3 “Strong Buy” Dividend Stocks Yielding at Least 5%

Remember the movie ‘The Perfect Storm’? Three weather fronts collided off the coast of New England, and George Clooney’s poor fishing boat never stood a chance. Hopefully, today’s economies will do better against the headwinds that are rapidly spinning into a perfect political-economic storm.

The storm got started as 2022 opened up. The bull run we had last year came to sudden halt, markets started turning down, and by the end of January the NASDAQ was in correction territory with the S&P not far behind. Supply chain shocks and stubbornly high inflation were cast as the villains. Pundits started talking about the stagflation of the Carter years.

Things failed to improve in February, as markets just couldn’t gain traction, and at the end of that month Russia invaded Ukraine, adding geopolitical tension, military conflict, and a looming wheat shortage to the mix. Now the specter of stagflation is closing in, a wicked combination of high inflation and low to no GDP growth. Ripple effects from Western financial sanctions on Russia are putting added pressure on global economies.

Watching from Morgan Stanley, equity strategist Michael Wilson acknowledges the problem head-on, writing, “Downside risk remains most acute over the next 6-8 weeks. We are firmly in the grasp of a bear market that is incomplete in both time and price.”

In this situation, investors will naturally gravitate toward defensive stocks – and that will quickly draw attention to the high-yield dividend payers. Dividend stocks offer a degree of safety by paying out an income stream whether markets move up or down, and that will help to insulate investors when the main indexes turn south.

With this in mind, we used the TipRanks' database to pinpoint three stocks that meet a profile: a Strong Buy rating from Wall Street’s analysts and a dividend yield of 5% or better -- more than double the average dividend yield found among S&P-listed companies. Let’s take a closer look now.

Alpine Income Property Trust (PINE)

We’ll start with a commercial real estate investment trust (REIT), Alpine Income Property. Based at Daytona Beach, Florida, Alpine has a wide-ranging portfolio of properties, spread across most regions of the lower 48 states – the exception is the Rocky Mountain region. The company’s operations are focused on Texas, where it has 23 properties, with the 11 properties in Ohio coming in second. Overall, Alpine boasts 113 properties totaling 3.3 million square feet – and best yet, a 100% occupancy rate.

The company has seen its revenues rise steadily over the past couple years, regardless of the pandemic, and the 4Q21 result, $9.47 million, was up 75% year-over-year. Diluted EPS in the quarter, at 64 cents, was orders magnitude higher than the 2 cents reported in 4Q20 – and simply blew away the 2-cent EPS forecast.

These strong quarterly results gave Alpine confidence to keep up its dividend. The payment, declared for 27 cents per common share, is payable at the end of this month. Annualizing to $1.04, it gives a strong yield of 5.6%. Of importance to dividend investors, the company has raised the dividend payment 5 times in just the last two years.

This commercial REIT is covered by BTIG analyst Michael Gorman, who wrote of it recently: “As a small-cap REIT early on in its growth cycle, Alpine has demonstrated its ability to generate value from smaller, one-off deals that are more insulated from private capital. Alpine grew FFO/sh 30% last year, and, despite the dilution from Office dispositions in 1H22, we expect the portfolio should again generate meaningful adjusted growth for shareholders this year."

"While rising rates generally have an outsized impact on the net lease REIT sector's ability to grow, we expect investors could turn to well-levered value names such as PINE, which currently trades at a 21% relative discount despite outperforming the peer group by 2100 bps last year," the analyst added.

To this end, Gorman rates PINE stock a Buy, while his $23 price target implies a 12-month upside potential of ~23%. Based on the current dividend yield and the expected price appreciation, the stock has ~28% potential total return profile. (to watch Gorman’s track record, click here)

Wall Street, generally, likes this stock, as shown by the 4 to 1 breakdown of Buy versus Hold ratings, backing the Strong Buy consensus view. The stock is trading for $18.88 and its $22.20 average target indicates room for ~18% gain from that level in the year ahead. (See PINE stock analysis on TipRanks)

Global Medical REIT (GMRE)

The next stock we’re looking at, another REIT, specializes in medical properties and facilities. Global Medical has a portfolio comprising 167 buildings, with 298 leases. The bulk of the company’s operations are in the Midwest and Southeast regions, with 50 and 51 properties respectively. The total portfolio boasts over 4.3 million square feet of leasable space.

In the last quarter of 2021, Global Medical brought in 6 cents per share in total earnings. While below the 7-cent forecast, this result was still triple the 2-cents from 4Q20. At the top line, revenue grew 21% year-over-year to reach $30.3 million. For the full year 2021, Global Medical made an important shift from net loss (of 17 cents per share in 2020) to a 19-cent EPS profit.

The company has an 8-year history of keeping reliable dividends, and that has kept its payment steady at 20 cents per common share in the last two years, despite the pandemic crisis. The last declaration was in December, and paid out in January. The annualized payment of 80 cents per common share gives GMRE a solid dividend yield of 5.3%.

Covering the stock for Colliers Securities, 5-star analyst Barry Oxford sees GMRE as a company in a sound position to keep bringing returns to shareholders.

"The company continues its strategy of investing in off-campus, purpose-built, medical facilities such as MOBs, specialty hospitals, IRFs and ASCs, that are geographically situated to take advantage of the aging U.S. population and the decentralization of healthcare. We believe their portfolio should continue to perform well in the short to medium term," Oxford explained.

Furthermore, Oxford sees the current valuation as an attractive entry point, writing: "The company has less than average multiple in the healthcare sector 15.3x versus 17.9x for the group. Given the company's conservative balance sheet, above average growth and excellent assets, we believe a premium multiple is warranted."

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