Most vanilla investors prefer to buy stocks that are preferred by Wall Street analysts.
this strategy, unlike me friend, we know it’s a recipe for disaster,
Why? Well, firms already popular with stock jokes have nowhere to go but down. missing namesOn the other hand, they are where the action happens because these are the next “analyst upgrade” candidates.
There is little downside and a lot of upside at these prices!
it is difficult to Get These biased plays happen because most analysts wear rose-colored glasses. They know how to butter their bread, and do it with a bullish attitude.
Which is why Cell Rating is so interesting to us. Hateful Names Are Unicorns in the Modern Market—Even in the Year Two of this bear market!
Seven—count them, seven!—companies in the S&P 500 have Disappointing Sell ratings today!
This seven, of course, is where we want to be looking. Imagine what happens when these stocks get upgraded to Holds Only! This will be a party of epic proportions.
If there’s anything I love more than the upgrade from analyst outhouse to penthouse, it’s a huge dividend. So, let’s combine two of our favorite contrarian income strategies today.
Today we have seven huge dividends ranging between 7.8% and 14.6%. Wall Street hates them all! Let’s see.
fear of wall street Real Estate Investment Trust (REIT) At the moment, and who can blame them? Jerome Powell’s aggressive interest-rate streak has crushed the sector. Even with higher dividends than the stock-market-at-large, real estate is underperforming the broader market through this bear turn.
But is the pessimism of professionals over?
maybe not with Vornado Realty Trust (VNO, 8.0% yield)—An office and retail property giant whose portfolio is concentrated in New York City but also holds properties in Chicago and San Francisco. VNOs absorbed the 1-2 shock of WFH—companies needing less office space, and retail buildings suffering from less foot traffic as workers are typing away at home—that started the bear market Shares have since been cut by more than half.
That’s not the only cut Vornado shareholders are getting. You may remember in January I said VNO and some other office REITs There may be a risk of dividend cut, OK, just a week or so later…
“Vornado Realty Trust (NYSE: VNO) announced today that its Board of Trustees has declared a decreased quarterly dividend of $.375 per share. The reduction is in recognition of the current state of the economy and capital markets and is primarily due to higher Reflects Vornado’s estimated 2023 taxable income due to interest expense.
A roughly 30% cut in payouts would put Vornado in better financial shape to survive these troubled times, but despite the still-high yield of 8%, the recent cut is a non-starter for anyone serious about long-term income. Is. So here, I agree with Wall Street, which has just 3 buys versus 6 holds and 5 sells on the stock.
I’m also on board with Lone Wolf Covering Alexander (ALX, 8.9%), a small NYC-based REIT that houses a handful of office and retail properties, as well as an apartment tower. Not only does it face the same pressures as VNOs—it’s actually managed by Vornado Realty Trust! The only Wall Street rating on the ALX is a single sell, but that in itself is pretty telling—acknowledging that the great valuations have received scant coverage from major research firms, but it’s also a worrying sign. That stock just isn’t worth the while. I was down in Alexander last summerAnd it still looks sick.
Brandywine Realty Trust (BDN, yields 13.4%) Claims 163 properties with heterogeneous geographic fragmentation that includes Philadelphia, the greater Washington, DC, area and Austin, Texas. That’s it. Brandywine also serves office buildings, but also mixed-use developments, co-working spaces, and research and laboratory properties. Most professionals covering BDN are on the fence — the stock has one buy and two sells, but four are holds — and tight dividend coverage remains a concern. What’s it like here? For one, on the most recent conference call, management stuck by its ability to finance its sky-high dividend. It is also undervalued on several metrics including funds from operations (FFO) and funds available for distribution (FAD).
We Can Avoid East Coast Prejudice Hudson Pacific Properties (HPP, 11.3% yield), which leases office and studio properties up and down the West Coast, from Los Angeles to Vancouver. Like BDN, analysts are largely on the fence — the pros have no buys but just two sells, versus 11 holds. Hudson’s office mirrors the rest, but it’s potentially facing a short-lived labor-strike for its studio business. But asset sales are helping to shore up liquidity, and HPP could redevelop an old NFL site as residential, which would help diversify the portfolio.
For Office Property Income Trust (OPI, 14.6% yield)Red Flags is true in name only. This is another office-space REIT, and it’s the most diversified of the bunch, with 160 properties across the US.
OPI has 3 sells versus only 1 buy, which reflects the mood in office REITs, but until I snap this stock, Some investors won’t even bet against it, Office Property Income Trust is built differently – most of its tenants are investment-grade, many of them are actually government entities, most of its properties are located in suburbs (not cities experiencing mass exodus), and It boasts of a high occupancy rate of 96%. But many local, state and federal employees are still working from home and cannot return to the office. Leases are an easy decision: They can be broken early or, at least, not renewed.
Wall Street’s door outlook isn’t just limited to the real estate sector.
Consider Prospect Capital (PSEC, yields 9.7%)same high yield Business Development Company (BDC) Industry. BDC is a small pond, but PSEC is definitely the bigger fish. It has funded more than 400 investments over its nearly two decades of publicly traded life, and currently has $7.9 billion invested in 130 companies across 37 industries.
Wall Street has largely dropped the name; The pair of analyst holdouts divides one hold and one sell between them. It’s no wonder why: The stock is a longtime underperformer and PSEC has cut its dividend twice since 2014.
Some glimmers are visible—net interest income (NII) has been rising in the recent past, and as a result, its dividend coverage is rising. So at least, this high-single-digit yield is looking safe for a while. Still, PSECs are weighed down by high management fees, paid to the same management team that has led most of the poor performance. And while I’d normally get excited about a deep 27% discount to NAV, it’s par for the course for PSEC—this stock is Eternal Undervalued, with payoff always seemingly out of Tantalus’ reach.
Don’t think that regular shares have been given up. Western Union (WU, 7.8% yield) There’s also a thumbs-down from Wall Street, with two buyers not coming close to offsetting the 10 holds and eight sells.
Can’t think why…
Technology has gotten tougher and faster for Western Union. Paypal (PYPL)Wise and many others are taking a big bite out of WU’s lunch each year, losing revenue from this once great pay (and Telegram!) giant.
But while Western Union is absolutely down, it’s not necessarily out. The bottom line has been running really high for a few years now, and the company’s 23.5-cent quarterly dividend only accounts for 40% of profits. One thing that can turn the tide is heavy investment in digital businesses. “Omnichannel” users are especially lucrative, so growing that group could help slow the bleeding.
Bret Owens Chief Investment Strategist opposite point of view, For more great income ideas, get your free copy of their latest special report: Your Early Retirement Portfolio: Huge Dividends—Every Month—Forever,
Credit: www.forbes.com /