In an unpredictable market, dividend and distribution payments are one of the few things investors can reliably count on. Unfortunately, many stocks that have the highest dividend yields come with a catch. When a stock drops, dividend yields rise given they are calculated as a percentage of share price.
In other words, some stocks with the highest yields may be the worst investments. In addition, when businesses are struggling, dividend cuts can be one way to stop the bleeding. Fortunately, there are plenty of stocks out there with generous dividend or distributions yields that analysts see as good investments as well.
Here are eight stocks to buy with at least 9% yields, according to Bank of America.
TCG BDC Inc (NASDAQ: CGBD)
TCG is a business development company, a type of closed-end investment company that invests in small and mid-sized businesses. By law, BDCs must distribute at least 90% of their profits to investors, producing some extremely high yields.
Analyst Derek Hewett says TCG is one of the top BDC investments given the company’s track record of strong execution and profitability. In addition, Hewett has said TCG is well-positioned in late-cycle investments and has a lower yield, lower risk strategy than many of its BDC peers. TCG has a 10.5% yield.
Bank of America has a Buy rating and $14.50 price target for TCG stock.
Hoegh LNG Partners LP (NYSE: HMLP)
Hoegh is a master limited partnership, another special class of investment that often has high yields but has special tax implications as well. Hoegh is a liquid natural gas storage and shipping vessel operator.
Analyst Ken Hoexter recently said Hoegh’s distribution covered bounced back to 1.2 times in the most recent quarter after temporarily dipping to 0.9 times. The rebound reassured investors the company can maintain its distributions at their current level heading into 2020. Hoexter says the company’s fleet has a remaining charter duration of greater than 10 years, which should create a stable environment for distribution growth. Hoegh has a 10.8% yield.
Bank of America has a Buy rating and $18 price target for HMLP stock.
Energy Transfer LP Unit (NYSE: ET)
Energy Transfer owns more than 83,000 miles of pipelines used for transporting natural gas, natural gas liquids and crude oil. After recently meeting with company management, analyst Ujjwal Pradhan said the company has a clear vision for the near-term.
First, it's prioritizing capital spending, including a potential buyback plan. Second, it is building a high-quality growth project backlog for the next two years. Pradhan said Energy Transfer has attractive growth opportunities and an improving credit profile and it deserves a higher earnings multiple than its peer group. Energy Transfer has a 9% yield.
Bank of America has a Buy rating and $20 price target for ET stock.
MPLX LP (NYSE: MPLX)
MPLX is another MLP that specializes in oil and natural gas transport. Shares have lagged the market in recent months after the company announced a review of its midstream operations.
Pradhan said earlier this month investors should get clarity on the plan sometime in the first quarter, including the possible full separation of the midstream business. While uncertainty about the review outcome has weighed on the stock price, Pradhan says the company will likely report solid underlying fourth-quarter results and 2020 guidance. MPLX has a 10.2% yield.
Bank of America has a Buy rating and $32 price target for MPLX stock.
BlackRock TCP Capital Corp (NASDAQ: TCPC)
BlackRock TCP Capital is a BDC that is focused on investing in the debt of unrated, middle-market companies with enterprise values ranging from $100 million to $1.5 billion. TCP Capital has a 10.2% yield.
Hewett recently said TCP Capital deserves to trade at a valuation premium to its peer group given management’s long-term track record of managing risk, generating impressive returns and utilizing leverage to boost EPS. In addition, he said the company’s affiliation with BlackRock should benefit its balance sheet.
Bank of America has a Buy rating and $15 price target for TCPC stock.
VEON Ltd (NASDAQ: VEON)
VEON is a global telecommunications company with more than 200 million customers in 10 different countries, including Russia, Kazakhstan and Ukraine.
Analyst Cesar Tiron recently met with VEON management and said the company has several key issues it is addressing in the near-term. He said management is planning to shore up its Russia operations and focus on digital operations and mobile payments in Pakistan. Tiron said VEON is attractively priced, is a potential turnaround story and pays investors generously for their patience. VEON has an 11.2% yield.
Bank of America has a Buy rating and $3.60 price target for VEON stock.
Vermilion Energy Inc (NYSE: VET)
Vermillion is an oil & gas exploration and production company with a diversified property portfolio of land in Canada, France, the Netherlands and other countries.
Analyst Asit Sen recently said Vermillion’s combination of its high yield and its differentiated business model is a good recipe for investors. Sen said Vermillion is diversified geographically and its business is diversified within the oil & gas business as well. Th company has a long track record of consistent production growth, has a strong project backlog and pays a world-class yield with low financial leverage and a low payout ratio.
Vermillion has a Buy rating and $19 price target for VET stock.
Western Asset Mortgage Capital Corp (NYSE: WMC)
Western Asset Mortgage is a real estate investment trust that invests primarily in agency mortgage-backed securities.
Investors may be leery of mortgage investments after the last financial crisis, but Hewett recently said Western Asset Mortgage should continue to produce an impressive total return for investors in 2020. Hewett said the company’s portfolio isn’t as sensitive to interest rates as some of its competitors. In addition, he said the REIT deserves a premium valuation given its superior returns over the past couple of years. Wester Asset Mortgage has an 11.7% yield.
Bank of America has a Buy rating and $10.50 price target for WMC stock.
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