The year has started well for stock market investors, no doubt about that. The S&P 500 was up 9% and the NASDAQ was up almost 17%. While this did not reverse last year’s losses, the gain, boosted by some positive economic data released, suggests that investor sentiment is turning more positive.
But there are always voices of warning, and today it comes from JPMorgan strategist Marko Kolanovic, who warned that the stock rally may not last — and it will only delay, not end. recession by the end of the year.
Kolanovic sees a fundamental weakness in the current economic conditions, a weakness exacerbated by the Federal Reserve’s policy of raising interest rates. The central bank’s underlying fund rate is currently set between 4.5% and 4.75%, following a 25 basis point increase announced on February 1.
“Unless the Fed starts to cut nominal policy rates, these actual limited policy rates will create an ongoing headwind, putting the risk of an eventual recession at the end of the year,” Kolanovic said. pretty high”.
From a practical investment standpoint, this describes a situation created for a defensive portfolio. Analysts at JPM clearly think so, as they have mined reliable information dividend stocks as likely to buy.
We reviewed TipRanks data to find out the latest details on two JPM picks; both have reliable payment histories, backed by the company’s unwavering commitment to maintaining dividends. Let’s take a closer look.
Brookfield Renewable Corporation (BEPC)
The first stock we’ll look at is Brookfield Renewable, a pure renewable energy platform — and the largest company in the world. Brookfield Renewable, which is 60% owned by $75 billion Brookfield Asset Management, has focused on building a portfolio of utility-scale solar, hydro, and solar facilities. , along with energy storage assets. The company is active in the Americas, Europe and Asia; it operates about 25,400 megawatts of installed generating capacity and can capture 8 million tons of carbon per year.
Brookfield Renewable just released its Q4 2022 and full year 2022 results. Revenue for the quarter was listed at ~$1.2 billion, up ~10% year over year. Earnings for Q4 FY22 came in at a loss of 16 cents per share, 33% deeper than the 12 cent loss from Q421 and slightly below the consensus forecast of (0.15). However, the company already has a solid source of capital from its operations; at $225 million, this is up $11 million from the previous quarter. On a per-share basis, the FFO is 35 cents, compared with 33 cents the previous year.
During the previously reported quarter, Brookfield continued its expansion activities and commissioned new projects with a total capacity of approximately 3,500 megawatts.
This company has committed to paying – and maintaining – a reliable dividend payment to common stockholders. The final statement, at 0.3375 per share, came in conjunction with the Q4 issue and will be paid out on March 31, 2023. Annual dividend of $1.35 per share common stock and offers a yield of 4.3%, almost double the average return found among shareholders. div payers in broader markets. Brookfield Renewables has gradually increased its dividend payout over the past few years.
JPM analyst Mark Strouse, who received a 5-star rating from TipRanks, points out that renewable energy is a rapidly growing sector and that Brookfield Renewable Corporation holds a leadership position in the field. “We believe that BEPC, along with related company Brookfield Renewable Partners (BEP), is the best player in the field of developing and owning renewable energy projects that deliver cash returns,” he wrote. High quality and good vision of growth. We believe this stock will appeal to investors who want long-term exposure to the renewable energy theme of the long-term growth.”
Based on this view and running with it, Strouse rates BEPC at Overweight (i.e. Buy) and his price target, currently set at $39, implies upside potential in a short period of time. year is ~25% for stocks. Based on current dividend yield and expected price appreciation, the stock has a ~30% potential total return profile (To see Strouse’s track record, click here)
Overall, the stock has managed to slip out of sight and only 2 recent analyst reviews have been archived – but both agree it’s a Buy stock, prompting consensus. Buy moderately agree. The stock is trading for $31.27 and an average price target of $38 suggests a 21.5% gain lies ahead, or BEPC. (See BEPC stock forecast)
Oneok Corporation (alright)
We will now shift our focus from renewables to hydrocarbons. Oneok is a midstream company operating in the natural gas industry, where its network of assets connects natural gas liquid suppliers in the Rocky Mountains, Mid-Continent and Permian Basin with hubs distribution and marketing important. In addition, the company is expanding its reach to include operations in the affluent Bakken region of the northern plains. Oneok’s assets include infrastructure to collect, process, store and transport natural gas liquids.
The company posted an increase in overall revenue and earnings over the past year. We’ll have to wait until February 27 to see the most recent quarterly results, but the final report, from Q3 of 22, shows net income of $431.8 million, up 10% from last year. On a per-share basis, the gain was similar, due to a 9% increase in diluted EPS over the same period to 96 cents. These gains were supported by a strong increase in the company’s Rocky Mountain area business, which saw a 9% increase in processed natural gas volumes and a 9% increase in raw material volumes. NGL throughput increased by 17%.
A hint that current performance remains steady comes from the recent dividend statement, for the common stock dividend to be paid on February 14. The payment, at 95.5 cents for per share of common stock, representing a 2% increase in payments from the previous quarter. At current rates, the annual dividend amounts to $3.82 per share and yields a yield of 5.6%. This is nearly three times the overall average dividend yield and more than three times the yield found among peers. More importantly, Oneok’s dividend history spans decades, and the company has a reputation for consistently making quarterly payments.
Going forward, Oneok may seek a smooth path, as last month the company announced an insurance agreement to close all claims related to the ‘Medford incident’. That event — an explosion and fire at a gas plant in Medford, Oklahoma that forced the evacuation of homes and businesses — has weighed on Oneok since last summer. The insurance payout, totaling $930 million, officially ends all claims.
This means that, for investors, Oneok is a much more reliable stock than it was six months ago. Jeremy Tonet, of JPM, explains: “In a notable risk reduction event, OKE also announced a solution to the Medford base crash that not only eliminated the redundancy on the stock but also Surprising bullish expectations, in our view…. While currently trading at a slightly more complete valuation, OKE’s leverage on Bakken, with its underlying supportive basin environment and ethane upside option, is, in our view, presents a favorable risk-reward profile, especially given the lack of direct exposure to natural gas prices. “
This favorable risk-return profile gives the stock an Overweight (i.e. Buy) rating from Tonet, with a price target of $75 indicating a 9% year-over-year gain for the stock. (To see Tonet’s achievements, click here)
Overall, OKE’s Buy Mode consensus rating is based on 4 Buys and 8 Holds. The stock is currently trading for $68.71 and the median target of $72.83 shows a ~6% gain. (See Oneok stock forecast)
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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.
