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The headwinds are piling up on our economic horizon, just a few blurs of cloud right now, at the edge of the horizon – and we just don’t know what’s coming next. The headwinds include factors we all know about: persistent inflation, the Fed’s higher interest rates and tighter monetary policy, the tighter business and consumer credit environment, and the fast-rising government debt which at $33.57 trillion already measures 103% of the total GDP. We’ve been reading about these headwinds for several years now; what we don’t know is if, or when, they will coalesce into a storm.

In the words of Jamie Dimon, the CEO of JPMorgan, “This may be the most dangerous time the world has seen in decades. While we hope for the best, we prepare the Firm for a broad range of outcomes so we can consistently deliver for clients no matter the environment.”

The bottom line is that investors need to take defensive postures with their portfolio additions. And that will naturally lead investors toward high-yield dividend stocks. These income-generating equities offer some degree of protection against both inflation and share depreciation by providing a steady income stream.

Against this backdrop, some top-rated analysts have given the thumbs-up to two dividend stocks yielding up to 11%. Opening up the TipRanks database, we examined the details behind these two to find out what else makes them compelling buys.

Blackstone Secured Lending (BXSL)

First up is Blackstone Secured Lending, a business development company, or BDC, operating under the larger cover of the Blackstone asset management firm. BXSL operates in the financial services sector, providing capital and credit services to private companies in the US market and across a wide range of sectors including veterinary care, the insurance industry, and cable communications distributors. The top sectors represented in BXSL’s portfolio are software and healthcare.

By the numbers, BXSL’s portfolio holds $9.3 billion in investments, at fair value. These are composed mainly of first lien senior secured loans, 98.4% of the total, and 98.7% of the total is made in floating rate instruments. BXSL has current investments in 180 companies, as of the end of 2Q23.

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That was the last reported quarter, and in it, BXSL realized some $290 million in total investment income. This was up 55% year-over-year and beat the forecast by $14.5 million. At the bottom line, BXSL reported a net investment income of $1.06 per share, a result that was 3 cents per share ahead of the estimates. The NII exceeded the company’s regular dividend payment – marking the 17th quarter in a row that BXSL has achieved full coverage of the common share dividend.

BXSL has recently increased its common share regular dividend by 10% to 77 cents, which is scheduled to be paid out this coming October 26. At an annualized rate of $3.08, this dividend offers a robust yield of 11.5%, surpassing the average dividend yield of S&P-listed companies by more than 5x.

Truist analyst Mark Hughes has been impressed by BXSL’s high quality portfolio and its ability to maintain its dividend. The 5-star analyst writes of the stock, “The high quality of Blackstone Secured Lending’s portfolio is underscored by its low proportion of PIK income and high dividend coverage. This positions the company to both grow net asset value (NAV) on a consistent basis and to maintain a stable and attractive dividend yield; historically this has been the formula for BDCs to trade at a premium to NAV… Blackstone Secured Lending shares are compelling on a price-to-NAV basis, we believe, particularly when evaluated in the context of the company’s return on equity and the quality of its investment portfolio…”

Looking ahead, Hughes rates BXSL shares a Buy, and his price target, now set at $29, implies the stock will gain 8.3% in the year ahead. The total return will approach ~20% when the dividend is added to the upside. (To watch Hughes’ track record, click here)

Overall, the 9 recent analyst reviews on this stock include 6 Buys over 3 Holds, for a Moderate Buy consensus rating. (See BXSL stock forecast)

Equitrans Midstream (ETRN)

Next up on our ‘dividend list’ is Equitrans, a midstream company in the oil and gas sector. Midstream firms hold a vital link in the energy chain, moving hydrocarbon products from production regions and wellheads to the refineries, terminal points, and storage farms where retailers can pick it up for sale to the end users. Equitrans focuses its operations in the Appalachian region, specifically the area where Pennsylvania, Ohio, and West Virginia come together. This is one of America’s richest natural gas production regions and forms the core of this company’s extensive midstream network.

Equitrans’ transport assets mainly move natural gas and natural gas products out of the Appalachian Basin; the company describes its network as holding a strategic position capable of ‘debottlenecking’ the Basin. In particular, the company’s Mountain Valley Pipeline (MVP) and MVP Southgate projects promise the growth needed to improve the key link between natural gas sources and the major US demand markets.

At bottom, this means the company is routinely capable of generating profits and cash. Yet, in its last financial report, for Q2, the company’s total revenue came to $318.5 million, down 3% from the prior-year quarter and missing the forecast by almost $7.9 million. But – the company’s bottom line was sound, at 9 cents per share by non-GAAP measures, a result that beat the forecast by 4 cents per share.

This company has a dividend history going back to 2019, and the dividend has been held stable since 2020. That current stable payment is 15 cents per common share, or 60 cents annually, and the dividend yield is 6.3%.

Writing on this stock from Goldman Sachs, industry expert John Mackay likes Equitrans’ extensive footprint and notes that its assets are attractive to investors and M&A firms alike.

“Given ETRN’s strategic gathering and transmission footprint in the Appalachian Basin, relative EV size, and cash flow clarity from an MVP resolution, we see ETRN as a potential M&A target. ETRN’s assets are highly strategic in our view in the core of the SW Marcellus and Utica with interconnections into all major interstate pipelines in the region – and are supported by long term MVCs with IG counterparties… With an EV size of ~$[12]b, we believe the relative size appears manageable for larger midstream players,” Mackay opined.

Going forward, these comments back up the Goldman Sachs analyst’s Buy rating, which comes with an $11.50 price target, suggesting a gain of almost 21% on the one-year horizon. That return can reach 27% with the dividend added in. (To watch Mackay’s track record, click here)

Overall, Equitrans boasts a Strong Buy rating from the analyst consensus, and it is unanimous – based on 3 recent positive share reviews. (See Equitrans 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.

Dividend stocks are the multi-purpose tool of the markets. They offer investors a two-pronged path towards profitable returns, including a measure of defense against tough market conditions along with a steady source of passive income. It’s an attractive combination.

The best dividend stocks will give an inflation-beating income based on the dividend alone, backing it up with a long-term history of reliable payments. It’s a win-win situation for investors: when the stock goes up, you’ll make money, but when it goes down, you can still make money.

The Street’s analysts are not shy about recommending high-yield dividend payers, and we’ve found two among their recent calls with dividend yields reaching up to 10%. That’s a solid return right there, but these equities also feature ‘Strong Buy’ ratings from the analysts – so let’s dip into the data from TipRanks and find out just what makes them such compelling portfolio additions.

Sunoco LP (SUN)

First up is Sunoco, one of America’s great brand names. The company has a long history in the energy industry, mainly as a producer and provider of motor fuels. Sunoco’s product lines include multiple formulations of gasoline, diesel fuels, and jet fuels, all offered in both branded and unbranded labels. The company manages a distribution network comprised of gas stations, convenience stores, independent dealers, and commercial distributors, with more than 10,000 locations across 40 states.

Sunoco’s fuel retail operations are backed up by the usual ‘value added’ products in the gas stations and convenience stores, including snacks and beverages, and the company also provides fuel dispenser equipment for gas stations and fleet customers.

In an important nod to the expanding ‘green’ economy, Sunoco has been developing reclamation solutions for transmix fuels – that is, gasoline, diesel, and jet fuels that mixed in the transport pipeline, rendering them unusable. The company collects these mixed fuels for processing into usable products, reducing both fuel waste and damage from environmental pollution.

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With all that said, Sunoco’s latest quarterly update was something of a mixed bag. The company reported $5.75 billion at the top line in 2Q23, a total that was down 26% year-over-year, although the figure  beat expectations by $28 million. The bottom line, while profitable, was not as upbeat; the 78-cent EPS figure came in 47 cents per share under the forecast.

For dividend investors, a key metric to note is the distributable cash flow, which was reported at $175 million for Q2, a favorable comparison to the $159 million from the prior-year second quarter. This supported a Q2 dividend declaration of 84.2 cents per common share, or $3.36 annualized. At the annualized rate and current share valuations, the dividend is yielding 7.1%, more than double the average dividend found among S&P 500 companies, and almost double the 3.7% annualized inflation reported for August.

For Justin Jenkins, 5-star analyst from Raymond James, Sunoco is notable for its ability to remain profitable and to generate cash, both features that will support a continued high-yield dividend. He writes of the company, “We remain constructive on Sunoco given strong execution, confidence in the continuation of increased profitability, and the upside potential from medium-term business optimization and M&A opportunities. These efforts, along with capital/cost discipline, have allowed for considerable free cash flow generation, positioning the balance sheet with solid flexibility, which will be utilized to further grow the business (organically and inorganically). While the macro backdrop is still ‘throwing curve balls,’ we see a stable-to-positive volume trend in 2023 supported by elevated fuel margins. This is complemented by a healthy slate of attractive bolt-on acquisitions and organic projects that generate long-term value, while further M&A could add to upside.”

Jenkins goes on to rate SUN shares as Outperform (a Buy), with a $53 price target that indicates room for 12% upside in the next 12 months. (To watch Jenkins’ track record, click here.)

The 5 recent analyst reviews on SUN include 4 Buys against 1 Hold, for a Strong Buy consensus rating. Going by the $51 average price target, the stock has a one-year upside potential of 7.5%; add in the dividend, and the total return potential here approaches 15%. (See Sunoco’s stock forecast.)

Ares Capital Corporation (ARCC)

The next stock on our list is Ares Capital Corporation, a BDC, or business development company. These firms are specialty lenders, providing credit and financing services for small- and mid-market businesses that won’t necessarily qualify for services from the traditional commercial banks. ARCC’s combination of capital funding, credit services, and provision of financial instruments is essential for its client base, and fills a vital niche in the American small business landscape.

Since going public in 2004, ARCC has invested over $21 billion in 475 companies, and generated a shareholder return of 12%. The company boasts a market cap exceeding $10.7 billion, making it the largest publicly traded BDC in the US markets. The portfolio behind this performance is both diverse and well-balanced, with a healthy composition of assets. Of the total, 22% is in software and services, 11.3% is in healthcare services, and 8.7% is in commercial and professional services. Other sectors represented in the portfolio include power generation, insurance, and consumer durables. Just under 42% of the portfolio is in first lien senior secured loans, and another 18.1% is in second lien senior secured loans.

For investors, results are what matter most. Ares reported 2Q23 total investment income of $634 million, up from $479 million in 2Q22 – for a y/y gain of 32% and beating the forecast by $11 million. At the company’s bottom line, Ares posted earnings of 58 cents per share, 1 cent ahead of the estimates and well above the 46 cents per share from 2Q22. The company boasted $411 million in cash and liquid assets as of June 30, 35% better than it had at the end of 2022.

A profitable business and solid cash holdings support the company’s Q3 dividend, which was declared on July 25 for a September 29 payout. The dividend, of 48 cents per common share, annualizes to $1.92 and yields 10%. The company has a dividend history stretching back to 2004, with regular quarterly payments interspersed with variable special distributions.

KBW analyst Ryan Lynch notes Ares’s history of generating returns and surviving the ups and downs of credit cycles. He says of the stock, “ARCC has a great underwriting and credit quality track record, and has generated some of the best economic returns in the sector, and has a best-in-class credit platform. ARCC has one of the longest track records and has operated through multiple credit cycles with very good results. ARCC’s dominant platform and broad, long-standing relationship with sponsors will help ARCC continue to capture a significant market share of the growing direct lending market. ARCC has the best liability structure which is low-cost, diverse, long-dated, and flexible with multiple investment grade ratings which have funded and will continue to help fund their portfolio growth.”

Looking forward, Lynch gives ARCC an Outperform (Buy) rating, linked with a $21 price target. This suggests an 8.5% upside potential on the one-year time horizon. (To watch Lynch’s track record, click here.)

The Strong Buy consensus rating on ARCC is based on 10 analyst reviews, including 9 Buys and 1 Hold. The shares are currently trading for $19.33 and their average price target, at $20.75, implies a 12-month gain of 7%. With the dividend in the mix, investors can realize a 17% return on ARCC. (See Ares Capital’s stock forecast.)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched 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.

Since hitting bottom last October, the S&P 500 has bounced back strongly – in fact, it’s up approximately 25% from that trough. A rally of that magnitude meets the definition of a bull market, and some economists are saying we’re experiencing just that.

A word of caution, however, comes from investment firm Wells Fargo. In a recent warning to investors, investment strategy analyst Austin Pickle notes that a recession is likely in the near future, and says, “With stock valuations full, we believe prices are unlikely to sustain recent highs as the economy rolls over.”

Pickle goes on to list three factors that are likely to push markets down in 2H23 or 1H24. First, the analyst notes that the Fed is still locked into raising interest rates. Even though the rate of inflation is falling, the Fed is almost certain to implement another 0.25% bump this month, putting rates at their highest level since 2007. Second, the economy hasn’t yet fallen into a recession. Historically, stocks tend to bottom after a recession hits – and after the Fed starts cutting rates in response. And finally, the current rally isn’t healthy. It’s been driven mainly by a small group of megacap tech stocks, a base too narrow to support a large rally.

It’s a mindset that naturally turns us toward dividend stocks. These are the traditional defensive investment plays, offering steady payouts to shareholders that guarantee an income stream whether markets go up or down.

Against this backdrop, some Wall Street analysts have given the thumbs-up to two dividend stocks yielding no less than 8%. Opening up the TipRanks database, we examined the details behind these two to find out what else makes them compelling buys.

OneMain Holdings (OMF)

We’ll start in the financial services sector with OneMain. This online banking and finance firm focuses on consumer services in the subprime banking and loan market. OneMain offers a wide range of financial services, especially personal loans and insurance products, to a consumer customer base that sometimes lacks access to the traditional banking system. OneMain uses a careful vetting system to screen its customers and boasts that its screening process has kept defaults at an acceptable rate. In addition to its online presence, OneMain also reaches out to customers through a network of physical locations, with approximately 1,400 branches across 44 states.

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On the financial side, OneMain reported its 1Q23 results at the end of April, showing some mixed results. The top line revenue came to $1.03 billion; this was in-line with expectations, flat year-over-year, and just missed the forecast, coming in $2.6 million below expectations. The company’s bottom line earnings showed a split. The non-GAAP measure came in at $1.46 per share, missing by 19 cents, while the GAAP EPS of $1.48 was 5 cents better than the estimates.

OneMain had $18.5 billion in outstanding debt balances at the end of Q1, along with $544 million in cash and liquid assets. Of that cash total, $177 million was not available for general corporate uses. The company has $385 million set aside as provision for finance receivable losses. While this sum is lower than equivalent provisions in the last three quarters, it is significantly higher than the $238 million set aside for this purpose at the end of 1Q22.

Turning to the dividend, we find that OneMain declared its last payment on April 25 of this year, for $1 per share. The dividend annualizes to $4, and gives a strong yield of 8.6%.

This consumer credit company has caught the attention of JMP’s 5-star analyst David Scharf, who sees the overall risk/reward here as favorable. Scharf notes that OneMain is outperforming its competition on customer applications, and maintaining discipline on expenses.

“We continue to be encouraged by the improving credit profile that has emerged since the mid-2022 tightening; the increased application volumes and share gains resulting from weakened competition; the maintenance of expense discipline; elevated capital generation; and the improving funding profile. We continue to believe that the company’s 2023 guidance is somewhat conservative, both in terms of loan loss reserves and portfolio growth, and we already saw the target for receivables growth raised to the high end of the range after just one quarter,” Scharf opined.

“When the positive attributes noted above are combined with a discounted current year P/E below 6x and a dividend yield above 10%, we see a very compelling risk/reward trade-off for shares of OMF,” the analyst summed up.

Looking ahead, Scharf gives OneMain stock an Outperform (i.e. Buy) rating, and his $55 price target implies a one-year upside potential of 18%. Based on the current dividend yield and the expected price appreciation, the stock has ~27% potential total return profile. (To watch Scharf’s track record, click here)

Overall, OneMain gets a Strong Buy rating from the Street, based on 12 recent analyst reviews that include 9 Buys and 3 Holds. (See OMF stock forecast)

Global Medical REIT (GMRE)

The next stock on our list is a real estate investment trust, a REIT. These are perennial dividend champs, and Global Medical puts an interesting twist on the REIT model: the company focuses on medical facilities and properties. The company boasts a heavy footprint, including 188 owned buildings, with 4.9 million leasable square feet, and 274 tenants. Global Medical’s real estate assets are valued at approximately $1.5 billion, and the company collects an annualized base rent of $114.9 million.

The firm has seen its revenues increase over the past several quarters, while earnings per share are sliding down. This can be seen in the company’s last quarterly financial release, from 1Q23. GMRE reported a top line of $36.2 million, up more than 13% from the year-ago quarter but sliding in just under the forecast by $340,000. The company’s bottom line, a net income of $700,000 attributable to common shareholders, gave an EPS of 1 cent per share. This was in-line the forecast, but was down sharply from the 4-cent EPS reported in 1Q22.

Dividend-minded investors should watch the company’s funds from operations, or FFO, as this metric reflects available cash. Global Medical reported an FFO of $15.1 million, or 22 cents per share for Q1, and an adjusted FFO, or AFFO, of $16 million, translating to 23 cents per share. The company had $4.6 million in cash and cash equivalents on hand as of March 31 this year, compared to $4.02 million at the end of 2022.

On June 9, the company declared its common stock dividend payment for 21 cents per share, and paid it out on July 11. The dividend annualizes to 84 cents, and yields a robust 8.6%. The company has been paying out the 21-cent dividend for the last 6 quarters, and has been paying out a slowly increasing dividend since 2016.

Covering this stock for Stifel, 5-star analyst Stephen Manaker sees plenty of potential for investors to grab onto. He writes, “We rate GMRE Buy, believing the stock represents an attractive value, despite limited near-term growth and above-average leverage. We still view the REIT as a long-term growth story, buying assets in secondary markets, markets that larger institutional investors typically avoid. While the tenants might not have an investment grade rating, GMRE’s focus on the profitability of a tenant in a specific location (among other underwriting criteria) has proven to be successful.

“The REIT should be able to sell some of these assets with proven tenants, allowing for the recycling of capital into higher yielding investments. This could help the REIT grow earnings without necessarily increasing the size of the balance sheet or accessing expensive capital,” the analyst added.

Alongside his Buy rating, Manaker gives GMRE shares a price target of $11, implying a 13% upside in the next 12 months. (To watch Manaker’s track record, click here)

Overall, GMRE gets a Moderate Buy rating from the analyst consensus, based on 7 recent reviews. These break down to 4 Buys and 3 Holds. (See GMRE 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.