the period, Newell produced roughly $600 million, which included an abnormally large $350 million in cash spent on an inventory buildup, which the company attributed to preparation for sales growth. With a dividend payout ratio below 70%, Newell should continue to easily support the large and tempting dividend.
Newell Brands stock comes with a 6.20% dividend. Morgan Stanley’s $18 price target compares with a $16.70 consensus target and the most recent close at $14.02.
Philip Morris
This company has continued to grow global market share and its stock makes good sense for total return investors now. Philip Morris International Inc. (NYSE: PM) is one of the largest international cigarette producers, with a share of 28% of the international cigarette/heated tobacco market. Key combustible brands include Parliament, L&M and Marlboro, one of the most valuable brands in the world.
The company is commercializing IQOS, a heat-not-burn product, in over 40 markets, which could drive earnings in the years to come. Most on Wall Street believe the company offers superior underlying growth prospects, both near term and long term. The share price has been weak of late as investors have questioned the growth potential of its reduced-risk products, and the overall market weakness has contributed. All of its sales are outside of the United States.
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Shareholders receive a 5.00% dividend. The Jefferies price objective of $118 is well above the $107.43 consensus target for Philip Morris International stock. Shares closed at $101.82 on Friday.
24/7 Wall St.Verizon
This top telecommunications stock offers tremendous value at current levels. Verizon Communications Inc. (NYSE: VZ) is one of the largest U.S. telecom companies. It provides wireless and wireline service to retail, enterprise and wholesale customers.
The company’s wireless network serves approximately 120 million mobile connections with 115 million postpaid subscribers. Its wireline business has undergone a period of secular decline due to wireless substitution and cable competition.
Verizon also provides converged communications, information and entertainment services over America’s most advanced fiber-optic network, and it delivers integrated business solutions to customers worldwide.
Investors receive a 6.53% dividend. Morgan Stanley’s price objective is $44. The consensus target is $45.05. Verizon Communications stock closed on Friday at $40.
The fact that long rates have collapsed is a rather good sign that the bond market thinks the economy will face a recession at some point this year. With more hikes coming from the Federal Reserve, and the reality that even when they are finished raising rates they will keep them there, it makes sense to add these conservative stocks as income-producing ideas.
With fourth-quarter earnings reports just getting out of the gate, it makes sense to check the ex-dividend dates on all these stocks, and perhaps to buy just partial positions now, as even with earnings estimates going lower, companies are struggling as inflation is still near 40-year highs.
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