Investing
These 7 'Strong Buy' Stocks Are Safe and Have Big, Dependable Monthly Dividends
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Even though the Federal Reserve has raised interest rates from 0% to 4.75% over the past year, longer rates on the 10-year and 30-year benchmark bonds have collapsed. In fact, due to the collapse, potential homebuyers have seen the biggest decline in mortgage rates in 14 years as the 30-year U.S. mortgage rate has moved from 7.18% to 6.18%. That is the biggest 10-week drop in rates since January 2009.
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While great for potential homebuyers or those looking to refinance, it is not so great for those looking for dependable dividends. The thought of buying a 30-year Treasury bond with a puny 3.89% yield make no sense for growth and income investors looking for yield.
One great idea now, especially with the Federal Reserve starting to close in on the end of the rate hike cycle, is a combination of top equity income ideas that pay investors every month instead of on a quarterly basis. Given that everybody gets their bills every 30 days instead of 90, the seven stocks we found are a great idea now. Many are at entry points that are the best in months as well. Yet, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
AGNC Investment
This company has paid solid dividends for years. AGNC Investment Corp. (NASDAQ: AGNC) operates as a real estate investment trust (REIT) in the United States. It invests in residential mortgage pass-through securities and collateralized mortgage obligations for which the principal and interest payments are guaranteed by U.S. government-sponsored enterprises or agencies.
The company funds its investments primarily through collateralized borrowings structured as repurchase agreements. The company has elected to be taxed as a REIT under the Internal Revenue Code of 1986 and would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders.
Shareholders receive a 12.64% dividend. Maxim Group has a $12 price target on AGNC Investment stock. That compares with the $11.60 consensus target and the most recent closing price of $11.39.
Agree Realty
This top REIT has had a nice run off the lows printed last year but still has potential upside. Agree Realty Corp. (NYSE: ADC) focuses on the ownership, development, acquisition and management of retail properties net leased to national tenants. It specializes in acquiring and developing net-leased retail properties for retail tenants.
The company specializes in the acquisition and development of properties net leased to industry-leading, omnichannel retail tenants. As of December 31, 2022, it owned and operated a portfolio of 1,839 properties, located in all 48 continental states and containing approximately 38.1 million square feet of gross leasable area.
Investors receive a 3.85% distribution. The $81 target price at Raymond James accompanies a Strong Buy rating. Agree Realty stock has a consensus target of $77.75. The stock last closed at $74.80.
Main Street Capital
This Wall Street favorite also offers very solid upside potential. Main Street Capital Corp. (NASDAQ: MAIN) is a private equity firm specializing in equity capital to lower middle-market companies. The firm also provides debt capital to middle-market companies for acquisitions, management buyouts, growth financings, recapitalizations and refinancing.
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The firm seeks to partner with entrepreneurs, business owners and management teams and generally provides “one-stop” financing alternatives within its lower middle-market portfolio. Main Street Capital typically invests in lower middle-market companies, generally with annual revenues between $10 million and $150 million. The firm’s middle-market debt investments are made in businesses that are generally larger in size than its lower middle-market portfolio companies. It makes majority and minority equity investments.
The dividend yield is 6.70%. B. Riley Securities has set a $42 price target, while the consensus target is $41.17. The most recent close was at $40.28 a share.
Realty Income
This is an ideal stock for growth and income investors looking for a safer bear-market-busting net lease REIT. Realty Income Corp. (NYSE: O) is an S&P 500 company dedicated to providing stockholders with dependable monthly income.
The company is structured as a REIT, and its monthly distributions are supported by the cash flow from over 6,500 real estate properties owned under long-term lease agreements with commercial tenants. To date, the company has declared 608 consecutive common stock monthly dividends throughout its 54-year operating history and increased the dividend 109 times since its public listing in 1994. It is a top real estate member of the S&P 500 Dividend Aristocrats index.
Realty Income stock comes with a 4.62% distribution. Morgan Stanley’s $74 price target is higher than the $70.21 consensus target and the $66.12 close on Friday.
Shaw Communications
This top company is in the process of a huge merger. Shaw Communications Inc. (NYSE: SJR) operates as a connectivity company in North America, and after the merger, it is expected to be Canada’s number two telecom company.
Its Wireline segment provides cable telecommunications services, including video, internet, Wi-Fi, phone, satellite video, and data networking through a national fiber-optic backbone network to Canadian consumers, North American businesses and public-sector entities.
The Wireless segment provides wireless services for voice and data communications serving customers in Ontario, British Columbia and Alberta through Freedom Mobile and in British Columbia and Alberta through Shaw Mobile. The company was formerly known as Shaw Cablesystems and changed its name in May 1993.
Last Friday, Canada’s Rogers Communications extended the deadline for its $20 billion (Canadian currency) merger with Shaw Communications for the fourth time to March 31 as the companies await the final nod from industry minister Francois-Philippe Champagne. The deal was expected to close on Feb. 17, following a successful end to the long-drawn battle with the competition bureau for approval.
Shareholders receive a 3.04% dividend. The $32 Canaccord Genuity target price compares with the $30.24 consensus target and the most recent close at $29.14.
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STAG Industrial
This strong industrial REIT play offers solid upside potential. STAG Industrial Inc. (NYSE: STAG) is a self-managed full-service real estate company primarily focused on the acquisition, ownership and management of single-tenant, Class B warehouses in secondary markets across the United States. The company continues to focus on expansion of its acquisition platform to find acquisitions to grow the portfolio.
Top Wall Street analysts expect management to be aggressive acquirers over time. Additionally, the in-place portfolio should deliver stable organic growth supported by healthy property-level fundamentals.
This one includes a 4.15% distribution. The BMO Capital Markets price objective is $41. The consensus target is $41.77, and STAG Industrial stock was last seen trading at $35.46.
TransAlta Renewables
This off-the-radar stock from Canada could be a side pocket huge winner for more aggressive investors. TransAlta Renewables trades over the counter and is among the largest of any publicly traded renewable independent power producers in Canada.
The company’s asset platform and economic interests are diversified in terms of geography, generation and counterparties and consist of interests in 26 wind facilities, 11 hydroelectric facilities, eight natural gas generation facilities, two solar facilities, one natural gas pipeline and one battery storage project, representing an ownership interest of 2,965 megawatts of owned generating capacity, located in the provinces of British Columbia, Alberta, Ontario, Québec and New Brunswick; the states of Pennsylvania, New Hampshire, Wyoming, Massachusetts, Michigan, Minnesota, Washington and North Carolina; and the State of Western Australia.
Investors enjoy a 7.85% dividend. The Raymond James price target in U.S. dollars is $12.25, and the stock last closed at $8.94 a share.
These seven top stocks are way off the highs printed over the past year, and these companies have paid dependable dividends for years. For those looking for monthly passive income, these are outstanding companies to own. It should be noted that while the rally since the beginning of the year has been stellar, the prospects for the rest of February and beyond look cloudy, so it may make sense to scale buy shares over the next few months.
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