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3 large dividend stocks that yield at least 10%; Analysts say “buy”

Markets continued their uptrend this week and have gained ground since the November 3rd vote. There is an optimistic view that with a new government, politics will evolve into a more normal pattern. Still, investors were cautious last fall – there is much to be feared. Coronavirus has made a comeback with the advent of cooler weather, and the political uncertainty surrounding the elections has left the status of further stimulus packages pending. At times like this, investors are starting to get interested in dividend stocks again. These are the classic defensive stocks, and for good reason: A steady dividend keeps income flowing no matter what the markets are doing. Wall Street analysts have snuck in – and they’re recommending high-yield dividend stocks for investors looking for portfolio protection. Here we’re looking at three stocks that fit a profile: a strong buy rating from the analyst community and a dividend yield of at least 10%. Stellus Capital (SCM) Stellus Capital offers capital solutions (read: debt financing) for lower-middle-class companies. These are companies that may have difficulty accessing capital through large banks. Stellus shoulders the higher risk as an investment opportunity. The corporation’s portfolio includes 67 companies with $ 1.6 billion in assets under management and over $ 6 billion in total investments. Stellus increased its dividend payment this year. The next dividend was already decided for December and shows an effective increase to 31 cents per common share. This comes from combining the regular 25 cents payment with a special 6 cents dividend and after the company paid out 25 cents per share for the past two quarters. Taking the regular dividend into account, the payment is annualized to $ 1 per common share, yielding a 10.91% return. Analyst Robert Dodd writes of Raymond James: “Core earnings covered base dividend in Q3 20 and a strong spillover position should cushion dividend dividend in 2021. We continue to see risk / reward attractive. The analyst added, “The SCM pipeline looks robust. ~ 10 portfolio companies go through different phases of due diligence. Repayments in fourth quarter 20 could be up to $ 30 million – with a modest positive impact on net asset value from exits above fair value in third quarter 20. “To this end, Dodd outperforms SCM shares (i.e. buy) and a price target of $ 11. This number implies an upward trend of 17% from the current level. (To see Dodd’s track record, click here.) Overall, Stellus’ consensus rating for Strong Buy analysts is based on 4 ratings, including 3 buys and 1 hold. The stock is selling for $ 9.43 and its average target price of $ 10.17 suggests it has upside potential of ~ 8% for a year. (See SCM stock analysis on TipRanks.) WhiteHorse Finance (WHF) Next up is WhiteHorse Finance, another BDC. WhiteHorse’s focus is on small-cap companies valued at $ 50 million to $ 350 million. WHF investments typically range from $ 10 million to $ 50 million. WhiteHorse’s portfolio is in excess of $ 595 million. A better outlook for the future, based on the recovery in earnings, has placed dividend payments on a solid footing, and WhiteHorse has kept its regular dividend of 35.5 cents. In combination with a special dividend of 12.5 cents, this results in the final payment of 48 cents per common share. The return is a sky-high 12.29%. Oppenheimer analyst Chris Kotowski is optimistic about WhiteHorse, noting: “WHF reported net investment income (NII) of $ 0.38 / share for the third quarter of 20 versus our estimate of $ 0.32 and a consensus of 0.29 USD. The bottom line was strengthened by a recovery in interest rates. However, what encouraged us the most was both the growth and the improvement in the quality of assets. Financing activity of USD 58.3 million was only partially offset by repayments of just USD 26.5 million, which, in addition to a significant appreciation, led to a quarter-on-quarter growth in investments of ~ 8.8%. The five-star analyst added, “Management was optimistic about the outlook for credit growth that it was perhaps the best environment they had seen since 2012-2013 and that they clearly have the ability to invest.” The current gross leverage of 0.94x (and net 0.87x) is below the management’s target leverage of 1.00 to 1.25x, which leaves plenty of room for growth in the coming quarters amid a strong investment pipeline. “As a result, Kotowski is giving the stock an outperformance (i.e., buy) rating, and his $ 15 price target implies a robust 29% uptrend for the year ahead. (To see Kotowski’s track record, click here.) Overall, WhiteHorse has a unanimous vote Strong Buy analyst consensus rating with 3 buy-side ratings The stock is currently trading at $ 11.65, with an average target price of $ 13.25 indicating an upward trend of 14% for a year (see WHF – Share research on TipRanks.) Capital Southwest Corporation (CSWC) Last but not least, is Capital Southwest, another Texas CSWC focused on credit and credit options for midsize companies. Capital Southwest has a portfolio of $ 664 million divided into 69 companies is invested and has cash in excess of $ 150 million, recovering from its negative first quarter results at the height of the corona crisis Both first and second quarter earnings resulted in quarterly revenue of $ 21 million, while third quarter earnings rose sharply to 45 cents per share, the highest in over two years. Rising profits have allowed Capital Southwest to continue its trusted history of dividend payments. The company increased its dividend through 2020 and has kept the 51-cent payment throughout the year. The 10.5% return is more than four times the average of its peers in the financial sector, making dividend investors aware of CSWC. CSWC fans include JMP analyst Devin Ryan, who rates the stock with a buy and sets a price target of $ 17. (To see Ryan’s track record, click here.) “Overall, we believe the quarterly results were strong and that Capital Southwest is one of the most attractive ways to get involved in the direct origins of the lower middle class. We are leveraging improvement Strong portfolio growth, a solid pipeline of deal flows, sustainable core / additional dividends and management’s focus on spending are the reasons we believe the stock can outperform, “said Ryan. Overall, CSWC has a strong buy rating based on analyst consensus, with 3 current buy ratings and 1 hold. The stocks have an average price target of $ 15.67, which is almost unchanged from the current trading price. The real return here is in the dividend. (See CSWC stock analysis at TipRanks)