7 Buy-Rated Stocks With Dividends as High as 15% Are On Sale Now
If you have ever heard the term “stock pickers market,” this is surely where investors find themselves now as we approach the end of the first half of 2023. While the Nasdaq is up a big 18.27% year to date. and the S&P 500 is 7.84% higher, the truth is that just 10 stocks have made up 95% of the gains in the S&P 500. Meanwhile, much of the Nasdaq’s rise has been due to the performance of the highest-weighted stocks in the index, nine of which are big technology leaders.
The reality for investors is that we are close to the abyss with the debt ceiling limit. If President Biden and Speaker McCarthy continue to play a game of chicken over this issue, we could possibly be in for the same kind of disaster that happened with the debt ceiling fight in 2011. While an agreement back then was made two days before a default, the market was down a stunning 18.9% in three weeks prior, a window we are in now.
We decided to screen our 24/7 Wall St. dividend value universe for well-known companies that pay big dividends and that, for the most part, fly way off the radar. The seven following top stocks came up, and while all are rated Buy, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Alliance Resource Partners
This is a leader in the thermal coal business and also offers solid diversity. Alliance Resource Partners L.P. (NASDAQ: ARLP), a diversified natural resource company, produces and markets coal primarily to utilities and industrial users in the United States. The company produces a range of thermal and metallurgical coal with sulfur and heat contents.
It operates seven underground mining complexes in Illinois, Indiana, Kentucky, Maryland, Pennsylvania and West Virginia. In addition, it leases land and operates a coal loading terminal on the Ohio River at Mt. Vernon, Indiana. It buys and resells coal, as well as owns mineral and royalty interests in approximately 1.5 million gross acres of oil and gas producing regions primarily in the Permian, Anadarko and Williston Basins.
Further, the company offers various mining technology products and services, including data network, communication and tracking systems, mining proximity detection systems, industrial collision avoidance systems and data and analytics software.
Investors receive a 15.15% distribution. Benchmark has a $28 target price on Alliance Resource Partners stock. The consensus target is even higher at $29.33.
This maker of tobacco products offers value investors a great entry point now as it has been hit as cigarette sales have slowed. Altria Group Inc. (NYSE: MO) is the parent company of Philip Morris USA (cigarettes), UST (smokeless), John Middleton (cigars), Ste. Michelle Wine Estates and Philip Morris Capital. PMUSA enjoys a 51% share of the U.S. cigarette market, led by its top cigarette brand Marlboro.
Altria also owns over 10% of Anheuser-Busch InBev, the world’s largest brewer, which some feel is worth more than $10 billion and may be a segment of the company that could be sold. When Altria posted outstanding fourth-quarter results, it also announced a shareholder-friendly $1 billion stock buyback plan.
Altria stock investors receive an 8.23% dividend. The Goldman Sachs target price is $52, while the consensus target is $49.62.
This top master limited partnership (MLP) is a safe way for investors looking for energy exposure and income. Energy Transfer L.P. (NYSE: ET) owns and operates one of the largest and most diversified portfolios of energy assets in the United States, with a strategic footprint in all the major domestic production basins.
Energy Transfer is a publicly traded limited partnership with core operations that include complimentary natural gas midstream, intrastate and interstate transportation and storage assets; crude oil, natural gas liquids (NGLs) and refined product transportation and terminaling assets; NGL fractionation; and various acquisition and marketing assets.
After the purchase of Enable Partners last December, Energy Transfer owns and operates more than 114,000 miles of pipelines and related assets in all the major U.S. producing regions and markets across 41 states, further solidifying its leadership position in the midstream sector.
Through its ownership of Energy Transfer Operating, formerly known as Energy Transfer Partners, the company also owns Lake Charles LNG, as well as the general partner interests, the incentive distribution rights and 28.5 million common units of Sunoco, as well as the general partner interests and 39.7 million common units of USA Compression Partners.
Investors receive a 9.98% distribution. The $17 Morgan Stanley target price is in line with the $17.07 consensus target.
FS KKR Capital
This very well-known name on Wall Street is offering a solid entry point at current levels. FS KKR Capital Corp. (NASDAQ: FSK) is a business development company specializing in investments in debt securities. It seeks to purchase interests in loans through secondary market transactions or directly from the target companies as primary market investments.
The company also seeks to invest in first and second lien secured loans and, to a lesser extent, subordinated or mezzanine loans. In connection with the debt investments, the firm also receives equity interests, such as warrants or options, as additional consideration. It also seeks to purchase minority interests in the form of common or preferred equity in our target companies, either in conjunction with one of the debt investments or through a co-investment with a financial sponsor.
On an opportunistic basis, the fund may invest in corporate bonds and similar debt securities. The fund does not seek to invest in start-up companies, turnaround situations or companies with speculative business plans. It seeks to invest in small and middle-market companies based in the United States. The fund seeks to invest in firms with annual revenue between $10 million and $2.5 billion. It seeks to exit from securities by selling them in a privately negotiated over-the-counter market.
FS KKR Capital posted stellar results for the most recent quarter and announced a continuation of a huge stock buyback.
Shareholders receive a 14.62% dividend. Jefferies is the only Wall Street firm, out of 15 that follow it, with a Buy rating on FS KKR Capital stock. Its $25 price target compares with a consensus target of $21.19 and the most recent close at $18.89.
Insurance never goes out of style, and this is one of the top companies in the industry. Lincoln National Corp. (NYSE: LNC) operates multiple insurance and retirement businesses in the United States.
Its Annuities segment offers variable, fixed and indexed variable annuities. The Retirement Plan Services segment provides employers with retirement plan products and services, primarily in the defined contribution retirement plan marketplace. This segment offers individual and group variable annuities, group fixed annuities and mutual fund-based programs, as well as a range of plan services, including plan recordkeeping, compliance testing, participant education, and trust and custodial services.
The Life Insurance segment provides life insurance products, including term insurance, such as single and survivorship versions of universal life insurance. It offers variable universal life insurance, indexed universal life insurance products and a critical illness rider.
Lincoln National stock comes with a 9.03% dividend. Goldman Sachs has set its price objective at $30.
Starwood Property Trust
Real estate legend Barry Sternlicht runs this high-yielding real estate investment trust with big-time total return potential. Starwood Property Trust Inc. (NYSE: STWD) operates in the United States, Europe and Australia through the following segments.
Its Commercial and Residential Lending segment originates, acquires, finances and manages commercial first mortgages, non-agency residential mortgages, subordinated mortgages, mezzanine loans, preferred equity, commercial mortgage-backed securities (CMBS) and residential mortgage-backed securities, as well as other real estate and real estate-related debt investments, including distressed or nonperforming loans.
Starwood’s Infrastructure lending segment originates, acquires, finances and manages infrastructure debt investments. The Property segment engages primarily in acquiring and managing equity interests in stabilized commercial real estate properties, such as multifamily properties and commercial properties subject to net leases, that are held for investment.
The Investing and Servicing segment manages and works out problem assets; acquires and manages unrated, investment grade and non-investment grade rated CMBS comprising subordinated interests of securitization and resecuritization transactions; originates conduit loans for the primary purpose of selling these loans into securitization transactions; and acquires commercial real estate assets that include properties acquired from CMBS trusts.
The distribution yield is 11.82%. Starwood Property Trust stock has an $18.50 price target at J.P. Morgan. The consensus target is even higher at $21.79.
This company was created through a merger of SunTrust Bank and BB&T in 2019. Truist Financial Corp. (NYSE: TFC) provides banking and trust services in the southeastern and mid-Atlantic United States. Its deposit products include non-interest-bearing checking, interest-bearing checking, savings and money market deposit accounts, as well as certificates of deposit and individual retirement accounts.
The company also provides funding; asset management; automobile lending; bankcard lending; consumer finance; home equity and mortgage lending; insurance, such as property and casualty, life, health, employee benefits, workers compensation and professional liability, surety coverage, title, and other insurance products; investment brokerage; mobile/online banking; and payment, lease financing, small business lending, and wealth management/private banking services.
In addition, Truist offers association, capital market, institutional trust, insurance premium and commercial finance, international banking, leasing, merchant, commercial deposit and treasury, government finance, commercial middle market lending, small business and student lending, floor plan and commercial mortgage lending, mortgage warehouse lending, private equity investment, real estate lending and supply chain financing services. It provides corporate and investment banking, retail and wholesale brokerage, securities underwriting and investment advisory services.
Shareholders receive a 7.75% dividend. Piper Sandler’s price target is $46. Truist Financial stock has a consensus target of $41.02
These seven top stocks, for one reason or another, have backed up some recently and are offering passive income investors seeking some growth an outstanding opportunity at some of the best entry points this year. It should be noted that the MLP distributions can contain return of principal, and investors are subject to a K-1 when shares are purchased.
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