This month began with President Trump’s tariff announcement sparking worries about commerce wars, a weak greenback, and a doable recession. Nevertheless, because the April 8 low, the S&P 500 has staged a rally, climbing 11%, after the Trump Administration signaled its willingness to de-escalate the tariff competitors, and Beijing responded in form. Add in a Q1 earnings season delivering extra upside surprises than anticipated, and all of a sudden, optimism is making a comeback.
It’s nonetheless too early to name it a full restoration, but when momentum holds, this might flip right into a self-sustaining rally, which can provide loads of alternatives for buyers to maximise their revenue.
One fashionable approach of boosting portfolio revenue, whether or not shares go up or down, is investing in dividend shares. The perfect dividend stock presents a mix of dependable funds, excessive yields, and share value development – sound attributes for any revenue stream.
Wall Road analysts are on board, suggesting two robust dividend stocks with yields north of 14%. In keeping with the TipRanks database, each shares additionally provide a strong double-digit upside potential over the following yr. Let’s dive in and take a better look.
Angel Oak Mortgage (AOMR)
The primary inventory we’ll take a look at is Angel Oak Mortgage, an actual property funding belief (REIT), whose major enterprise thrust is within the acquisition of first-lien non-QM loans and different mortgage-related belongings from the U.S. mortgage market. By way of these investments, Angel Oak has constructed and maintains a portfolio able to producing enticing risk-adjusted returns for its shareholders, returns which are realized via money distributions – dividends – mixed with capital appreciation. The corporate’s key energy is its potential to keep up these returns throughout rate of interest and credit score cycles.
Angel Oak is an externally managed REIT, and is affiliated with the bigger firm Angel Oak Capital Advisors LLC, an alternate credit score supervisor that counts a vertically built-in mortgage origination platform amongst its subsidiary belongings. By way of this connection, Angel Oak Mortgage REIT has connections to all facets of the mortgage enterprise, from sourcing and buying loans, to allocating belongings and managing the portfolio. The reference to Angel Oak Capital Advisors gives a key benefit for the mortgage REIT.
As famous, Angel Oak Mortgage REIT is dedicated to robust capital returns, notably to the dividend. The corporate final declared the dividend fee on February 6 of this yr and paid it out on February 28, at a price of 32 cents per widespread share. At that price, the dividend annualizes to $1.28 per share and provides a strong yield of 15%. This most up-to-date declaration marked the tenth quarter in a row for the 32-cent dividend fee.
Angel Oak helps its dividend with sound monetary outcomes. The corporate’s final launch coated 4Q24, and in that report it confirmed a prime line, the online curiosity revenue, of $9.9 million. This was up 20% year-over-year and was in keeping with the market’s expectations. On the backside line, the corporate reported a Distributable Earnings of 42 cents — 16 cents per share higher than the forecast and greater than sufficient to completely cowl the dividend.
For B. Riley analyst Randy Binner the important thing factors listed below are Angel Oak’s excessive dividend yield and the general portfolio high quality. He writes, “The dividend yield, plus our implied return to focus on, units up a good risk-reward in our view. We forecast one other good quarter of NII technology and can search for updates on non-QM development alternatives in gentle of potential adjustments on the GSEs. 10-yr Treasury yields moved from 379bps to 457bps in 4Q24, decreasing financial guide worth from $14.02 to $13.10 at YE24. Provided that charges moved decrease in 1Q25 and the 10-year ended at 421bps, we anticipate to see some restoration in BVPS…”
“We imagine the portfolio has prepayment/refi safety as mortgage charges within the underlying portfolio are weighted in the direction of greater coupons. Delinquency tendencies had been favorable in 4Q24, and we anticipate that development to proceed in 1Q25, given our view that residential mortgage is among the many higher credit score danger areas, as different areas have seen unfold widening,” the analyst added.
These feedback assist Binner’s Purchase ranking on the inventory, whereas his $12 value goal factors towards a possible one-year upside of 41%. Along with the dividend yield, the entire return on this inventory can attain as excessive as 56% for the approaching yr. (To observe Binner’s monitor report, click here)
Total, there are 3 latest analyst evaluations on report for Angel Oak Mortgage REIT, and they’re unanimously optimistic for a Robust Purchase consensus ranking. The shares are at present priced at $8.48 and their $12.17 common value goal implies a 43% upside by this time subsequent yr. (See AOMR stock forecast)
TXO Vitality Companions(TXO)
Subsequent on our checklist is an vitality firm, TXO Vitality Companions. Like mortgage REITs, vitality manufacturing companies like TXO have a popularity for delivering robust dividends. TXO earns the revenue that helps its dividends from the strong hydrocarbon acreage positions in a number of of the nation’s finest energy-producing areas. These embody the Williston Basin of North Dakota and Montana; the San Juan Basin, straddling the 4 Corners; and the well-known Permian Basin alongside the Texas–New Mexico border. The corporate prioritizes its acreage holdings by a number of components, together with low geologic danger, low decline charges, and excessive recoveries, all relative to drilling and completion prices.
This technique has led TXO to construct up a portfolio of worthwhile performs in each oil and pure fuel, able to producing advantages for the corporate and returns for shareholders. Firm administration has centered its land buys to accumulate confirmed oil and fuel manufacturing places, in areas with lengthy and well-known information of hydrocarbon technology. The objective is to construct an vitality portfolio that’s extra predictable and dependable than the higher-risk unconventional restoration performs.
On the monetary aspect, TXO realized $109.3 million in internet money supplied by working actions throughout calendar yr 2024. That top-line determine supplied a strong sum of money out there for distribution: $79.1 million. The entire money out there for distribution was greater than double the equal determine reported on the finish of 2023.
Distributions imply dividends, and TXO’s final declaration, made on March 4, was for a fee of 61 cents per widespread share. The dividend was paid out on March 21, and the $2.44 annualized price supplied a yield of 14.5%. This final declaration marked the eighth consecutive quarter that TXO has paid out a standard share dividend.
TXO has caught the eye of Stifel analyst Selman Akyol, who sees the strong capital return and low-cost enterprise mannequin as enticing attributes for the corporate.
“We imagine TXO Companions presents buyers a sexy funding alternative given its return of capital framework, which is supported by low manufacturing decline charges, low leverage and manageable capex ranges. Moreover, we imagine every basin TXO is in presents its personal distinctive development alternative set. Lastly, the administration crew is properly skilled and has a monitor report of extracting incremental worth out of belongings, and making use of its ability set to potential acquisition targets… TXO goals to payout 100% of its money out there for distribution, which at present is leading to a 4Q annualized yield of 14.4%. Whereas distributions are variable and instantly impacted by commodity costs, we imagine low manufacturing decline charges are supportive of a better payout,” Akyol opined.
Akyol quantifies his stance on TXO with a Purchase ranking, and he provides the inventory a $20 value goal that means a achieve of 18% on the one-year horizon. Add within the dividend yield, and this inventory can carry a one-year return of 32.5%. (To observe Akyol’s monitor report, click here)
Whereas there are solely 2 latest evaluations on report right here, they’re each optimistic – giving TXO a Average Purchase consensus ranking. The inventory has a present promoting value of $16.95, and its common goal value of $21.50 implies a one-year upside potential of ~27%. (See TXO stock forecast)
To search out good concepts for shares buying and selling at enticing valuations, go to TipRanks’ Best Stocks to Buy, a software that unites all of TipRanks’ fairness insights.
Disclaimer: The opinions expressed on this article are solely these of the featured analysts. The content material is meant for use for informational functions solely. It is extremely vital to do your personal evaluation earlier than making any funding.
