2 low-dividend stocks with a yield of 8% – or better

While big-name stocks may attract attention and headlines, they’re not the only game in town. And sometimes, the market giants aren’t even the best place to make a solid return on that initial investment. There are small- and mid-cap stocks on the market that can be an unbeatable combination for income-minded investors: stocks that are bullish and high-yielding. dividend return.

However, these stocks can operate in secret, catching the eye of investors, for a variety of reasons, from living in unusual business niches to consistently failing to make a profit. , but sometimes the reason can be much more mundane: they’re just smaller companies. It is inevitable that some sound stocks will be ignored.

With this in mind, we used the TipRanks platform to identify two lesser-known stocks with dividend yields in excess of 8%. And even better, both have a Buy rating from Street analysts and solid upside potential. Let’s take a closer look.

Crescent Capital BDC, Inc. (CCAP)

We will start with Crescent Capital, a BDC company that is part of the larger Crescent Group. Crescent Capital BDC offers a wide range of financial services to mid-market private businesses, the type of companies that have long been the driving force behind the overall U.S. economy but are often too small to access extensive credit and financial services from the traditional banking sector. Crescent serves this facility through loan origination, equity purchases and debt investments; The company’s portfolio has a total fair value of more than $1.29 billion and is based primarily on unit first mortgages (62.7%) and premium secured first mortgages (25.4%).

Crescent Capital will report its fourth quarter financial results in February; Analysts are forecasting final earnings of 44 cents per share. It is interesting to note that the company has surpassed EPS guidance by about 21% in each of the last two reported quarters. In the most recent Q3 of 22, the company showed total investment income of $29 million, up 13% year-over-year, and net investment income of $16 million, up 26% year-over-year. with the same period. Net investment income per common share for the third quarter came in at 52 cents, compared with 45 cents reported in the previous quarter.

Back in November, Crescent Capital announced its fourth quarter dividend, which was paid out on January 17th. The payout is set at 41 cents per share of common stock and the annual rate of $1.64 yields a yield of 11.5%. That’s nearly 5 points higher than December’s 6.5% annual inflation rate and nearly six times the average dividend paid by companies listed on the S&P. It should be noted that, as of Q4 2021, in addition to the ordinary quarterly dividend of 41 cents, Crescent Capital also continuously pays a special dividend of 5 cents.

The Fed is committed to fighting inflation through rate hikes, and Raymond James 5-star analyst Robert Dodd sees this as a net boon for Crescent. “Rising prime interest rates should benefit earnings in the fourth quarter of 2022. Earnings benefit from higher rates as the upside of inflation, the downside being margin pressures and the impact of inflation,” he wrote. it for some investment companies. We expect portfolios to decline and non-accumulators to increase as we head into the year (for all BDCs), but we believe the interest rate gains will outweigh the negative effects. potential negative effects of increasing non-accumulative accounts in the short/medium term. .”

At the bottom line, Dodd said, “We find the risk/reward attractive, with positive interest rate sensitivity and good credit quality — for BDC trading at a substantial discount to NAV/Shares. current shares and at a discount to its peer group. “

Continuing this, Dodd rates the CCAP Stock as a Good Performance (i.e. Buy) and his price target, set at $18, implies a ~25% one-year gain to the upside. prior to. Based on current dividend yield and expected price growth, the stock has a ~36% total potential return profile. (To see Dodd’s achievements, click here)

Overall, this BDC selected 3 recent analyst reviews – and all were positive, supporting a Strong Buy consensus rating. The shares are priced at $14.42 with an average price target of $17.67 showing ~22% upside potential over the next 12 months. (See CCAP Stock Forecast)

Piedmont Office Realty Trust (PDM)

From the BDC world, we will shift our focus to real estate investment trusts (REITs), another leading sector among dividend payers. Piedmont Office is a ‘fully integrated and self-managed’ REIT that focuses on the ownership and management of premium, Grade A office buildings in highly developed Sunbelt cities such as Orlando, Atlanta and Dallas . The company also has a strong presence in the northeast, in Boston, New York and DC. In addition to existing office space, Piedmont has ownership of prime parcels, totaling 3 million square feet, for build-to-order or pre-lease projects.

Through February 8, Piedmont is expected to release its fourth-quarter 2022 and fiscal 2022 results. The company has posted full-year guidance of $73 million to $74 million in net income and other financials. core fund from diluted operations per share is $1.99 to $2.01. Keeping these numbers in mind, we can look back to Q3 2022, last quarter’s report.

For that quarter, the company had net income of $3.33 million; the first three quarters of 2022 achieved net income of $71.26 million. Net earnings per share for the quarter came in at 3 cents, much lower than forecasts of 6 cents. The company’s core funds from operations – a key measure for dividend investors, as it funds payouts – in the third quarter remained in line with the previous year’s results, at 61, 35 million dollars. Core FFO hit 50 cents per share in Q3 2022.

Although Piedmont’s earnings have fallen over the past year, the company has had no problem paying a 21-cent dividend on common stock. The dividend is announced in October and paid on January 3 of this year. At 84 cents per common share, the annual payout yields 8.5%, beating inflation by a solid 2 points. Piedmont has a long history of reliable dividend keeping; the company has been making regular quarterly div payments since 2009 and has maintained its current payout since 2014.

Assessing Piedmont’s outlook, Baird analyst Dave Rodgers explains why this REIT remains the top pick: “We believe PDM is one of the best positioned to operate. more efficient in 2023. The current space market is represented by concentrated office leasing activity in small and medium-sized companies. supporting large tenants 1) PDM focuses on value addition and property repositioning; 2) average onsite tenant size is 14ksf; and 3) its 8ksf average size when lease expires in 2023.”

“While we expect leasing to be an opportunity for PDM, in our view the bigger catalyst is the resilience of the investment market — driving PDM back to the strategy. capital recycling strategy and active exits of NYC, Boston and Houston in the near term,” added Rodgers.

Rodgers continues to rate the PDM Stock Doing Well (i.e. Buy), with a price target of $13, indicating his confidence in a 28% gain over a one-year time horizon. (To see Rodgers’ achievements, click here)

This stock is rated Moderate Buy from analyst consensus, based on 3 recent reviews consisting of 2 Buy and 1 Hold. The average price target of $13.67 suggests a potential 35% upside from the current trading price of $10.12. (See PDM stock forecast)

To find great ideas for trading dividend stocks at attractive valuations, visit TipRanks’ Best stocks to buyone tool that unifies all of TipRanks’ equity insights.

deny the responsibility: The opinions expressed in this article are those of prominent analysts only. Content is used for informational purposes only. It is very important that you do your own analysis before making any investment.


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