2 under-the-radar dividend stocks with a dividend yield of 8% or more

Just when it seemed time to throw in the towel, the market pulled through and posted a win. A better-than-expected reading of the consumer price index last week has raised hopes that the Federal Reserve will slow the pace of its rate hikes.

Looking at the situation for Morgan Stanley, equity strategist Michael Wilson, one of the bigger bears of the past year, is getting a little more upbeat, saying, “We think we’re now entering the final phase of the bear market…”

At the same time, Wilson acknowledges that the bear is still with us. Looking at the current general conditions and the outlook for 2023, he writes: “We advise investors to remain defensively positioned… We would say the last 12 months have been pretty uneventful because a bear market was so likely that we just defined our defensive strategy and stuck to it…”

The classic defensive game is, of course, the dividend stocks – and if investors need to stay defensive for now, we can look to the high yield div payers. Using the TipRanks platform, we found two such stocks, stocks with a dividend yield of at least 8% and a Buy rating from Street. Interestingly, both stocks have gone under the radar. Let’s take a closer look at that.

Global Partners L.P (GLP)

The first dividend stock we look at is a standby of the energy industry. Global Partners operates as an energy wholesaler, with an extensive network of energy delivery infrastructure, including oil and gas terminals, retail locations and gas stations, primarily located in the Northeast, but extending to the Midwest, Southeast and Gulf States. The company’s available products include crude oil, diesel oil, fuel oil, kerosene and gasoline. In addition to hydrocarbon fuels, Global Partners also markets numerous brands of prepackaged to-go foods through convenience stores.

Global Partners has an impressive network in terms of figures. The company owns and operates 24 terminals for petroleum bulk products and has a storage capacity of 10 million barrels. The company sells more than 369,000 barrels of fuel products daily and owns, leases or supplies approximately 1,700 gas stations.

Rising prices have recently boosted Global Partners’ revenue, and the company’s 9-month revenue for 2022, $14.45 billion, already surpasses the $13.24 billion revenue for all of 2021. The company’s revenue in 3Q22 was $4.6 billion, up 39% year over year. Net profit rose sharply from 3Q21 to $111.4 million from $33.6 million, an impressive 231% increase. Earnings per share were even higher; diluted earnings per share increased 262% y/y, from 86 cents to $3.12. The company has increased its quarterly dividend payment 8 times in the past three years.

Global Partners’ last dividend payment was made on November 14 of this year at 62.5 cents per common share. This works out to $2.50 per share on an annualized basis and gives a return of 8.15%. With the recent drop in annualized inflation to 7.7% for October, it means investors will get a real return from GLP’s dividend payout.

Global Partners’ solid position and performance caught the attention of Stifel analyst Selman Akyol, who thought it necessary to upgrade the stock from Hold to Buy.

Supporting his bullish stance, Akyol writes, “We expect Global to use the recent outperformance to expand its footprint and take advantage of increased volumes and economies of scale. Depending on how the commodity picture evolves, there could be headwinds in 2023, but we want to emphasize that GLP has been able to deliver exceptional performance this year amid heightened commodity volatility. While we recognize that the results of 2022 may not be repeated in 2023, GLP was able to use its increased cash flows to invest in lower-risk businesses, wind down its balance sheet and increase distribution. We believe these decisions will benefit unitholders in the short and long term.”

Looking ahead to these comments, Akyol set a $35 price target on the stock, suggesting room for a 12.5% ​​increase over the next year. Based on current dividend yield and expected price appreciation, the stock has a potential total return profile of ~21%. (To view Akyol’s track record, click here)

Some stocks go under the radar and get few analyst ratings despite good performances, and this is one of them. Akyol’s is the only recent analyst review registered here. (See GLP stock analysis on TipRanks)

NexPoint real estate financing (NREF)

The next dividend stock on our list is a real estate investment trust, a REIT; these companies are known as high-yield dividend champions, so it’s unusual to see them slip under investors’ noses – but that’s what happened here, with NexPoint Real Estate Finance. The company, which focuses its investments on mortgage loans for single-family and multi-family rental properties, as well as direct ownership of storage facilities and commercial office space, has not attracted much attention. But maybe that should change.

For starters, the company’s portfolio has stabilized at 92.9% and has an average of 6.2 years left on leases. The company’s portfolio is worth $1.7 billion and consists of 83 investments – and as of October 26 of this year, there were no loans in default or deferrals in the portfolio. NexPoint available for distribution (EAD) earnings were 48 cents per diluted share in its recent 3Q22 report. And of particular note here, the company had $11.2 million in cash available for distribution (CAD) as of September 30. This came to 50 cents per diluted share and fully covered the dividend.

That dividend was last declared in October, for payment on December 30 — at 50 cents per common share. This dividend works out to exactly $2 on an annualized basis, giving a robust return of 11.2%. This yield is more than 5x higher than the average dividend in the broader markets. NexPoint has increased its dividend payment three times in the past three years and is ensuring that the payment remains consistent with its distributable cash.

Five-star analyst Stephen Laws, of Raymond James, likes what he sees in this company, writing in his recent note: “With the investment portfolio largely focused on SFR and multi-family assets and NREF’s use of mostly peer-to-peer funding, we expect CAD to increase the dividend to continue to cover… Given our estimates of our portfolio’s return and with stocks trading at a discount to book value, we reiterate our Strong Buy rating.”

Laws’ Strong Buy rating comes with a $21 price target for NREF stock. If this goal is achieved, investors can realize a potential price increase of ~18% over the current share price of NREF. (To view Laws’ track record, click here)

Overall, NREF has slipped under most analysts’ radar; The stock’s moderate buying consensus is based on just two recent ratings; Buy and hold (i.e. neutral). (See NREF stock analysis on TipRanks)

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

disclaimer: The opinions expressed in this article are solely those of the named analysts. The content is for informational purposes only. It is very important to do your own analysis before making an investment.

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