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JPMorgan says buy these 2 high-yield stocks — including one with a 9% yield


Banks withdrawals and extreme market volatility – is the darkness of 1929 for us? Probably not, the current situation, while dangerous, is unlikely to cause a recession across the entire economy.

The real test, at least according to David Kelly, JPMorgan’s head of global strategy for wealth management, will come on Wednesday, at the Federal Reserve’s next interest rate policy meeting. The central bank will have to determine which risk is more pressing, persistently high inflation or a banking crisis and adjust its recent monetary tightening policy accordingly.

Kelly has some firm opinions on the direction the Fed should take. “We already know what the limit is regarding the rapid tightening of the Fed, and the limit is here, and the Federal Reserve should stop,” he said in a recent interview.

Regardless of what the Fed decides to do, stock analysts at JPMorgan are turning sharply towards high yields dividend stocks, a standard defensive stock that moves when the market turns chaotic. We used Tips Rating platform for insights into two JPM dividend options – from data showing these are Buy-rated stocks with double-digit upside potential – and one with a dividend yield of 9%. Let’s take a closer look and find out why they believe these are attractive options for investors right now.

MPLX LP (MPLX)

First on our list of JPM dividend picks is MPLX, the mid-stream subsidiary of Marathon Oil. MPLX acts as a general limited partnership, owning and operating the original parent company’s midstream energy transportation network, as well as other logistics assets. MPLX also operates in the fuel distribution sector, transporting refined fuel products from refineries to terminals. MPLX’s network includes transportation assets, terminals and storage facilities for crude oil, natural gas and natural gas liquids, as well as an extensive pipeline network and inland sea areas across the waterways. navigable rivers in North America. The MPLX’s transportation network leads to coastal export ports, various oil refineries, tank farms and storage facilities.

All of this and the $33 billion northern market, making MPLX one of the largest midstream operators in North America and their recent financials, for Q4 and full year. 2022, showing full scale. The company posted revenue of $2.5 billion, although this was lower than the $3.3 billion achieved in the third quarter and the $2.64 billion in the previous quarter. Quarter 4 EPS reached 78 cents; This was unchanged year-on-year and 7% lower than forecast.

As for the full year 2022 numbers, overall, the MPLX has increased year-on-year. Annual revenue came in at $11.15 billion, up nearly 15% from 2021, and net income in 2022, at $3.95 billion, up 28% year-over-year. These results have supported solid cash flow, with operating net cash reaching $5 billion by 2022, a total of which allows MPLX to return more than $3.5 billion to common shareholders. through a combination of share repurchases and dividends.

In terms of dividends, there’s a lot that investors like. MPLX last paid its common stock dividend on February 14, at 77.5 cents per share. This annually amounts to $3.10 per common share and yields a yield of 9.13%. Final numbers for inflation, for February, show a year-over-year rate of 6%, so MPLX’s dividend is above that rate by a large margin, ensuring a real return for the year. the investors. The company has maintained a reliable dividend payout for the past 10 years.

JPM analyst Jeremy Tonet has a long-term assessment of the stock and is bearish on the bulls’ point of view. In his recent note on MPLX, Tonet writes, “Like its refined pipeline peers, MPLX is well positioned to capitalize on band expansion as inflation escalates and lifts tariffs. more than the actual cost increase. Furthermore, implementing the ‘all capital allocations above’ philosophy, which includes steady distributed growth and acquisitions, helps alleviate our previous concerns about corporate governance…. at a healthy 3.5x YE22 leverage, MPLX tracks near the bottom of the peer group, providing management with a strong option between increasing distribution and unit acquisition… From a pricing perspective, in While the unfiltered MPLX is the cheapest of the bunch, we view pricing as undemanding and advantageous given the aforementioned defensive downstream characteristics.”

Tonet complements its comment with an Overweight (Buy) rating and offers a $41 price target, implying a 21% gain over the next year. (To see Tonet’s achievements, click here.)

JPM’s view is bullish here. This company’s 9 recent analyst reviews include 6 Buy reviews, 2 Hold reviews, and 1 Sell rating, for a moderate Buy consensus rating. The stock is selling for $33.73, and an average price target of $39 suggests the stock will grow 16% this year. (View MPLX stock forecast at TipRanks.)

Oneok, Inc. (Okay)

Next on our list is Oneok, another midstream company in the hydrocarbon industry. Oneok focuses on moving and transporting natural gas and natural gas liquids across the middle of the North American continent. The company’s asset collection, processing, storage, and transportation network brings natural gas and gas products from production areas, particularly in the Rocky Mountains and the Permian Basin, to the distribution and marketing center.

As with the MPLX above, it’s a big business, and Oneok boasts a $27 billion market cap and multi-billion dollar annual revenue. In 2021, Oneok reached the highest revenue of 17.27 billion USD; this number has grown to $22.87 billion by 2022.

Diving into the most recent reported quarter, Q4 of 22, we find that Oneok’s quarterly revenue is lower than in the same period last year, at $5.97 billion versus $5.7 billion for year ago, while earnings increased. Q4 net profit, net income, came in at $485 million, up 28% y/y. On a per-share basis, the company’s earnings came in at $1.08 per diluted share, up 27% from the 85 cents reported in the year-ago period — and well above the 1.02 forecast. dollars more than 5%.

Oneok’s results gave management confidence to increase its common stock quarterly dividend by 2%, to a new payout of 95.5 cents. With an annual payout of $3.82 per common share, the new dividend yield is 6.4%. That yield, while just 0.4 points above inflation, is more than three times the average dividend yield found in companies listed on the S&P – and Oneok has a long history in the industry. maintaining reliable dividend payments.

We’ll return to JPM’s Jeremy Tonet, who sees reason to be bullish on the stock, based on Oneok’s prospects of improving business through 2023. Tonet writes, “On storage, OKE continues continues to expand Oklahoma’s storage capacity by 4 bcfd and continues to re-evaluate idle storage facilities in Oklahoma and Texas. Additionally, the ethane mining dynamics proved to be topical on the call, as management noted expectations that the Permian would maintain a high level of ethane resilience while increasing international demand. increasing will encourage ethane to increase out of Midcon and Bakken with a wider difference at the end of the year…. Notably, the 2023 well connection schedule includes a number of well connections pushed from 2022.”

Taking this outlook into account, Tonet rates the stock as Overweight (Buy), with a $78 price target to point to a 28% upside potential in the stock over the next 12 months. (To see Tonet’s achievements, click here.)

With 11 recent analyst ratings, including 4 Buys and 7 Holds, Oneok stock has a moderate Buy by analyst consensus. An average price target of $74.91 implies a 23% gain in one year from the current share price of $60.76. (See Oneok’s stock forecast at TipRanks.)

To find great ideas for trading stocks at attractive valuations, visit TipRanks’ Best stocks to buya newly launched tool that consolidates all of TipRanks’ equity insights.

Disclaimer: 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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