{"id":21158,"date":"2023-06-11T09:40:31","date_gmt":"2023-06-11T13:40:31","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/8-hated-stocks-yielding-up-to-18\/"},"modified":"2023-06-11T09:40:32","modified_gmt":"2023-06-11T13:40:32","slug":"8-hated-stocks-yielding-up-to-18","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=21158","title":{"rendered":"8 Hated Stocks Yielding Up To 18%"},"content":{"rendered":"
\n

We contrarians profit on analyst dislike.<\/p>\n

Note that I did not say like<\/em>. Dis<\/em>like is where the dividend money is at!<\/p>\n

Analyst ratings are a wonderful buy signal. Vanilla investors purchase payers that are widely liked\u2014and wonder why every downgrade dents their pocketbook.<\/p>\n

We don\u2019t care about popularity. Heck, we prefer stocks that are far from being in analyst good graces.<\/p>\n

Give us the disgraces<\/em>. And we\u2019ll collect our dividends while we sit back and wait for the analyst upgrades<\/em> to follow.<\/p>\n

It\u2019s not easy to find the \u201cuncool kids\u201d on Wall Street. The school of S&P 500 is a joke. Everyone gets an award (a Buy rating):<\/p>\n

<\/fbs-ad><\/p>\n

Four in five stocks are buys. What a market!<\/p>\n

Let\u2019s consider the discarded one in five, my fellow contrarian. Today I have handpicked eight loathed dividend payers dishing between 5.9% and 18.3% annually. Hated for a reason? Perhaps\u2014or perhaps not.<\/p>\n

Moelis & Co. (MC)<\/strong><\/p>\n

We start with independent global investment bank Moelis & Co. (MC, 5.9% yield)<\/strong>, which provides numerous advisory services, most notably in mergers and acquisitions (M&A).<\/p>\n

Moelis has nary a buy to its name following a 2022 that saw M&A activity fall off a cliff. The situation hasn\u2019t improved much in 2023\u2014the banking crisis has further muddied the M&A waters\u2014and Moelis is just a month or so removed from another earnings miss. In the short-term, things could get even worse for MC than they already are. But keep your eye on Moelis longer-term, as robust hiring in its tech arm could represent the underpinnings of future growth.<\/p>\n

Xerox (XRX)<\/strong><\/p>\n

One of the biggest names in printing continues to fight for relevancy.<\/p>\n

Xerox (XRX, 6.6% yield)<\/strong> sells printers and digital document services in more than 160 countries nationwide. The latter business makes sense in the modern office\u2014the former, less so. Xerox already was facing reduced paperwork heading into the COVID office exodus. And while employers are pushing for a return to the workplace, it\u2019s clear that hybrid situations are here to stay\u2014meaning overall less demand for Xerox\u2019s core products.<\/p>\n

XRX is also friendless in the analyst crowd, with zero buys at present. That\u2019s despite a yield of nearly 7% and an extremely cheap valuation: its price\/earnings-to-growth (PEG) ratio is a lowly 0.6. But I think the pros are right here\u2014Xerox might be cheap, but it\u2019s not a value.<\/p>\n

Energy Stocks<\/strong><\/p>\n

Crude\u2019s slowdown in 2023 has taken energy stocks with it, saddling the sector with a loss despite an up year for the broader market.<\/p>\n

Texas-based CVR Energy (CVI, 7.5% yield)<\/strong> deals in renewable fuels and petroleum refining, as well as nitrogen fertilizer manufacturing through its interest in CVR Partners LP (UAN)<\/strong>. It hacked its payout in half during COVID\u2014not abnormal for the space. However, while CVI did begin to restore it this year, there\u2019s not much room for celebration. Last year\u2019s massive special dividends seem unlikely to repeat unless oil goes bananas again, based on comments from CVR Energy\u2019s Q1 conference call. But more importantly from that same call: A spinoff of their UAN stake could warrant a review of their regular dividend. Analysts\u2019 bearishness seems deserved here.<\/p>\n

Holly Energy Partners LP (HEP, 7.8% yield)<\/strong> has a single buy call, but that lone wolf might have the right idea. HEP, formed in 2004 by HollyFrontier\u2014now HF Sinclair (DINO)<\/strong>\u2014provides petroleum product and crude oil transportation, terminalling, storage and throughput storage. The company\u2019s recent results have been boosted by HollyFrontier\u2019s acquisition of Sinclair, as well as higher revenues on its Woods Cross refinery processing units. This newfound tailwind should widen its dividend coverage\u2014raising the prospects of a distribution raise, which would begin a long climb back from a near-halving of the payout in 2020.<\/p>\n

Cheniere Energy Partners LP (CQP, 9.4% yield)<\/strong> is another unpopular master limited partnership (MLP), boasting just two buy calls against six holds and six sells. It was created by Cheniere Energy (LNG)<\/strong> to hold its midstream assets; it owns Louisiana\u2019s Sabine Pass liquefied natural gas (LNG) terminal, as well as the Creole Trail Pipeline.<\/p>\n

CQP has been a perpetual quarterly distribution raiser<\/em> for years\u2014small steps each quarter, but steps that have added up over time. That said, the MLP came up against a brick wall this year, as it actually announced a ~4% decrease in May. Regardless, the company\u2019s full-year guidance of $4.00-$4.25 per unit would be an improvement over 2022. My concern: CQP is starting an expensive Sabine Pass expansion\u2014one that could draw resources away from the distribution as early as next year.<\/p>\n

REITs<\/strong><\/p>\n

Wall Street is generally disenchanted with real estate investment trusts (REITs) right now, and for good reason. Jerome Powell\u2019s lead foot has kept the interest-rate pedal down, rattling the sector loose. Real estate has underperformed since the start of the bear market, and is still flat in 2023 against a 12% gain for stocks more broadly.<\/p>\n

In short: There are plenty of hated stocks in the space. But are there any you can trust?<\/p>\n

LTC Properties (LTC, 6.8% yield)<\/strong> invests in a 50\/50 blend of senior housing and skilled nursing properties from coast to coast. While the worst of COVID has long passed, the operating environment remains difficult for LTC. After the end of Q1, LTC allowed one tenant to defer interest payments, another to defer monthly rent, and a third will receive an abatement. Long-term, there\u2019s no denying the importance and stickiness of these kinds of properties, but there\u2019s little in the way of short-term catalysts.<\/p>\n

An even more troubled area of real estate is office property. Take Office Properties Income Trust (OPI, 12.2% yield)<\/strong>, for instance. It owns nearly 160 primarily single-tenant office properties across the U.S. Shares are off nearly two-thirds over the past year and now trade in the single digits. Work-from-home would seem to doom the likes of OPI, though the REIT is an outlier operationally: Most of its properties are suburb-based, not city-based, and its occupancy rate is north of 96%. Still, I\u2019ve largely agreed with the bearish analyst camp\u2014I\u2019ve recommended avoiding OPI in the past, and readers who heeded that advice dodged a 55% dividend cut announced in April.<\/p>\n

Most analysts are on the fence concerning Hudson Pacific Properties (HPP, 18.3% yield)<\/strong>. HPP leases out office and studio properties up and down the West Coast, from L.A. all the way up to Vancouver. Hudson\u2019s office issues mirror the rest, but in March, I also flagged the potential hit from Hollywood\u2019s writers strike. Well, in May, the company withdrew its full-year FFO outlook thanks to uncertainty from the strike\u2014and more importantly, waved a white flag for its dividend. \u201cThe Company\u2019s Board of Directors approved a 40% to 50% reduction in the common stock dividend, with the exact amount to be determined later this month.\u201d That exact amount hasn\u2019t yet been announced, but even halving the dividend would leave behind a yield in the high single digits, and a much healthier payout ratio of roughly half of first-quarter adjusted funds from operations (AFFO).<\/p>\n

Brett Owens is chief investment strategist for <\/em>Contrarian Outlook<\/em>. For more great income ideas, get your free copy his latest special report: <\/em>Your Early Retirement Portfolio: Huge Dividends\u2014Every Month\u2014Forever.<\/p>\n

Disclosure: none<\/em><\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

We contrarians profit on analyst dislike. Note that I did not say like. Dislike is where the dividend money is at! Analyst ratings are a wonderful buy signal. Vanilla investors purchase payers that are widely liked\u2014and wonder why every downgrade dents their pocketbook. We don\u2019t care about popularity. Heck, we prefer stocks that are far […]<\/p>\n","protected":false},"author":1,"featured_media":21159,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-21158","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing","tag-featured"],"yoast_head":"\n8 Hated Stocks Yielding Up To 18% | iFintechWorld<\/title>\n<meta name=\"description\" content=\"We contrarians profit on analyst dislike. Note that I did not say like. Dislike is where the dividend money is at! 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