U.S. Yields Slip From One-Year High; Stocks Drop: Markets Wrap
Several factors are coming together in the market picture, and indicate a possible change in conditions in the medium term. These include the rise in commodity prices, especially oil prices, which have recently been introduced. In addition, the number of January jobs released earlier this month was poor and disappointing, at worst. They, however, increase the likelihood that President Biden and the Democratic Congress will pursue the COVID relief package largely through recruitment. These factors are likely to pull in different directions. The rise in oil prices suggests an impending squeeze in supply, while fans of market liquidity are likely to cash in more incentives. However, these developments point towards a possible price redistribution climate. Against this backdrop, some investors are looking for ways to rebuild and hedge their portfolios. And this will bring us to the dividend. By providing a steady income stream, whatever the market situation, a reliable dividend share provides a pad for your investment portfolio when the stock stops appreciating. And so, we have opened the TipRanks database and drawn details on two stocks with high yield – at least 7%. Even better, these shares are seen by Wall Street analysts as strong buys. Let’s know the reason for this. Williams Company (WMB) The first stock we will see is Williams Company, a natural gas processing firm based in Oklahoma. Williams controls pipelines for the Pacific Northwest, Natural Gas Liquid, and Oil Gathering, in a network that extends from the Pacific Northwest, across the Rockies to the Gulf Coast and the Mid-Atlantic to the South. Williams’ core business is the processing and transportation of natural gas, with crude oil and energy production as secondary operations. The company’s footprint is huge – it handles about a third of natural gas use in the US, both residential and commercial. Williams will report his 4Q20 results later this month – but a look at the Q3 results is informative. The company reported $ 1.93 billion on the top line, down 3.5% year-over-year, but 8.4% quarter-on-quarter, and the highest quarterly revenue released by 2020. Net income 25 cents per share, flat from Q2 but 38% year-over-year. The report was widely held as meeting or exceeding expectations, and the stock gained 7% in the two weeks following its release. A solid Q4 earnings could be indicated along the way, with the company announcing its next dividend payout on 29 March. The 41% common payout per share is up 2.5% from the previous quarter, and is annualized to $ 1.64. At that rate, the dividend yields 7.1%. Williams has a 4-year history of dividend growth and maintenance, and typically increases payouts in the first quarter of the year. Covering the stock for RBC, 5-Star analyst TJ Schultz wrote: “We believe Williams can hit the bottom-end of its 2020 EBITDA guidance. While we expect medium-term growth in the NE, we think the WMB should benefit from less associated gas than before the Permian. Given our long-term outlook, we speculate that Williams may remain comfortable within the investment grade credit matrix through our forecast period and retain dividends. To this end, Shultes gave WMB an outperform (ie buy) rate, and indicated a $ 26 price target of above 13% over the next 12 months. (To see Shultz’s track record, click here) With 8 recent reviews on the record, including 7 Buys and just 1 Hold, WMB achieved its Strong by Analyst consensus rating. While the stock has reached $ 23 in recent months, the average price target of $ 25.71 implies that it has room for ~ 12% growth this year as well. (See WMB Stock Analysis on TipRCans) AGNC Investment (AGNC) Next up is AGNC Investment, a real estate investment trust. It is no surprise to find a REIT as a dividend winner – these companies are required by tax codes to return a high percentage of profits directly to shareholders, and often use dividends as a vehicle for compliance. AGNC, based in Maryland, focuses on MBS (mortgage backed securities) with support and guarantees from the US government. These securities make up about two-thirds of the company’s total portfolio, or $ 65.1 billion out of $ 97.9 billion. AGNC’s most recent quarterly returns, for 4Q20, showed $ 459 million in net revenue and net income per share of $ 1.37. EPS was the strongest record for 2020, keeping yo down. For the full year, AGNC reported $ 1.68 billion in total revenue and $ 1.56 per share paid in dividends. The current dividend, paid 12 cents per ordinary share monthly, will be annualized to $ 1.44; The difference from last year’s high annual rate is due to dividend cuts implemented in April in response to the coronovirus crisis. At the current rate, the dividend gives investors a strong yield of 8.8%, and is easily affordable for the company, given current earnings. Among the bulls at AGNC is Maxim analyst Michael Diana who wrote: “AGNC has maintained a competitive yield at book value relative to other mortgage REITs (mREITS), even earning its dividend and repurchased shares. is. While upheavals in mortgage markets at the end of March resulted in losses and lower book values for all mortgage REITs, AGNC was able to meet all of its margin calls, and, significantly, incur relatively lower receiving losses. And so the higher earning power maintains the post- upheaval. “Based on all of the above, Diana rated AGNC a Buy with a $ 18 price target. This figure is expected to reverse ~ 10% from current levels. (To see Diana’s track record, click here) Wall Street is on the same page. Over the past few months, AGNC has received 7 buys and a single hold – all adding to a strong Buy consensus rating. However, the $ 16.69 average price target suggests that the shares will be limited for the future. (See AGNC Stock Analysis at TipRank) To find good ideas for dividend stock trading at attractive valuations, buy from TipRank’s Best Stocks, a newly launched tool that unites all TNRank’s equity insights. Disclaimer: The opinions expressed in this article are solely those of select analysts. Content is to be used for informational purposes only. It is very important to do your own analysis before making any investment.