The stock market closed last week on a negative note, weighed down by investor speculation that the Federal Reserve might reduce its pace of policy easing.
Federal Reserve Chair Jerome Powell, in remarks on Thursday, emphasized there was no immediate rush to lower rates of interest, citing positive economic indicators. This message was reinforced on Friday by a stronger-than-expected October retail sales report.
Meanwhile, enthusiasm for President-elect Donald Trump’s pro-business agenda is fading, with growing concerns concerning the potential costs and inflationary risks tied to his fiscal policies.
On this environment, investors will turn toward defensive shares – and that often means dividend stocks. These investments offer consistent income, making them a reliable alternative in periods of market uncertainty.
So, if Friday’s downbeat day has you searching for out dividends, Wall Street analysts have flagged two dividend stocks to purchase, including one with a 14% yield. Let’s take a more in-depth look, with insights drawn from the TipRanks database.
AFC Gamma(AFCG)
We’ll start with an actual estate investment trust, a REIT, that operates with a little bit of a twist. The corporate, AFC Gamma, works with the cannabis industry, where it acts as a finance provider, making available business real estate loans, in addition to loan underwriting and other financial services. The corporate makes direct loans and bridge loans within the range of $10 million to $100 million – a crucial source of finance in an industry that’s growing rapidly but can also be coping with a fancy legal structure. AFC Gamma estimates that the cannabis industry has an addressable market of roughly $30 billion.
The corporate is predicated in West Palm Beach, Florida, considered one of the states with a legal cannabis framework, and its customer base is state-licensed cannabis operators across the country. The cannabis industry has a high overhead, because the grow facilities require a mixture of enormous floor space and heavy use of each water and electric utilities. Access to traditional banking capital will be limited, because cannabis is prohibited on the Federal level, and the states present a patchwork of various legal frameworks. All in all, AFC Gamma’s goal area of interest is a vibrant opportunity for a finance company that may operate outside the banking networks – and the corporate’s status as the most important REIT within the cannabis industry makes it attractive to dividend investors.
AFC Gamma has been paying out dividends since 2021. Essentially the most recent declaration got here in September of this 12 months, for an October 15 payout of 33 cents per common share. The payment’s annualized rate, $1.32 per share, gives a formidable forward yield of nearly 14.3%.
The corporate’s dividend is supported by its financial results. Within the last reported quarter, 3Q24, AFC Gamma showed distributable earnings per share, a DEPS, of 35 cents per common share, beating the forecast by a penny – and covering the dividend payment with room to spare.
Seaport analyst Sonny Randhawa highlights AFC Gamma’s strength in its area of interest, in addition to its potential to proceed generating returns in a growth industry.
“With the remaining of the cannabis sector range sure anxiously awaiting the DEA’s decision on rescheduling, the final word elimination of 280E taxes is just considered one of the numerous company specific and industry catalysts that ought to profit AFCG over the approaching years… AFCG’s cycle tested management team and robust investment review process helped investors significantly outperform the most important cannabis REIT and our benchmark US cannabis ETF by over 26% and 826%, respectively, by generating a 37% total return since its first trading day. We consider the very best is yet to come back, as AFCG offers investors the rare opportunity to sit down at the highest of the capital stack in an emerging growth industry while earning equity like returns,” Randhawa explained.
These comments back up the analyst’s Buy rating on ACFG, and his $13 price goal implies a one-year upside of 42%. Add within the dividend yield, and the whole return on this stock can reach 56% in the approaching 12 months. (To look at Randhawa’s track record, click here)
AFC Gamma has not attracted a whole lot of analyst attention, but those that have recently reviewed the stock agree with Randhawa’s assessment. ACFG has a unanimous Strong Buy analyst consensus rating, based on 3 recent reviews. The stock’s $13.33 average price goal suggests room for a 46% upside in the approaching 12 months. (See ACFG stock forecast)
4 Corners Property Trust(FCPT)
The following stock on our list, 4 Corners Property Trust, is a more traditional REIT. This company is concentrated on restaurant properties, and has amassed a solid portfolio of properties across 47 states. The corporate has investments in 1153 properties, representing 156 restaurant brands, totaling 7.8 million square feet, and having a mean lease term of seven.3 years. 4 Corners’ business is acquiring, owning, and leasing these properties, with the goal of generating returns for its own investors.
The casual investor will likely recognize a number of the brands in 4 Corners’ portfolio. Of the corporate’s total investments, 314, or 35%, are in Olive Garden restaurant locations; the corporate also leases properties to 116 Longhorn Steakhouse locations, 82 Chili’s branches, and 23 Outback Steakhouses. As well as, 10% of the corporate’s portfolio is leased to auto service locations, and eight% to other retailers.
On the financial front, 4 Corners’ 3Q24 results showcased total revenue of $66.79 million, reflecting a 3% year-over-year increase, though falling just $690,000 in need of expectations. The underside-line figure, the 27-cent EPS, was in-line with expectations. The corporate reported adjusted funds from operations (AFFO) of 43 cents per share, up a penny from the prior 12 months.
The AFFO fully supports the dividend, which was increased in probably the most recent declaration, on November 11 for Q4, to a rate of 35.5 cents per common share. At this rate, the payment annualizes to $1.42 per share. The forward yield is sound, at 5%.
4 Corners stock has caught the eye of UBS analyst Michael Goldsmith, who sees loads of reasons for investors to purchase in.
“We rate FCPT Buy as we predict its favorable cost of capital & diversification strategy away from restaurants support upside to AFFO growth at a positive valuation… We model 2025 UBSe AFFO growth of 4%, which is ahead of consensus by ~100 bps, and positions FCPT above the peer avg… We see upside to FCPT’s valuation from its accelerating acquisition activity in 2H’24. Based on our correlation of avg. quarterly acq. volume and avg. quarterly AFFO multiple (R=0.47), we consider FCPT’s 2H’24 activity is deserving of an AFFO multiple of 18x (currently 16x),” Goldsmith opined.
That Buy rating comes together with a $33 price goal that points toward a one-year gain of ~17%. Add within the dividend yield, and the whole one-year return is within the neighborhood of twenty-two%. (To look at Goldsmith’s track record, click here)
Overall, FCPT shares have a Moderate Buy consensus rating, based on 5 analyst reviews that break right down to 3 Buys and a pair of Holds. The present trading price of $28.22 and average goal price of $30.50 together imply an upside of 8% in the subsequent 12 months. (See FCPT stock forecast)
To seek out good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this text are solely those of the featured analysts. The content is meant for use for informational purposes only. It is vitally vital to do your personal evaluation before making any investment.
