Jefferies Loves Top Buy Rated Stocks Yielding 8% and More

Most investors know that logically buying the U.S. 30 year Treasury bond at a 2.26% yield makes little sense. Ditto for a 10-year yield under 1.50%. This almost feels particularly painful when you consider that bond yields have hit lows seen just once in roughly the last sixty years. The only thing worse would be buying European sovereign debt yielding even less. Sure, both are safer than stocks that pay dividends. The issue is that the puny yields just hardly seem worth the effort when you have to also factor in taxes into the matter.

The Jefferies research team has put out a list of Buy rated stocks with outstanding yields. In fact, some of these even come with 8% yields or yield-equivalent payouts. While more suited for aggressive income accounts, we found four that look fairly valued and make sense in what could be a long term low yield environment.

AmeriGas Partners

This outfit is a solid play on the propane industry. AmeriGas Partners LP (NYSE: APU) has the advantage of having a very large propane footprint. Propane usually trades at almost twice the price of spot natural gas. The consumer is often in a rural or in some cases, outlying area, and there is no major competition to speak of. AmeriGas operates as a retail and wholesale distributor of propane gas, and related equipment and supplies in the United States. It serves approximately 2 million residential, commercial, industrial, agricultural, wholesale, and motor fuel customers in 50 states through approximately 2,500 propane distribution locations.

Unlike other master limited partnerships, this company is not constantly going to the equity markets to raise capital, and that is a big plus for unit-holders, given the current situation in the energy sector. While much better than earlier in the year, the less dilution and units outstanding to cover on the distribution, the better.

AmeriGas investors are paid a very rich 8.1% distribution. The Jefferies price objective is set at $50, and the Thomson/First Call consensus target is posted at $43.50. AmeriGas closed Tuesday at $46.41. Remember that MLP distributions can contain return of capital.

The Blackstone Group L.P.

This top money management company makes solid sense for aggressive income investors. The Blackstone Group L.P. (NYSE: BX) provides financial advisory services to its clients. It provides its services to public and corporate pension funds, academic, cultural, and charitable organizations. The firm manages separate client focused portfolios. Blackstone also launches and manages private equity funds, real estate funds, funds of hedge funds, and credit-focused funds for its clients. It invests in private equity, public equity, fixed income, and alternative investment markets.

Blackstone investors are paid an outstanding 8.9% distribution. The Jefferies price objective for the stock is $31, and the consensus is set higher at $33.07. Shares closed Tuesday at $23.86.

Energy Transfer Partners, L.P.

This outfit is still offering investors a top quality distribution and entry point. Energy Transfer Partners, L.P (NYSE: ETP) currently owns and operates approximately 35,000 miles of natural gas and natural gas liquids pipelines. ETP also owns 100% of Panhandle Eastern Pipe Line Company, LP (the successor of Southern Union Company) and a 70% interest in Lone Star NGL LLC, a joint venture that owns and operates natural gas liquids storage, fractionation and transportation assets.

Energy Transfer shareholders are paid a huge 10.77% distribution. The Jefferies price objective is $46, and the consensus price target is set at $41.13. Shares closed Tuesday at $39.17.

Triangle Capital

This is a top business development company or BDC that make sense for aggressive investors. Triangle Capital Corporation (NYSE: TCAP) is a BDC specializing in private equity and mezzanine investments. It focuses on leveraged buyouts, management buyouts, ESOPs, change of control transactions, acquisition financings, growth financing, and recapitalizations in lower middle market, mature, and later stage companies. The firm prefers to make investments in many business sectors including manufacturing, distribution, transportation, energy, communications, health services, restaurants, media, and others. It primarily invests in companies located throughout the United States, with an emphasis on the Southeast and Midatlantic.

While the company recently cut its payout 17% in May that bodes well for new shareholders at it is very unlikely they will have another cut anytime soon. In addition, the company is currently earning more in investment income than they are paying out in distributions by a large margin. Triangle shareholders are paid a 9.63% distribution. The Jefferies price target is posted at $20, and the consensus is at $20.77. The shares closed the day Tuesday at $18.69.

Four big yielding ideas that make sense for aggressive accounts looking for some growth, but focusing on outstanding distributions. While not suitable for all, the upside here, especially with most of the market selling apparently passed for now looks solid.

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