3 Top dividend shares with growth potential; Goldman Sachs says “Buy”
Investing is about making a profit, and investors have long seen two main paths to that goal. Stocks of growth, stocks that will bring a return based mainly on rising stock prices, are one way. The second time is through dividend shares. These are shares that pay a percentage of the profits back to the shareholders ̵
1; a dividend that is usually sent quarterly. Payments range widely, from less than 1% to more than 10%, but the average stock listed in the S&P 500 is about 2%. Dividends are a nice addition for a patient investor as they provide a steady stream of income. Goldman Sachs analyst Caitlin Burroughs is looking at the real estate trust segment, a group of stocks long known for dividends that are both high and reliable – and she sees ample reason to expect strong growth, especially in three stocks. As we led the trio through the TipRanks database, we learned that all three were welcomed by the rest of the street as they boasted a strong buy analyst consensus. Broadstone Net Lease (BNL) First, Broadstone Net Lease is an established REIT that went public this September in an IPO that raised over $ 533 million. The company put 33.5 million shares on the market, followed by another 5 million plus taken by insurers. It was considered a successful opening and BNL now boasts a market capitalization of over $ 2.63 billion. Broadstone’s portfolio includes 628 properties in 41 US states plus the Canadian province of British Columbia. These properties accommodate 182 tenants and cost a total of $ 4 billion. The best feature here is the long-term nature of the leases – the weighted average residual lease is 10.8 years. In the third quarter, the latest with full financial data available, BNL reported a net profit of $ 9.7 million, or 8 cents a share. Revenues come mainly from rents and the company reported that it collected 97.9% of the rents due during the quarter. In the future, the company expects to acquire property for $ 100.3 million in Q4 and an increased rental collection rate of 98.8%. Broadstone’s revenue and collection of high rents maintain a dividend of 25 cents per share, or $ 1 per year. This is a payment available to the company and offering investors a yield of 5.5%. Goldman Burroughs believes that the company’s acquisition moves are the most important factor here. “Credential acquisitions are the main driver of profits for Broadstone … While management stopped acquisitions after COVID-induced market uncertainty (BNL did not complete any acquisitions in 1H20) and before the IPO, we are confident that acquisitions will increase in 2021 and we saw the beginning of this with activity 4Q20 … We estimate that BNL achieves a positive investment spread of 1.8%, leading to 0.8% profit growth (at 2021E FFO) for every $ 100 million acquisitions (or 4 , 2% of our acquisition volumes in 2021E), “To this end, Burroughs estimates BNL for a purchase and its price price of $ 23 suggests an increase of ~ 27% for the coming year. (To view Burrow’s record, click here) Wall Street usually agrees with Burroughs on Broadstone, as shown by the 3 positive reviews that stocks have garnered in recent weeks. These are the only registered reviews, which makes the analyst’s consensus unanimous Strong purchase. Currently, the share price is 18.16 dollars, and the average price target of 21.33 dollars of sugar expects a one-year growth of ~ 17%. (See BNL stock analysis of TipRanks) Realty Income Corporation (O) Realty Income is a major player in the field of REIT. The company has a portfolio of more than $ 20 billion with more than 6,500 properties located in 49 countries, Puerto Rico and the United Kingdom. Annual revenues exceeded $ 1.48 billion in fiscal 2019 (the last with full data) and maintained a monthly dividend for 12 years. Looking at current data, we find that O posted 7 cents per share of earnings in 3Q20, along with $ 403 million in total revenue. The company collected 93.1% of the agreed rents during the quarter. Although relatively low, a detailed examination of the monthly values shows that rental rates have been increasing since July. As noted, O has been paying a monthly dividend and has been doing so regularly since it went public in 1994. The company increased its payout in September 2020, marking the 108th increase during that time. The current payment is 23.45 cents per ordinary share, which reaches 2.81 cents a year – and gives a yield of 4.7%. Based on the above, Burroughs puts this stock on his list of convictions for America, with a purchase rating and a price tag of $ 79 for the next 12 months. This target assumes 32% up from current levels. Supporting her position, Burroughs noted: “We expect 5.3% growth in FFO per year in 2020E-2022E, compared to an average of 3.1% for full REIT coverage. We expect the key drivers of profits will include a continuous recovery in the volume of acquisitions and a gradual improvement in theater rents (in 2022). The analyst added: “We estimate that O makes $ 2.8 billion in acquisitions for each of 2021 and 2022, compared to consensus expectations of $ 2.3 billion. [We] we believe that our assumptions about the volume of acquisitions may in fact be conservative, as, eight days in 2021, the company has already made or agreed to make acquisitions of $ 807.5 million (or 29%) from our forecast for 2021). “Overall, Wall Street is taking a bullish position on Realty Income shares. 5 purchases and 1 retention issued in the previous three months make the stock a strong buy. Meanwhile, the target for the average price of $ 69.80 suggests that ~ 17% is TipRanks) Essential Properties Realty Trust (EPRT) Finally, Essential Properties owns and manages a portfolio of commercial properties with one tenant in the U.S. There are 214 tenants in over 1,000 properties in 16 industries, including car washes, shops, medical services and restaurants.Essential Properties boasts a high occupancy rate of 99.4% for its properties.In 3Q20, the company recorded revenue growth of 18.2% on an annual basis, reaching $ 42.9 million. quarter with an impressive $ 589.4 million in available liquidity, including cash, cash equivalents and available credit.The strong monetary position and growing revenues made the company confident enough, to increase the dividend in Q4. The new dividend payment is 24 cents per ordinary share, which is 4.3% more than the previous payment. The current rate is calculated annually up to 96 cents and gives a yield of 4.6%. In the last two years, the company has been regularly increasing its dividend. In his review of Goldman, Burroughs focused on the restoration that Essential Properties made after the height of the COVID panic last year. “When the accommodation mandates came into force in early 2020, only 71% of EPRT’s properties were open (in full or on a limited basis). This situation has improved over the months and now only 1% of EPRT’s portfolio is closed … We expect the future growth of EPRT’s profits to be driven by increased acquisitions and to forecast 2.8% potential profit growth of $ 100 million acquisitions “Burrows writes. In line with its optimistic approach, Burroughs gives EPRT shares a buy rating, along with a target price price of $ 26 for one year, suggesting a 27% increase. Overall, EPRT has 9 recent analyst reviews and a breakdown of 8 purchases and 1 sale gives the shares a strong rating for a strong buy. The shares are priced at $ 20.46 and have an average price price of $ 22.89, which gives ~ 12% potential to increase compared to current levels. (See TipRanks ‘EPRT stock analysis.) To find good ideas for dividend stocks trading at attractive ratings, visit TipRanks’ Best Stocks to Buy, a newly created tool that brings together all TipRanks equity statistics. Disclaimer: The views expressed in this article are those of the analysts only. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.