Ares Capital Corp. (NASDAQ: ARCC) has a consensus analyst target that is above the share price, but the business development company (BDC) is not at all universally loved. Some analysts and investors even expect a dividend cut. With shares at roughly $15.25, the $1.52 annualized payout has a yield of 9.9%. The 52-week range is $11.01 to $16.22, and the company’s market cap is about $4.8 billion. The consensus price target is $16.63.
Ares Capital is specialty finance shop for debt and equity financing in the middle market sector. This is classified as BDC, a segment that has been discounted by the market of late. That being said, analysts do see the earnings matching or exceeding that $0.38 current payout. The company represents in its press releases that it is the largest BDC by total assets and market capitalization.
The entire BDC class has historically been neglected by traditional analysts. Jefferies was recently positive here, and its $17.50 price target was based on Ares’s own origination platform, noting that Ares has a diversified portfolio totaling $9.1 billion at fair value.
Frontier Communications Corp. (NASDAQ: FTR) is a company that is an exception to the rule of earnings per share exceeding the dividend. This is a cash flow story, and the company has suggested that it is supportable, and analysts are predicting that the dividend will stay static at $0.42 per share on an annualized basis ahead.
Trading at $5.15, Frontier has a dividend yield right at 8% and its market cap is $6 billion. The consensus target price is $6.00, and the 52-week range is $3.81 to $5.85.
Frontier is a battleground stock because so many investors have a hard time understanding the dividend and cash flow when it has losses. It is always actively shorted, with the latest short interest data showing a whopping 166 million shares short. UBS recently said that Frontier should be a $7 stock. Just keep in mind that the lowest price target is all the way down at $4.
COMMUNICATIONS SALES & LEASING
Communications Sales & Leasing, Inc. (NASDAQ: CSAL) is technically a REIT, but it is in the communications infrastructure and wireless infrastructure solutions industry. If this one is not that familiar by name, note that it was formed via a spin-off of Windstream Holdings.
Communications Sales & Leasing recently traded at $30.95 and has a 7.7% yield. Its market cap is $4.7 billion, its consensus price target is $31.43 and its 52-week range is $15.13 to $31.24.
This REIT was mentioned last because of the limited trading history and due to it being covered less frequently than other telecom and REIT players. Its 5.1 million shares in the short interest was the highest short interest reading since June 29.