5 Analyst Favorite Stocks Include REITs That Pay Solid Dividends and Fight Inflation

The Residential Lending segment operates a mortgage loan conduit that acquires residential loans from third-party originators for subsequent sale, securitization or transfer to its investment portfolio. This segment also offers derivative financial instruments to manage risks associated with residential loans.

The Business Purpose Lending segment operates a platform that originates and acquires business purpose loans, such as single-family rental and bridge loans for subsequent securitization or transfer into its investment portfolio.

The Third-Party Investments segment invests in residential mortgage-backed securities issued by third parties, as well as in K-Series multifamily loan securitizations and SLST reperforming loan securitizations. This segment also offers servicer advance and other residential and multifamily credit investments.

The company qualifies as a REIT for federal income tax purposes, and it intends to distribute at least 90% of its taxable income as dividends to shareholders.

Shareholders pocket a 5.89% distribution. Raymond James has set a $16.50 price target. The $15.25 consensus is closer to Monday’s closing trade for Redwood Trust stock of $13.25 per share.

Valero Energy

This Wall Street favorite is a solid energy play for conservative investors looking for safer ideas. Valero Energy Corp. (NYSE: VLO) is one of the largest independent petroleum refining and marketing companies in the United States. It is based in San Antonio, Texas; owns 13 refineries in the United States, Canada and Europe; and has a total throughput capacity of around 2.5 million barrels per day.

Valero also is a joint venture partner in Diamond Green Diesel, which operates a renewable diesel plant in Norco, Louisiana. Diamond Green Diesel is North America’s largest biomass-based diesel plant.

Valero sells its products in the wholesale rack or bulk markets in the United States, Canada, the United Kingdom, Ireland and Latin America. Approximately 7,400 outlets carry Valero’s brand names.

Investors receive a 5.36% dividend. The Raymond James price target on Valero Energy stock is $95. The consensus target is $86.76, and shares were last seen trading at $73.13.

While none of these stocks will soon be making any massive parabolic moves higher, they are safer ideas for nervous investors concerned about the potential for inflation to wreak havoc on the economy in 2022. Remember that REIT distributions can contain return of principal.

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