Stock investing ultimately revolves around generating returns. Achieving this goal requires building a strategically curated portfolio focused on value creation. While growth stocks often take center stage, incorporating high-yield dividend stocks can provide stability and bolster overall performance.
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Reliable dividends ensure a regular income stream, and high yields can beat the prevailing interest rates. While dividend stocks are usually considered a defensive stance, the best of these income-sharing equities make a strong supplement to a growth portfolio.
Wall Street’s analysts have always recognized the strengths inherent in dividend stocks, and are not shy about recommending them – especially the high-yield payers.
Against this backdrop, we’ve opened up the TipRanks platform to pull up the details on two high-yield div stocks that have Buy-ratings from the analysts – and are yielding as much as 15%. Let’s see what else makes these two dividend stocks look attractive.
Mach Natural Resources(MNR)
First on our list is a relatively new company to the public markets, Mach Natural Resources. Mach is an independent upstream operator in the North American oil and gas industry, working with a focus on acquiring and developing Mid-Continent natural gas and natural gas liquid reserves, mainly in the Anadarko basin, a hydrocarbon production region that spreads across the Texas panhandle, southern Kansas, and western Oklahoma.
The company’s operational strategy is based on identifying attractive acquisition opportunities that feature sound prospects for exploration and development. Mach follows the identification process by optimizing current production, efficiently drilling the existing inventory, and effectively managing risk. In a recent example of the company’s acquisition strategy, this past October Mach announced its purchase of “certain interests in oil and gas properties, rights and related assets” located in the Kansas parts of the Anadarko basin and in the Ardmore basin in Oklahoma. The company paid $136 million for the assets.
Mach was founded in 2017 and went public in October of last year, in an IPO that raised $190 million in gross proceeds. The company currently has a market cap in excess of $1.6 billion.
Since its IPO, Mach has paid out four quarterly dividends, varying the payment as needed according to conditions in the oil and gas markets. The last declaration, made in November, was for a 60-cent common share payment, which was sent out to shareholders on December 10. At the current rate, the dividend annualizes to $2.40 per share and gives a yield of 15.2%.
This stock has caught the attention of Truist’s energy industry expert Neal Dingmann, who writes appreciatively of Mach’s basic strategy: “The company has found several cheap assets with low rates of decline that provide opportunities for continued stable organic production. In our view, MNR has benefited from quickly instituting operational efficiencies on acquired assets resulting in lower costs and improved wells. Over the past 5-years, the company has focused on the Mid-Continent where many attractive acquisition opportunities have existed. We believe the company is currently actively evaluating opportunities across the entire lower 48 depending on where opportunities may arise.”
Looking ahead, Dingmann sees high potential here, in both the dividend and the operational outlook. Summing it up, he says, “The company’s distribution will likely continue to vary making the quarterly payouts dependent on commodity prices among other things. In addition to the solid unitholder return, MNR maintains a healthy balance sheet with a net leverage ratio of just under 1x and no debt maturing in 2024, and only 11% of its total senior notes outstanding that mature in 2025… In our view, the company’s higher distributions relative to industry peers makes MNR’s stock an attractive investment and we thus rate the shares Buy.” (To watch Dingmann’s track record, click here)
Along with his Buy rating on the stock, Dingmann sets a price target of $23, pointing toward an upside potential of 46% in the next 12 months. Dingmann’s is the sole recent analyst review on record for MNR shares, which are currently selling for $15.76. (See MNR stock forecast)
Innovative Industrial Properties(IIPR)
The second stock we’ll look at is Innovative Industrial Properties, a real estate investment trust (REIT) that operates with a twist – IIPR focuses its investment activities on properties in the US cannabis sector. The company’s activities include the acquisition, ownership, operation, leasing, and management of properties used in various aspects of the legal cannabis industry. While the cannabis field in the US is complicated by the patchwork nature of legal regimes across state lines, IIPR has built up a portfolio of 108 properties across 19 states.
This portfolio is substantial. It encompasses 8,998,000 square feet of total space, occupied by 30 tenants. The company has invested a total of $2.47 billion in its real properties, which are acquired as freestanding industrial and retail spaces and operated under long-term, absolute net lease agreements. IIPR has significant footprints in several states, including Michigan, where it has 14 properties totaling 946,000 square feet; Colorado, where it has 27 properties totaling 233,000 square feet; and Pennsylvania, where it has 10 properties totaling 1.36 million square feet.
In the last reported quarter, 3Q24, IIPR reported declines in revenues and earnings compared to the prior-year period. The declines were attributed to delays in rent collections, driven by an increase in repossessed properties. Looking at the results, the company generated $76.5 million in total revenue, down 1.7% year-over-year and missing the forecast by $870,000. At the bottom line, IIPR’s funds from operations (FFO, a key metric for REITs) came in at $2.02 per share, down 7 cents from the prior year and a penny below the estimates.
Despite the drop at the top and bottom lines, IIPR has maintained a solid dividend payment. The company last declared its quarterly dividend for the amount of $1.90 per share on December 13, set to be paid it out on January 15. The payment annualizes to $7.60 per common share and gives a yield of 7.5%.
Writing from Compass Point, analyst Merrill Ross notes that IIPR’s current difficulties with rent collection are likely to be temporary. She writes of the company and its prospects going forward, “The cannabis industry is heavily regulated and taxed, and faces fierce competition from illicit operators. Though it will take time, we think that most of the properties that are under development or redevelopment or have been repossessed from tenants will be re-leased to be used in cannabis cultivation, production, or sales. IIPR is unlikely to return to the growth trajectory that supported five years of explosive growth since its 2016 IPO, but the recent sell off created a buying opportunity, in our opinion.”
The ‘buying opportunity’ here translates to a Buy rating, while Ross’s $125 price target implies an upside potential of 23.5% on the one-year time horizon. (To watch Ross’s track record, click here)
There are 4 recent analyst reviews on record for IIPR, and they split to 2 Buys and Holds, each, for a Moderate Buy consensus rating. The shares are priced at $101.26, with an average target price of $124.33, suggesting that the stock will gain 23% in the coming year. (See IIPR stock forecast)
To find good ideas for dividend stocks trading at attractive valuations, visit TipRanks’Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
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.
