Investing
4 Mid-Cap Stocks With 6% to 10% Yields and Upside Expected
August 2, 2016 8:05 am
Last Updated: January 13, 2020 5:02 am
Investors have to be wondering just what to think about the stock market these days. Despite all the negative international catalysts and despite so much uncertainty, even in the United States, stocks have hit all-time highs. Dividends have been responsible for so much of the total returns in recent years.
Investors love dividends. More than half of the Dow stocks, some 21 of 30, outyield the 30-year Treasury note’s 2.2% yield. Still, there are some companies that pay 5%, 6% and even 8% or 10% yields to their investors. These are generally more obscure or are complicated companies. Still, there are some in the 6% and higher category that are still viewed favorably for upside by analysts and investors alike.
24/7 Wall St. has pulled apart the dividend-paying universe for the stocks with yields north of 6%. We did not include the master limited partnerships (MLPs), and we were careful in not allowing certain aspects of the real estate investment trust (REIT) market to be included due to earnings and distribution volatility.
The screen from 24/7 Wall St. focused on stocks with a market cap of $2 billion or more. These companies are pretty much all in the lower mid-cap level due to have market capitalization rates of under $10 billion.
Each company had to have enough dividend support with earnings from operations or cash flows to support the dividend. Two were income and two were from cash flow. Of the two here from cash flows, analysts do see those dividends remaining static ahead.
These companies also had to have an average daily trading volume of at least 200,000 shares. That may seem easy enough, but too many companies have trading volume of under 50,000 and that can create a sense of illiquidity.
Each company screened had to have a dividend yield of 6% or more. That being said, the lowest yield was 6.7% – with one at 8% and one at almost 10%.
These also had to a have a consensus analyst price target from Thomson Reuters that was above the current share price. That doesn’t mean that analysts are universally higher, but it at least means that the general lot of analysts is more positive than negative. Also included is a brief description on each company and additional color.
ALLIANCE-BERNSTEIN
AllianceBernstein Holding L.P. (NYSE: AB) keeps showing up in dividend screens north of 6%, but the stock has not rallied as the public does not want to pay up for traditional asset managers whose assets are not dominated by exchange traded funds (ETFs). It pays a $1.60 annualized per share dividend, and while the last report barely hit that 40 cent target, the reality is that analysts see $1.77 in earnings per share (EPS) in 2016 and $1.99 EPS in 2017.
With shares at $23.75, the yield is 6.7%, and the market cap is $2.3 billion. AllianceBernstein has a consensus analyst target price of $25.00 and a 52-week trading range of $16.11 to $29.49.
One issue that could be viewed either way is that AllianceBernstein called off a deal to acquire a fund from the hedge fund manager Visium Asset Management. The firm is also now higher than the $24 target assigned by Merrill Lynch back in March when it raised its rating to Buy from Neutral.
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