Menu

3 “Strong Buy” Stocks with Over 9% Dividend Yield

Yahoo Finance

Markets ended 2020 on a high note, and have started 2021 on a bullish trajectory. All three major indexes have recently surged to all-time highs as investors seemingly looked beyond the pandemic and hoped for signs of a rapid recovery.

Veteran strategist Edward Yardeni sees the economic recovery bringing its own slowdown with it. As the COVID vaccination program allows for further economic opening, with more people getting back to work, Yardeni predicts a wave of pent-up demand, increasing wages, and rising prices – in short, a recipe for inflation.

“In the second half of the year we may be on the lookout for some consumer price inflation which would not be good for overvalued assets,” Yardeni noted.

The warning sign to look for is higher yields in the Treasury bond market. If the Fed eases up on the low-rate policy, Yardeni sees Treasuries reflecting the change first.

A situation like this is tailor-made for defensive stock plays – and that will naturally bring investors to look at high-yield dividend stocks. Opening up the TipRanks database, we’ve found three stocks featuring a hat trick of positive signs: A Strong Buy rating, dividend yields starting at 9% or better – and a recent analyst review pointing toward double-digit upside.

CTO Realty Growth (CTO)

We’ll start with CTO Realty Growth, a Florida-based real estate company that, last year, made an exciting decision for dividend investors: the company announced that it would change its tax status to that of a real estate investment trust (REIT) for the tax year ending December 31, 2020. REITs have long been known for their high dividend yields, a product of tax code requirements that these companies return a high percentage of their profits directly to shareholders. Dividends are usual route of that return.

For background, CTO holds a varied portfolio of real estate investments. The holdings include 27 income properties in 11 states, totaling more than 2.4 million square feet, along with 18 leasable billboards in Florida. The income properties are mainly shopping centers and retail outlets.

During the third quarter, the most recent reported, CTO sold off some 3,300 acres of undeveloped land for $46 million, acquired two income properties for $47.9 million, and collected ~93% of contractual base rents due. The company also authorized a one-time special distribution, in connection with its shift to REIT status; its purpose was to put the company in compliance with income return regulation during tax year 2020. The one-time distribution was made in cash and stock, and totaled $11.83 per share.

The regular dividend paid in Q3 was 40 cents per common share. That was increased in Q4 to $1, a jump of 150%; again, this was done to put the company in compliance with REIT-status requirements. At the current dividend rate, the yield is 9.5%, far higher than the average among financial sector peer companies.

Analyst Craig Kucera, of B. Riley, believes that CTO has plenty of options going forward to expand its portfolio through acquisition: “CTO hit the high end of anticipated disposition guidance at $33M in 4Q20, bringing YTD dispositions to nearly $85M, with the largest disposition affiliated with the exercise of a tenant’s option to purchase a building from CTO in Aspen, CO. Post these dispositions, we estimate >$30M in cash and restricted cash for additional acquisitions, and we expect CTO to be active again in 1H21.”

To this end, Kucera rates CTO a Buy along with a $67 price target. At current levels, his target implies a 60% one-year upside potential. (To watch Kucera’s track record, click here)

Overall, CTO has 3 reviews on record from Wall Street’s analysts, and they all agree that this stock is a Buy, making the analyst consensus of Strong Buy unanimous. The shares are priced at $41.85, and their average price target of $59.33 suggests room for ~42% growth in the year ahead.

To view the full article click here

In $97M deal, Consolidated sells control of Daytona land holdings

A Chicago area institutional investor is the new majority owner of the 5,300 acres of undeveloped land in Daytona’s LPGA area.

DAYTONA BEACH — In a move that took Daytona Beach city officials by surprise, Consolidated-Tomoka Land Co. announced late Wednesday its sale of a controlling interest in the remaining undeveloped land it owns here to a Chicago area-based investment group.

“I just got an email (from Consolidated-Tomoka) saying that they sold (a 66.5 percent stake in) all 5,300 acres in Daytona Beach for $97 million to Magnetar Capital,” City Commissioner Rob Gilliland announced at the end of Wednesday night’s commission meeting. “That’s a huge deal to us.”

Gilliland’s comments, which can be heard on the video recording of the meeting on the city’s website, appeared to stun the other commissioners, including Mayor Derrick Henry.

Mark Patten, the chief financial officer for Daytona Beach-based Consolidated-Tomoka, in a phone interview, said the sale is only of the “raw” land that the company owned in the area on both sides of the Interstate 95/LPGA Boulevard interchange, and did not include its properties in downtown Daytona Beach or on A1A or West International Speedway Boulevard.

Consolidated-Tomoka continues to be the sole owner of the former First Baptist Church property in downtown Daytona Beach, the six acres along A1A that it leases to Landshark Bar & Grill and the new Crabby’s Oceanside restaurant, as well as the recently vacated former Barnes & Noble property on West International Speedway Boulevard, across from Daytona International Speedway, Patten confirmed.

And while Evanston, Illinois-based Magnetar will now has final say on what happens to the 5,300 acres, Consolidated-Tomoka will continue to manage the land, Patten said.

“We will work with them on how they want to manage the portfolio,” he said.

Consolidated-Tomoka CEO John Albright in a news release described the sale of the controlling stake to Magnetar as a “transformative transaction (that) unlocks significant value from our remaining legacy holdings in Daytona Beach.”

Click here to view the full article