2 compelling dividends with a yield of at least 8%; Oppenheimer said “buy”
The crises of the past year-the COVID pandemic, the social blockade, and the economic shock-are gradually decreasing, which is a good thing. However, the post-crisis crisis is spreading. It is natural to compare the current economic crisis with the “Great Depression”
; 12 years ago, but as Oppenheimer’s chief investment strategist John Stoltzfus pointed out, “consider the differences between the causes of the financial crisis. About twelve years ago The major financial crisis… and the current crisis… No wonder, compared with the same period last year, the situation is not bad. There is still much to be revealed about the exit and consequences of the epidemic. The crisis is about to take shape…” It is believed that although economic data has suffered some setbacks, it is generally elastic. The market is on the rise, as Stoltzfus said, “…In our opinion, for investors who have the appropriate tolerance for risk and are patient, there are more opportunities than Risk.” Considering Stoltzfus’ prospects, we want to take a closer look at the two stocks that received warm applause from Oppenheimer stock analysts. Using TipRanks’ database, we learned that both have the same characteristics: a consensus rating of “Strong Buy” by a team of Wall Street analysts and a reliable dividend of at least 8%. Let us see what Oppenheimer has to say about this. Owl Rock Capital (ORCC) We will start with Owl Rock Capital, which is one of the many professional financial companies in the financial industry. These companies usually live in the middle-market financial sector, where they provide capital for acquisitions, recapitalization, and general operations to middle-market companies that do not necessarily have other sources of credit. Owl Rock’s investment portfolio includes investments in 119 companies, totaling $11.3 billion. Of these investments, 96% are senior secured loans. Owl Rock reported its fourth quarter and full year results at the end of February. The company’s fourth-quarter net income was $180.7 million, or 46 cents per share. This is an increase of 27% from 36 cents per share in the fourth quarter of 2019. Investment income also increased, this quarter was 221.3 million US dollars, a year-on-year increase of 9%. The investment income for the whole year was US$803.3 million, an increase of more than 11% over 2019. In addition, the company’s assets under management at the end of 2019 exceeded $27 billion. Dividend investors are particularly interested. Owl Rock’s board of directors declared a dividend of 31 cents per common share for the first quarter. The payment will be made in mid-May and will match the company’s previous regular dividend payments. The annualized interest rate of $1.24 produces a 9% yield. Also of interest in Owl Rock’s dividend is the company’s sixth and final special dividend in the past 12 months-related to the 2019 IPO. In 2019, ORCC distributed a special dividend of 80 cents and regular dividends. Since its listing in the summer of 2019, the company has maintained a reliable dividend payout that can meet regular and special payments. Owl Rock has attracted the attention of Oppenheimer’s Mitchel Penn, who believes that the company is a reliable investment that can exceed expectations. “We expect 8% and 9% earnings per share in 2021 and 2022, respectively, at US$1.22 and US$1.34. We expect Owl Rock to earn 8.5% ROE, and given that the estimated cost of equity capital is 8.5% , We calculated the fair value to be 15 U.S. dollars per share or 1.02 times the book value.” “To achieve an 8.5% return on equity, ORCC would either need to increase its portfolio return from 8.4% to 9.0%, or it would need to increase The leverage ratio has increased from 1x to 1.2x. It is also possible to have both. Our model takes into account the increase in fees from a fixed 75 basis points to 1.5% of the basic fee of assets and an incentive fee of 17.5% of income Payne rated the stock as “outperforming the market” (ie, “buy”), and its $15 price target indicates that the stock’s current upside potential is 7%. However, the dividend yield is the real attraction (to view Penn’s history, click here.) ORCC’s stock has attracted 3 comments recently, and all of them are “buys”-this makes a “strong buy” “The consensus ratings are the same. The stock is priced at $13.98 per share, with an average target price of $14.71. (See ORCC stock analysis on TipRanks) Fidus Investment Corporation (FDUS) insists on using the mid-market financial sector, let’s take a look at Fidus Investment. The company, like Owl Rock, provides capital access to smaller companies, including access to debt solutions. Fidus’ investment portfolio is mainly based on priority secured debt and mezzanine debt. The value of the companies Fidus invests in is between US$10 million and US$150 million. In the fourth quarter, around 2020, Fidus invested in 7 new companies that invested in its portfolio, with a total investment of US$103.9 million. The company’s investment portfolio in the quarter brought an adjusted net investment income of $10.7 million, or 25 cents per common share. This is a year-on-year increase of 3 cents, or 13%. For the full year of 2020, adjusted net income will increase from 35.3 million U.S. dollars in 2019 to 38 million U.S. dollars. Earnings per share in 2020 are US$1.55, a year-on-year increase of 7.6%. Over the past year, Fidus’ stock price has been growing steadily. Since April last year, the stock has risen by 153%. This allowed FDUS’s stock to appreciate steadily to supplement dividend returns. These dividends are substantial. The company announced the payment of the 1Q21 payment in February, and the payment was made on March 26. The regular payment yield of 31 cents per common share is 8%, and the annualized expenditure is $1.24. In addition to this regular payment, Fidus also announced a special dividend of 7 cents per share, almost twice the special dividend of 4 cents in the previous quarter. Turning now to Opduheimer’s report on Fidus, we find that five-star analyst Chris Kotowski is satisfied with the company, enough to rate it outperform (ie “buy”), with a target price of $18. This figure indicates that there is 15% upside in a year. (To view Kotowski’s track record, click here.) [are] At the end of the year, debt investment was basically stable, and interest income was consistent with the previous quarter and our estimates… What makes us most happy is that at the end of the year, we have only a small amount of unscheduled payments. In one year, a piece of credit suffered a major loss. This credit was confirmed in the fourth quarter of FY20, but equity gains also appeared in the first quarter of FY20, which offset this loss, and in our opinion The fact that our net loss at the end of the year is very small proves the gains of FDUS. business model. “Regarding Fidus’ dividend policy, maintaining basic payments and increasing special dividends where possible, Kotovsky simply wrote: “We think variable dividends make sense. “Like ORCC above, this stock has 3 consensus ratings of “Strong Buy” that have been consistently positively reviewed recently. Fidus’s stock price is $15.70, and its average price target of $17.17 indicates a 9% increase in the stock price. Space. (See FDUS stock analysis on TipRanks) To find a good idea for dividend stocks that are traded at attractive valuations, please visit TipRanks’ “Best Buy Stocks”, a newly launched tool that can be Combines all the equity insights of TipRanks. Disclaimer: The views expressed in this article are those of unique analysts only. The content is for reference only. It is very important to conduct your own analysis before making any investment.