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Raymond James: Buy 2 Big 7% Dividend Stocks Now
Raymond James strategist Tavis McCourt watches the markets for the prime opportunity and sees both risk and opportunity in current market conditions. The opportunity, in his opinion, arises from the obvious factors: the Democrats won both seats in the Georgia Senate in the most recent runoff, backing the incoming majority of the Biden administration in both houses of Congress – and the likelihood of meaningful tax support was increased law in the near future. More importantly, the coronavirus vaccination program continues and reports show the Pfizer vaccine, one of two approved in the US, is effective against the new strain of the virus. A successful vaccination program will accelerate economic recovery and allow states to relax lockdown rules – and get people back to work. The risks also come from the fields of politics and public health. House Democrats have passed impeachment procedures against President Trump despite the impending natural closure of his term in office, and this passage diminishes the chances of political reconciliation in a highly polarized environment. And while the COVID strain is in line with current vaccines, there's still a risk of developing a new strain that isn't covered by existing vaccinations – which could restart the cycle of lockdowns and economic decline. Another risk McCourt sees beyond these two would be a sharp spike in inflation. He doesn't estimate it, but thinks it is unlikely that it will happen anytime soon. “… Product / service inflation is only really a possibility after a reopening, so that the market feels a little bulletproof in the short term and thus the ongoing rally where Dems wins the GA races and only fuels the stimulus. McCourt noticed. Some of McCourt's fellow analysts on Raymond James' cadre consider these risks and place their imprimatures on strong dividend stocks. We looked at recent Raymond James views and selected two stocks with high yield dividends using the TipRanks database. These buy-rated tickers bring a dividend yield of 7%, a strong draw for investors interested in capitalizing on the current good times to put in place a defensive firewall should the risks materialize. Enterprise Products Partners (EPD) We're starting in the energy sector, a business that has long been known for both high cash flows and high dividends. Enterprise Products Partners is a midstream company that is part of the network that transports hydrocarbon products from the wellheads to the storage farms, refineries and distribution points. The company controls pipelines valued at over 50,000 miles, shipping terminals on the Texas Gulf Coast, and storage facilities for 160 million barrels of oil and 14 billion cubic feet of natural gas. The company suffered from low prices and low demand in the first half of 20 but recovered partially in the second half. Revenue flipped and sequentially increased 27% to $ 6.9 billion in the third quarter. That number was down 5.4% year over year, but was more than 6% higher than forecast for the third quarter. The result in the third quarter of 48 cents per share was just below the forecast, but increased by 4% year-on-year and by 2% sequentially. EPD recently announced its fourth quarter dividend payout of 45 cents per common share. This is more than the previous 44 cents payment and marks the first increase in two years. At an annualized value of $ 1.80, the yield on payments is 7.9%. Among the cops is Raymond James' Justin Jenkins, who rates EPD as a strong buy. The analyst gives the stock a price target of USD 26, which implies an upward movement of 15% from the current level. (To view Jenkins' track record, click here.) Endorsed his optimistic stance, Jenkins commented, “From our point of view, EPD's unique combination of integration, balance sheet strength and ROIC track record is still the best in class. We see EPD arguably best positioned to withstand the volatile landscape … With EPD's footprint, demand gains, project growth, and contracted ramps should more than offset supply headwinds and lower year-over-year marketing results … “It's not often that all analysts focus on one Share some, if this happens, take note. EPD's Strong Buy consensus rating is based on a unanimous 9 purchases. The stock's average target price of $ 24.63 indicates an upward movement of 9% from the current share price of 22 . $ 65. (See EPD stock analysis on TipRanks) AT&T, Inc. (T) AT&T is one of the most instantly recognizable ren stocks of the market. The company has been a long-time member of the S&P 500 and is considered one of the best dividend payers on the stock exchange. AT&T is a true industry giant, with a market cap of $ 208 billion and the largest network of cellular and landline phone services in the United States. With the acquisition of TimeWarner (now WarnerMedia) in a process between 2016 and 2018, the company has a large stake in the mobile content streaming business. AT & T recorded a decline in sales and earnings in 2020 under the pressure of the corona pandemic. The decline was modest, however, as the same pandemic also highlighted telecommunications and network systems, which tended to support AT & T's business. Revenue for the third quarter of 20 was $ 42.3 billion, 5% below the prior-year quarter. On the positive side, free cash flow increased from $ 11.4 billion year over year to $ 12.1 billion and the company posted net income of 5.5 million new subscribers. Subscriber growth was driven by the new 5G network rollout – and premium content services. The company has maintained its reputation as a dividend champion and made its most recent dividend declaration for payment in February 2021. The payment is the fifth in a row at current levels at 52 per common share and is annualized to $ 2.08 yield of 7.2%. By comparison, the average dividend among peers in the technology space is just 0.9%. AT&T has kept its dividend strong for the past 12 years. Raymond James analyst Frank Louthan sees AT&T as a classic defensive value stock and describes the current state of T as one with the bad news “branded” in. “[We] I believe there is more that can go right in the next 12 months than can get worse for AT&T. Throw in the fact that stocks are severely shorted and we believe this is a recipe for upside move. Large-cap value names are hard to come by, and we think investors who can wait a few months for an average reversal while getting a 7% return should buy AT&T on the current one Level should be rewarded, ”said Louthan. In line with these comments, Louthan T is rated on outperform (i.e. Buy) and its target price of $ 32 implies room for 10% growth from current levels. (To see Louthan's track record, click here.) What does the rest of the street think? With regard to the consensus distribution, the opinions of other analysts are more diverse. 7 buy ratings, 6 holds and 2 sells result in a moderate buy consensus. Additionally, the average target price of $ 31.54 indicates upside potential of ~ 9%. (See AT&T stock analysis on TipRanks.) To find great ideas for trading dividend stocks at attractive valuations, visit TipRanks ‘Best Stocks to Buy, a newly launched tool that brings together all of TipRanks' stock insights. Disclaimer: The opinions expressed in this article are solely those of the presented analysts. The content is intended to be used for informational purposes only. It is very important that you do your own analysis before making any investment.