Seeking At Least 9% Dividend Yield? Analysts Suggest 2 Dividend Stocks to Buy
Saturday, Nov 9, 2024 6:00 am ET
Investors seeking high dividend yields should look no further than two stocks recommended by analysts: CTO Realty Growth (CTO) and Holly Energy Partners (HEP). Both stocks offer attractive yields and strong growth potential, making them excellent choices for income-oriented investors.
CTO Realty Growth, a Florida-based real estate company, announced its shift to REIT status in 2020. This change allowed the company to increase its dividend payout to a yield of 9.5%, significantly higher than the average among financial sector peer companies. CTO's diverse portfolio of income properties and leasable billboards provides a stable revenue stream, supporting its high dividend yield. Analyst Craig Kucera of B. Riley rates CTO a Buy with a $67 price target, indicating a 60% one-year upside potential.
Holly Energy Partners, a midstream transportation player in the energy sector, boasts a dividend yield of 10%. The company's operations in the Colorado-Utah and New Mexico-Texas-Oklahoma regions generate steady cash flow, backing its high-yielding payout. Holly reported distributable cash flow of $76.9 million in 2020, up more than $8 million year-over-year, supporting a 35-cent dividend payment per regular share, or $1.40 annualized. Well Fargo analyst Michael Blum notes that the distribution is sustainable at this level, as lost revenue is offset by inflation.
Both CTO and HEP have shown strong performance in comparison to the broader market and other dividend stocks. CTO's stock price has increased by over 50% in the past year, outperforming the S&P 500's 20% gain. HEP's stock price has risen by over 30% in the same period, also outperforming the broader market. Additionally, both stocks have dividend yields significantly higher than the S&P 500's 1.5% and the 10-year Treasury note's 4.1%.
Investing in dividend stocks with yields above 9% can be a lucrative strategy, offering high income and potential capital appreciation. CTO Realty Growth and Holly Energy Partners are two stocks that analysts recommend for their high yields and strong fundamentals. Both companies have shown strong performance compared to the broader market and other dividend stocks, making them attractive options for income-oriented investors.