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Investment firm Morgan Stanley had set a 3,900 year-end target for the S&P 500 – and it is already out of date. The index stands at 4,196, 7.5% above Morgan Stanley’s target. Since the start of the year, despite a few volatile trades, the S&P is up nearly 12%. Mike Wilson, chief investment officer and U.S. equity strategist for Morgan Stanley, has taken a deep dive into the current state of the market and believes stocks have peaked – at least for now. “We continue to believe that valuations are too high and will adjust significantly lower over the next six months … We have exited the start of this recovery cycle … the reopening of the economy is likely to ” exert upward pressure on costs and downward pressure. on the margins. This will come as a surprise to the now high earnings estimates, in our opinion, ”Wilson explained. Markets don’t get any help from fiscal policy either. Wilson notes that the Biden administration is pushing to raise the corporate tax rate to 28% and, while it is likely to compromise at a slightly lower rate, Wilson sees the increase in corporate taxes as a headwind for the S&P. For retail investors, this environment points to defensive stocks, to isolate the portfolio from stock depreciation, which will naturally bring up the topic of dividend-paying stocks. Paying the dividend provides a steady stream of income, which can offset declining equity gains when markets plateau. With that in mind, we used the TipRanks database to focus on two stocks that have high dividend yields – in the range of 7%. Each share also has a Strong Buy consensus rating; let’s see what makes them so attractive to Wall Street analysts. Hercules Capital (HTGC) We’ll start with Hercules Capital, a niche business development company – it specializes in venture capital. Hercules provides financing and support to scientific start-up client companies. The company has $ 2.6 billion in assets under management and, in its 18 years in business, has committed $ 11.6 billion in financing to more than 530 clients. For the first quarter of this year, Hercules reported a record level of new debt and equity commitments, at $ 530.9 million. The company had $ 550 million in cash on hand at the end of the quarter and net investment income of 30 cents per share, based on a total of $ 34.6 million. During the quarter, Hercules also declared its regular dividend, at 32 cents per common share. Subsequently, the company added an additional dividend of 7 cents per share, for a total payout of 39 cents in the current quarter. This payment gives a yield of 7.5%. Covering the stock of RBC Capital, 5-star analyst Kenneth Lee writes: “HTGC’s first private credit fund could potentially expand opportunities over time. The pipeline of potential investments looks strong. We continue to focus on HTGC’s specialized niche of direct lending to growth-oriented, technology-driven businesses, well-sustained dividends and above-average ROE generation potential. The analyst added, “We continue to believe that HTGC’s common dividends are well supported; our forecast NII / sh for fiscal 21 and 22 continues to be above the base dividend level. In addition, the 94c / sh of spinoff income provides additional support. ” To that end, Lee rates HTGC an outperformance (i.e. a buy), and his price target of $ 19 implies year-over-year upside potential of around 14%. Based on the current dividend yield and expected price appreciation, the stock has a potential total return profile of around 21%. (To see Lee’s track record, click here) Wall Street analysts are in full agreement here; all 10 recent reviews on HTGC stocks are positive, which is unanimous in the Strong Buy consensus rating. The stock is selling for $ 17.03 and the average price target of $ 18.13 suggests upside potential of around 12%. (See HTGC market analysis on TipRanks) Gladstone Commercial (GOOD) We’ll change gears – but stay in the financials – for our next stock. Gladstone Commercial is a real estate investment trust (REIT) and, as the name suggests, the company is focused on commercial real estate. Gladstone’s portfolio consists primarily of industrial and office buildings, both single-tenant and anchor multi-tenant. The portfolio includes 120 properties in 27 states, with a total of 107 tenants. Gladstone boasts that its property occupancy rate has never fallen below 95% since the company went public in 2003; the current occupancy rate is 95.5%. Another feature of Gladstone’s portfolio is the long-term nature of the leases. This helps to lock in the flow of income, keeping profits stable even when the macroeconomic situation is unstable. Gladstone has seen its quarterly revenue maintain between $ 33 million and $ 34.6 million over the past 5 quarters. In the most recent quarter, 1Q21, Gladstone posted total revenue of $ 34.6 million, the top of that range. The company collected 98% of the rents due during the quarter and renewed leases on more than 192,000 square feet of property, with lease terms ranging from 6.6 to 11.8 years. Importantly for investors, Gladstone also declared its dividend for the quarter. The company pays monthly and in April it reported a payment of 12.5 cents for each of April, May and June. This works out to 37.5 cents per quarter, or $ 1.50 per annualized common share. At this rate, the dividend pays 7.2%. Craig Kucera, 5-star analyst at B. Riley Securities, writes of the company: “GOOD’s occupancy rate is improving and the volume of acquisitions is expected to increase during the remainder of 2021… GOOD’s attention to investing in smaller industrial properties located in secondary markets continues. to enable acquisition returns above the company’s cost of capital and we find the stocks attractive, trading at 100% of our estimate of net asset value… ”Unsurprisingly, Kucera rates good stocks to buy with a goal of price of $ 23, which suggests a 10% increase. (To look at Kucera’s track record, click here) While there are only 3 recent reviews on this stock, all of them are positive, making the analyst consensus rating a strong buy. GOOD has an average price target of $ 23, matching Kucera’s above, and a current trading price of $ 20.92. (See GOOD Stock Analysis on TipRanks) For great ideas for dividend-paying stocks traded at attractive valuations, visit Top Stocks to Buy from TipRanks, a newly launched tool that brings together all the information about TipRanks stocks. Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.