3 Higher dividend stocks with growth opportunity; Goldman Sachs says „buy“
Investing is all about creating profits, and investors have long seen two main paths to achieving this goal. Growth stocks, stocks that will give a return that depends primarily on the rise in the share price, is one way. The second way is through distributed shares. These are shares that pay a percentage of dividends to shareholders – dividends, usually sent out quarterly. Payments vary widely, from less than 1% to more than 10%, but the average, among S&P 500 listed stocks, is around 2%. Dividends are a good plus for a patient investor, as they provide stable income. Goldman Sachs analyst Caitlin Burrows is researching the real estate confidence sector, a group of stocks long known for high and reliable dividends – and she sees plenty of reason to expect strong growth in three stocks in particular. Running the trio through the TipRanks database, we learned that the three have been welcomed by the rest of the street as well, boasting the consensus of „strong buy“ analysts. Broadstone Net Lease (BNL) First, Broadstone Net Lease, is a well-established REIT fund that went public last September in an initial public offering that raised more than $ 533 million. The company floated 33.5 million shares in the market, followed by an additional 5 million captured by subscribers. Considered a successful opening, BNL now boasts a market cap of over $ 2.63 billion. Broadstone’s portfolio includes 628 properties in 41 US states plus the Canadian province of British Columbia. These properties host 182 tenants and have a total value of $ 4 billion. The best feature here is the long-term nature of the leases – the weighted average remaining lease is 10.8 years. During the third quarter, the latest with full financial data available, BNL reported net income of $ 9.7 million, or 8 cents per share. Income came mainly from rents, and the company reported that it collected 97.9% of the rents due during the quarter. Looking forward, the company expects $ 100.3 million in property acquisitions during the fourth quarter, and an increase in the rental collection rate of 98.8%. Broadstone income and higher rental groups support a dividend of 25 cents per common share, or $ 1 per year. It is an affordable down payment for the company, offering investors a 5.5% return. Goldman’s Burrows sees the acquisition of the company as the most important factor here. “Cumulative acquisitions are the main driver of earnings for Broadstone … while management has halted acquisitions following the market uncertainty caused by the coronavirus (BNL has not completed any acquisitions in the first half of 2020) and prior to the IPO, we are on Confidence that acquisitions will increase in 2021, and saw the start of this with Q4 2020 activity … We estimate that BNL is achieving a positive investment spread of 1.8%, resulting in profit growth of 0.8% (in 2021E FFO) for every 100 $ 1 million in acquisitions (or 4.2% of our 2021E acquisition volumes), „Burrows said. To that end, Burrows rated BNL a Buy, and its $ 23 price target means a roughly 27% gain for next year. (To see Burrow’s record, click here) Wall Street generally agrees with Broadstone’s Burrows, as indicated by the three positive reviews the stock has had in recent weeks. These are the only reviews on file, making the analysts‘ consensus on a unanimously strong buy rating. Shares are currently quoted at $ 18.16, with an average target price of $ 21.33. It estimates a one-year increase of approximately 17%. (See BNL stock analysis on TipRanks) Realty Income Corporation (O) Realty Income is a major player in the REIT business. The company has a portfolio of more than $ 20 billion, with more than 6,500 properties in 49 states, Puerto Rico and the United Kingdom. Annual revenue topped $ 1.48 billion in fiscal 2019 (the latest with full data), and it has maintained a monthly profit of 12 years. Looking at the current data, we found that O recorded an income of 7 cents per share in the third quarter of 2020, along with $ 403 million in total revenue. The company collected 93.1% of contracted rents for the quarter. Although relatively low, research into monthly values shows that rental collection rates have been on the rise since July. As noted, O pays a monthly dividend, and it has done so regularly since its listing in 1994. The company raised its payments in September 2020, marking an increase of 108 during that period. The current payment is 23.45 cents a common share, which comes annually at 2.81 cents – and gives a yield of 4.7%. Building on the above, Burrows has placed this stock on the Americas indictment list, with a buy rating and a $ 79 price target for the next 12 months. This target indicates a 32% rise from current levels. In support of her position, Burrows noted, “We estimate growth of 5.3% FFO per year through the 2020E-2022E, versus an average of 3.1% for full REIT coverage. We expect the major earnings drivers to include a continued recovery in acquisition volumes and a gradual improvement in theater rents (in 2022). The analyst added, “We assume that O achieves $ 2.8 billion in acquisitions in both 2021 and 2022, against agreed expectations: $ 2.3 billion. [We] We believe our acquisition size assumptions can actually be conservative, as the company has already made or agreed to make acquisitions of $ 807.5 million (or 29% of our 2021 estimate) eight days into 2021. ‚In general, Wall Street is taking a bullish position on Realty Income. 5 purchases and 1 contract released over the past three months make the stock a solid buy. Meanwhile, the average target price of $ 69.80 points to a gain of nearly 17% from the current share price (See stock analysis at TipRanks) Essential Properties Realty Trust (EPRT) Last up, Essential Properties, owns and operates a portfolio of commercial properties for individual tenants across the U.S. There are 214 tenants in more than 1,000 properties in 16 industries, including Car wash and convenience stores, medical services and restaurants.Essential Properties boasts a high occupancy rate of 99.4% for its properties.In the third quarter of 2020, the company saw revenue increase of 18.2% year-on-year, to $ 42.9 million. Sell with $ 589.4 million in available cash, including cash and cash equivalents and available credit. The strong cash position and rising revenues made the company confident enough to raise its dividend in the fourth quarter. The new dividend is 24 cents a common share, up 4.3% over the previous payment. The current rate is 96 cents and gives a yield of 4.6%. The company has been increasing its dividend payouts regularly over the past two years. In its Goldman review, Burrows focuses on the recovery Essential Properties has achieved since the height of the COVID panic last year. “When shelter mandates in place came into effect in early 2020, only 71% of EPRT holdings were open (fully or on a limited basis). This situation has improved in the months that followed, and now only 1% of the EPRT portfolio has been closed. EPRT … we expect future EPRT earnings growth to be driven by acquisitions backlog and estimate potential earnings growth of 2.8% from $ 100 million acquisitions, „Burrows wrote. In keeping with its optimistic approach, Burrows is giving EPRT shares a buy rating, along with a price target of $ 26 for one year, indicating a 27% rise. In all, the EPRT has 9 recent analyst reviews, and a breakdown of 8 buying and 1 selling of the stock gives a strong buy consensus rating. The shares are priced at $ 20.46 and have an average target price of $ 22.89, giving a probability of roughly 12% up from current levels. (See EPRT stock analysis at TipRanks) To find good dividend trading ideas with attractive valuations, visit the Best Stocks to Buy from TipRanks, a newly launched tool that unites all the stock insights for TipRanks. Disclaimer: The opinions expressed in this article are only those of featured analysts. The content is intended for informational use only. It is very important to do your analysis before making any investment.
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