2 large dividend shares with at least 7% yield; Raymond James says “Buy”
For investors looking for a strong dividend player, there are some market segments that are known for their high-yield dividends, which makes them logical places to start looking for reliable payers. The hydrocarbon sector, the extraction and incorporation of oil and gas, is one of them. The sector deals with products that are essential ̵
1; our world works with oil and its by-products. And while overhead costs for energy companies are high, they still have a market for their products, leading to a ready-made cash flow – which can be used, among other things, to pay dividends. All this has investment firm Raymond James, which is looking at the list of oil and gas companies for mid-level dividends with growth potential. “We are waiting [midstream] the group will add about ~ 1 turn to its average EV / EBITDA, a multiple of this year. This equates to ~ 20-25% movement in the value of equity, “said Raymond James analyst Justin Jenkins. Jenkins outlined a series of points leading to a recovery in the average flow in 2021, which include a shift from blocking policies. “towards ‘opening up’; a general push on the raw material path, with the growth of the economy; the political view that some of DC’s more traditional centrists are unlikely to vote in favor of anti-oil policies, the Green New Deal; and finally, with relatively low stock values, dividend yields are high.A look at the TipRanks database reveals two medium-sized companies that have caught the attention of Raymond James – for all the points noted above.These are stocks with a specific set of clear attributes : dividend yield of 7% or higher and purchase ratings MPLX LP (MPLX) MPLX, which split from Marathon Petroleum eight years ago as a separate medium-sized enterprise, acquires, owns and is operates a series of medium assets, including pipelines, terminals, refineries and supply rivers. MPLX’s main areas of action are in the northern Rockies and the Midwest and stretch south to the Gulf Coast. Revenue reports for the “year of the crown” from 2020 show the potential value of the intermediate flow of oil and gas. The company reported $ 2.18 billion in the first quarter, $ 1.99 billion in the second quarter and $ 2.16 billion in the third quarter; profits turned negative in the first quarter, but were positive in both subsequent quarters. The third quarter report also shows $ 1.2 billion in net cash generated, more than enough to cover the company’s dividend distribution. MPLX pays 68.75 cents per ordinary share per quarter or $ 2.75 per year, giving the dividend a high return of 11.9%. The company has a diversified set of mid-range operations and strong money-generating factors that drive Raymond James’ Justin Jenkins to upgrade its position on MPLX from Neutral to Outperform (ie buying). Its target, which is $ 28, implies a 22% one-year increase in shares. (To watch Jenkins’ record, click here) Supporting his position, Jenkins wrote: “Given the number of ‘boxes’ that the MPLX story can check, it’s no surprise that this is a debate. With exposure to changing G&P trends, the expected recovery of the refined / refined volume of the product, the story falls into many operational fields – while spreading several financial debates … We also believe that the solid financial results for 2020 should give more long-term confidence … on the street, it seems that other analysts are usually on the same page. With 6 purchases and 2 retentions assigned in the last three months, the consensus rating comes as a strong purchase. In addition, the target for an average price of 26.71 dollars puts up ~ 17%. (See MPLX stock analysis for TipRanks) DCP Midstream Partners (DCP) Based in Denver, Colorado, the next stock is one of the largest natural gas operators in the country. DCP controls a network of pipelines, hubs, storage facilities and plants that stretch between the production areas of the Rocky Mountains, the Middle Continent and the Permian Basin, and the coast of the Gulf of Texas and Louisiana. The company also operates in the Antrim gas region of Michigan. In the last quarter, 3Q20, DCP collected and processed 4.5 billion cubic feet of gas per day, along with 375,000 barrels of natural gas. The company also reports $ 268 million in net cash generated, of which $ 130 million is free cash flow. The company reduced its debt burden by $ 156 million in the quarter and showed a 17% reduction in operating expenses on an annual basis. All of this allowed DCP to keep its dividend at 39 cents a share. At the beginning of the coronary crisis, the company had to reduce payments – but only once. The recently declared dividend for 4Q20 is the fourth in a row with 39 cents per ordinary share. The annual rate of $ 1.56 gives a decent income of 7.8%. This is another action that receives an upgrade from Raymond James. Analyst James Weston is expanding this stock from Neutral to Superior (ie Buying), while setting a target price of $ 24 to mean 20% growth for the one-year time horizon. “[We] expect DCP to publish another solid quarter for consistent improvements in NGL prices, NGL market volatility and positive upstream trends … we are not capitalizing on current propane prices and expect a solid but more normalized price regime over the next 12 -18 months. “We think this will create a favorable operating environment for DCP’s cash flows, which is not currently reflected in Street estimates,” Weston said. Overall, the analyst consensus rating for moderate DCP purchases is based on 7 recent reviews dividing 4 by 3 buy-backs. The stock is priced at $ 19.58, and the average target of $ 23 suggests an increase of ~ 15% from this level. (See DCP’s stock analysis for TipRanks.) To find good dividend ideas with stocks trading at attractive rates, visit TipRanks’s Best Buy Purchase, a recently launched tool that brings together all insights into TipRanks ownership. 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.