Artificially low interest rates by central banks around the world have made it very challenging for income-focused investors to find attractive yield. With that in mind, we have highlighted Nine (9) Big Yield Stocks that we believe offer very attractive dividend payments and significant price appreciation potential. For your consideration, here is the list.
9. Frontier Communications (Telecom, 8.0%)
Frontier Communications (FTR) is not a glamorous company, but its dividend is big (8.0%), and its shares are cheap. In particular, we like Frontier because it has carved out a niche for its business, it has been easily covering its dividend payments, its current valuation is attractive, and its recent acquisition of Verizon assets will give the company the cash flow needed to pay down debt and ultimately position itself for more growth. You can read our full Frontier Communications write-up here.
8. Main Street Capital (BDC, 6.9%)
Main Street Capital (MAIN) announced positive first quarter earnings this past week, and declared that it will maintain its big monthly dividend payment, currently equal to a 6.9% yield on an annualized basis. And factoring in the company’s semiannual supplemental dividend payments then the yield jumps to over 9%. Valuing the Business Development Company (BDC) based on its monthly dividend alone (excluding the semiannual supplemental dividends), Main Street is worth significantly more than its current market price suggests; and if you factor in the possibility of supplemental dividends, the strong internal management team, the diversified risk exposures and the low volatility, then Main Street becomes an extremely attractive option for long-term income-hungry investors. You can read our full Main Capital report here.
7. Liberty Property Trust (REIT, 5.3%)
Liberty Property Trust is a big dividend REIT (5.3% yield) that has already climbed over 25% since we first highlighted it back in February. However, we believe it still has significantly more upside potential ahead. Liberty is greatly underappreciated by the market because it cut its dividend back during the financial crisis (and hasn’t increased it since then), and because it is in the middle of a multi-year transition to change its focus to industrial properties (and out of suburban office properties). We believe the transition is wise, LPT still offers more upside than many of its peers, and the company may resume dividend increases within the next year. You can read our full Liberty Property Trust write-up here.
6. Plains All American (MLP 11.4%)
Plains All American Pipeline (PAA) is a high-yield (11.4%) Master Limited Partnership (MLP) that has declined more than 50% in the last year. A basic distribution discount model suggests the market is already pricing in a 40% distribution cut. However, we believe a distribution cut of this magnitude (or one at all) is unlikely given PAA’s high level of energy price agnostic fee business, the credit worthiness of its counterparties, and the fact that it is currently well capitalized. We also believe PAA has significant price appreciation potential, it will continue to pay attractive distributions, and it could be a valuable addition to the higher risk portion of a diversified, income-focused, investment portfolio. Technically, this one is not a stock (it’s an MLP) and it pays distributions (not dividends). Regardless, we believe it’s a terrific opportunity, and you can read our full report on Plains here.
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