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3 Big Dividend Stocks Yielding at Least 8%; Analysts Say ‘Buy’

Do you like roller coasters? According to Deutsche Bank, we’re looking at some roller coaster volatility for the next few months, with near-term gains likely, followed by a Q2 retreat, and second-half gains. The firm expects share values to fall in the next three months, perhaps by as much as 5% to 10%, for several reasons laid out by the firm’s strategist Binky Chadha. “The more front-loaded the impact of the stimulus, and the direct stimulus checks at around a quarter of the new package clearly are one off, the sharper the peak in growth is likely to be. The closer this peak in macro growth is to warmer weather (giving retail investors something else to do); and to an increased return to work at the office, the larger we expect the pullback to be,” Chadha noted. That’s the mid-term. In the longer view, Chadha expects markets to strengthen by year’s end, and has put a 4,100 target on the S&P 500. This is up from his previous 3,950 target, and suggests potential gains of 4% from current levels. So, for investors, we’re looking at a rocky summer and fall, with some dips and gains likely in the markets. In that environment, a defensive stock play makes sense; it provides some stability to the portfolio, as well as some insurance should the gains not materialize. Reliable dividend stocks, with their regular payouts, provide an income stream that’s independent of the share price appreciation, as well as a share profile that is less volatile to begin with, making them the ideal move for investors worried about keeping up returns while coping with high macro volatility. To that end, we’ve used the TipRanks database to pull up three high-yield dividend stocks that share a profile: a Buy-rating from the Street’s analyst corps; considerable upside potential; and a reliable dividend yielding over 8%. Let’s see what Wall Street’s pros have to say about them. Monroe Capital (MRCC) We’ll start with Monroe Capital, a private equity firm invested in the health care, media, retail, and tech sectors. Monroe is focusing its business on minority and women-owned companies, or on companies with employee stock ownership plans. Monroe offers these sometimes underserved demographics access to capital resources for business development. Monroe has shown two contradictory trends so far this year: declining revenues and earnings, along with rising share value. The company’s top line, at $12.6 million, was down 6% from Q3, and 25% year-over-year, while EPS fell 40% sequentially to 42 cents. Year-over-year, however, EPS more than doubled. Looking at share price, Monroe’s stock has gained 60% in the past 12 months. On the dividend front, Monroe paid out 25 cents per share in December; the next is scheduled, at the same amount, for the end of this month. With an annualized payment of $1, the dividend yields a strong 9.8%. This compares favorably to the 2% average yield found among peer companies. The dividend attracted attention from Oppenheimer analyst Chris Kotowski, rated 5-stars by TipRanks. “We continue to see a runway to eventual dividend coverage with full fees expensed as management grows the portfolio to its target 1.1–1.2x leverage (from 1.0x currently) and redeploys funds currently tied up in non-accruals once resolved… The primary driver of return for a BDC is its dividend payout over time, and we have confidence that MRCC’s new $1.00 distribution (equating to a ~10% yield) is sustainable,” Kotowski noted. In line with his comments, Kotowski rates MRCC an Outperform (i.e. Buy), and his $12 price target suggests it has room to grow 25% in the year ahead. (To watch Kotowski’s track record, click here) The analyst reviews on MRCC break down 2 to 1 in favor of Buy versus Holds, making the consensus rating a Moderate Buy. The shares have a trading price of $9.59, and their $11.13 average target implies an upside of 16% in the…