The 2 big dividend yields are at least 7%; Raymond James says “buy”
For investors looking for strong dividend payers, some market sectors are known for their high-yield dividends, which makes them a logical place to start looking for reliable payers. In the hydrocarbon industry, oil and gas production and mainstreaming are one of them. The industry’s essential products-our world depends on oil and its by-products to survive. Despite the high administrative costs of energy companies, they still have a market for deliverables, which brings ready cash flow – among other things, cash flow can be used to pay dividends. All of this led the investment firm Raymond James to seek the midstream oil and gas companies on the list to find dividend stocks with growth potential. “We expect [midstream] The group̵
7;s average EV/EBITDA multiple this year will increase by approximately 1 times. Raymond James analyst Justin Jenkins (Justin Jenkins) pointed out that this is equivalent to a stock value fluctuating about 20-25%. Jenkins outlined a series of points that led to the midstream recovery in 2021, including the transition from a “lock-in” policy to a “reopening” policy. As the economy picks up, the development of commodities has been generally boosted; a political view, some of the more traditional centrists in the District of Columbia are unlikely to vote for anti-oil, green New Deal policies; finally, due to relatively low stock prices, TipRanks database Shows two midstream companies that caught the attention of Raymond James – these stocks have a clear set of attributes for all the above points: a dividend yield of 7 MPLX LP (MPLX) MPLX was a marathon from eight years ago An independent midstream entity spun off by an oil company that acquires, owns and operates a series of midstream assets, including pipelines, docks, refineries and river transportation. The main business area is in the north of the Rocky Mountains, the Midwest and the south to the Gulf Coast. The revenue report for the “Corona Year” in 2020 shows the potential value of intermediate oil and gas flows. The company reported revenue of $2.18 billion in the first quarter, $1.99 billion in the second quarter, and $2.16 billion in the third quarter. Revenue in the first quarter became negative, but it was positive in the next two quarters. The third quarter report also showed that $1.2 billion in net cash was generated, enough to pay the company’s dividend distribution. MPLX pays 68.75 cents per common share every quarter, or annualized US$2.75, which gives dividend yields as high as 11.9%. The company has a range of diversified midstream businesses and strong cash-generating capabilities, all of which led Raymond James’ Justin Jenkins to elevate its stance on MPLX from “neutral” To the “better than the market” (ie “buy”) factor. His target stock price is $28, which means that the stock’s one-year upside potential is 22%. (To watch Jenkins’ track record, click here.) Jenkins supports his position, writing: “Given the number of “boxes” that MPLX stories can check, it is not surprising that this has become the focus of controversy. The ever-changing G&P trend, the expected refining/finished product recovery, this story has broken into many operating boxes-while also crossing some financial debates… We also believe that reliable 2020 financial performance should give long-term confidence…” According to Wall Street, other analysts are usually on the same page. In the past three months, 6 buys and 2 positions have been allocated, and the consensus rating is strong buy. In addition, the average price target is US$26.71, and the upside is about 17%. (See MPLX stock analysis on TipRanks) The next stock of DCP Midstream Partners (DCP) is located in Denver, Colorado, and is one of the largest midstream natural gas operators in the United States. DCP controls a network of natural gas pipelines, hubs, storage facilities, and factories that extend between the Rocky Mountains, Mid-Continent and Permian Basin production areas, and the Gulf Coast of Texas and Louisiana. The company also operates in the Antrim Gas District in Michigan. In the most recent reporting quarter (the third quarter of 2020), DCP collected and processed 4.5 billion cubic feet of natural gas and 375,000 barrels of natural gas liquids every day. The company also reported generating net cash of US$268 million, of which US$130 million was free cash flow. The company reduced its debt burden by US$156 million in the quarter and operating costs fell by 17% year-on-year. All this enables DCP to maintain its dividend at 39 cents per share. At the beginning of the corona crisis, the company had to cut this amount, but only once. The recently announced 20Q4 dividend is the fourth consecutive payment of 39 cents per common share. The annualized interest rate of $1.56 yields a considerable return of 7.8%. This is another stock that has been upgraded by Raymond James. Analyst James Weston upgraded the stock from “neutral” to “outperform” (ie, “buy”), and set a target price of $24 to imply that it will be in a year The growth rate over time is 20%. “[We] It is expected that DCP will release another stable quarter due to continuous improvement in NGL prices, volatility in the NGL market and positive upstream trends. We will not use the current propane price and hope to establish a stable but more standardized pricing system in the next 12-18 months. We believe that this will create a favorable operating environment for DCP’s cash flow, which is currently not reflected in Street estimates. “Weston pointed out. All in all, the analyst consensus rating for DCP’s “moderate buy” is based on the last 7 comments, and the ratio between “buy” and “hold” is 4:3. The company’s stock issuance The price is $19.58, and its average target stock price is $23, which means that the stock has about 15% upside. (See the DCP stock analysis on TipRanks) Find dividends that trade at attractive valuations For great ideas on stocks, please visit TipRanks’ “Best Stocks to Buy”, a newly launched tool that combines all TipRanks stock insights. Disclaimer: The views expressed in this article are only those of the main analyst The content is for reference only. It is very important to conduct your own analysis before making any investment.