3 shares with ‘strong buy’ with at least 6% dividend
There is so much going on in the markets that it is difficult to know where to start and what to look for. On the red side of the general ledger, it is clear that the headwind is gathering. House Democrats still reject the $ 1.8 trillion in coronavirus assistance and stimulus package presented by the White House, saying President Trump̵
7;s proposal does not go far enough. House Dems are pushing their own $ 2.2 trillion stimulus. At the same time, both Eli Lilly and Johnson & Johnson have suspended their coronavirus vaccine programs after the latter company reported an “adverse event” in early trials. This has more than just investors worried about, as most hopes of a “return to normal” are linked to the development of a working vaccine for the new virus. And the earnings season starts. Over the next few weeks, we will see Q3 results from all listed companies and investors will see these results eagerly. The consensus is that earnings will be lower from year to year somewhere between 20% and 30%. With this in mind, we have used the TipRanks database to draw up to three dividend stocks yielding 6% or more. However, that is not all they offer. Each of these stocks has a strong buy rating and a significant upward potential. Philip Morris (PM) First on the list is the tobacco company Philip Morris. The ‘sin stores’, producers of tobacco and alcohol products, have long been known for their good yields. PM has taken another blow in the past year with a turn towards smokeless tobacco products that are marketed as cleaner and less dangerous to users’ health. One sign of this is the company’s partnership with Altria on the launch and marketing of iQOS, a heated smoke – free tobacco product that enables users to get nicotine – free pollutants from tobacco smoke. PM has plowed over $ 6 billion into the product. Given the regulatory challenges and PR surrounding vaping products, the PM believes that smokeless heated tobacco will prove to be the stronger alternative with greater potential for growth. Either way, PM’s core product currently remains Marlboro cigarettes. The iconic brand remains a bestseller despite the long-term trend where public opinion turns to cigarettes. As for the yield, PM has been and remains a true champion. The company has raised its dividend payment every year since 2008 and has reliably paid out the quarter. Even the corona could not derail it; PM continued its quarterly payment of $ 1.17 through 2020, and its most recent dividend, paid out earlier this month, saw an increase to $ 1.20 per share. Common share. This annuals to $ 4.80 and gives a dividend of 6%. Coverage of PM for Piper Sandler, analyst Michael Lavery, likes the transition to smokeless products and writes: “We remain bullish on PM’s strong long-term outlook and we believe the latest iQOS momentum through the COVID-19 pandemic has been impressive . iQOS has had strong user growth and improved profitability, and store reopening can further help promote the adoption of new users. Lavery estimates that PM shares an overweight (ie buy), and his $ 98 price target implies a one-year upside of 24%. (To view Lavery’s track record, click here) Overall, the consensus rating for Strong Buy is based on 9 reviews breaking 8 to 1 in Buy versus Hold. The stock is priced at $ 79.10 and their average $ 93.56 price target suggests an 18% upward potential. (See PM share analysis on TipRanks) Bank of NT Butterfield & Son (NTB) Butterfield is a small banking company based in Bermuda and provides a full range of services to customers on the island – and in the Caymans, Bahamas and Channel Islands as well as Singapore, Switzerland and United Kingdom. Butterfield’s services include personal and business loans, savings accounts and credit cards, mortgages, insurance and asset management. Butterfield saw revenue and earnings slide in the first half of this year in line with the general pattern of banking services globally – the worldwide COVID -19 pandemic put a damper on business and bankers felt hit. Earnings in the last quarter of 2019 were 87 cents per share. Stock and in Q2 20 fell to 67 cents. While it was a significant drop, it was still 21% better than expected. On the top line, revenue is down to $ 121 million. NTB reports 3rd quarter earnings later this month and the forecast is at 63 cents EPS. Along with beating earnings forecasts, Butterfield has paid out a strong dividend this year. In the second quarter, the dividend was up to 44 cents per common share, making the return a robust 7%. When considering the current low interest rate regime – the US Fed has set interest rates close to zero and government bonds yield below 1% – NTB’s payment looks even better. Raymond James Donald Worthington, 4-star analyst at Raymond James, writes of Butterfield, “… robust capital levels [provide] in our view more than sufficient loss-making capacity for the credit problems that may arise. Its fee income stability has proven to be valuable given the impact of falling interest rates on the NII, where the bank has actively managed spending to help support earnings. We continue to believe that its dividend is safe given its low-risk loan portfolio, solid capital levels and our forecast for a dividend below 100%, even under our stressful outlook. These comments support the analyst’s Outperform rating, and his $ 29 price target suggests a 15% upward trend for the coming year. (To view Worthington’s track record, click here) All in all, NTB has 4 recent reviews that include 3 Buys and a single Team, making the analyst consensus rating a strong buy. This stock has an average price target of $ 29 that matches Worthington. (See NTB share analysis on TipRanks) Enviva (EVA) Last on our list is an energy company, Enviva. This company has an interesting niche in an important sector that produces “green” energy. Specifically, Enviva is a producer of processed biomass fuel, a wood pellet derivative sold to power plants. The fuel burns cleaner than coal – an important point in today’s political climate – and is made from recycled waste (wood chips and sawdust) from the timber industry. The company’s production facilities are located in the southeastern United States of America, while its main customers are in the United Kingdom and mainland Europe. The economic shutdowns introduced during the corona pandemic reduced the demand for power, and Enviva’s revenues fell in 1H20, primarily due to the reduced demand. However, earnings remained positive and the EPS outlook for Q3 predicts an increase back to 45 cents – in line with strong earnings seen in the second half of 2019. Enviva has shown a constant commitment to pay its dividends and in the last quarter – August payment – the company withdrew the payment from 68 cents per. Common stock for 77 cents. This brought the annual value of the dividend to $ 3.08 per share. Share and make the return 7.3%. Even better, Enviva has paid regular dividends for the last 5 years. To cover this stock for Raymond James is analyst Pavel Molchanov, who rates EVA as Outperform (ie Buy) and sets a price target of $ 44. The recent stock improvement has brought the stock close to this target. Based on its position, Molchanov writes, “Enviva benefits from an ever-widening customer base and there is growth with high visibility via dropdown. In connection with the electricity sector’s massive exit from coal – including (as of September 2020) 34 countries and 33 subnational jurisdictions with mandatory coal phasing out … ”(To see Molchanov’s track record, click here.) Enviva’s consensus assessment of Strong Buy is based on 4 purchases and 1 team. The stock price gained in recent sessions is $ 42.60 and as mentioned it has closed in at the average price target of $ 44.80. (See EVA stock analysis at TipRanks) To find great dividend trading ideas for attractive valuations, visit TipRanks ‘Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ stock insights. exclusively those of the featured analysts. The content is intended for informational purposes only. It is very important to do your own analysis before making an investment.