2 High-Yield Dividend Stocks to Buy NOW

At least several times a week, I get a note from a newsletter subscriber or other investor who has heard a stock market correction or bear market is coming soon. The next statement is that the investor either plans to sell his stocks until prices drop or wait for the prices to drop before buying into any stocks. Like many commonly held beliefs about investing in stocks, this is one that is likely to cost the investor a lot of money.

Here are a couple of reasons why selling to avoid a market correction or waiting for one to buy will cost an investor money.

Reason 1: No matter what you see or read in the financial news, the next bear market does not appear to be imminent. The main reason to forecast an approaching bear market is because it has been almost nine years since the end of the last one. This logic doesn’t work because bear markets do not follow a calendar. Ten of the last 12 bears have been associated with an economic recession. The current economy gives zero indication that the next recession is on the horizon. History tells us that the economy will at some point go to negative growth, but currently there are none of the usual indicators for a pending economic downturn.

A stock market bear market is arbitrarily defined as a 20% decline from the most recent high. While the last decline of this magnitude occurred in 2008-2009, there have been several “near bear” corrections since then. Here are the three significant corrections that occurred during the current bull market:

  • 2010: 16% decline
  • 2011-2012: 19.4% decline
  • 2015-2016: 14.3% decline

These corrections have acted as circuit breakers that keep the current market values from a place where a big drop is likely just to take off some of the froth. While it is likely that a correction will occur within the next year (they happen on average once a year), a true bear market is very unlikely.

Reason 2: History shows that getting out of the market too early costs you more than riding out corrections and bear markets. Here are some averages on the 12 bear markets since 1937.

  • The average decline was 35.5%.
  • Average duration from market peak to bottom of 13.8 months.
  • Typical decline of about 20% in the first year.

The interesting additional data is that the two years leading up to the bear markets are, on average, the years with the biggest bull market gains. In the two years before the start of the bear markets, the S&P 500 climbed by an average 58% plus dividends. In the final year before the peaks, the average gain was 25% plus dividends. Comparing the numbers, even if you hold on through the average bear market, owning the stock averages for the two years prior to the start of the bear market leaves you with a larger portfolio value than if you had stayed out of the market and had perfect timing to get back in when the bear hit bottom. The not obvious lesson is that getting out too early can cost you more wealth than staying in through part or even all the bear market.

One feature of my dividend focused strategies is that they rule out the need to try to time when the next bear market or correction will start. I can more accurately predict dividend payments than I can swings in the stock market. My strategies focus on finding dividend stocks with a high degree of confidence in the ongoing dividend payments and buy those stocks to build a growing income stream. If the market declines into a correction or bear market, dividend earnings can be used to buy shares at lower prices boosting both the dividend stream and the capital gains when the market starts the recovery or next bull market. A dividend focused investment strategy allows you to take advantage of the proven techniques of dollar cost averaging and to buy low when fearful investors have panicked.

I recommend that income investors focus on building a portfolio of dividend stocks that balances high yield stocks with those where dividend growth is very predictable. Here are a pair of income stocks that illustrate this combination.

Hercules Capital Inc (NYSE: HTGC) is a business development company (BDC) that makes loans in in the venture capital space. Hercules client companies are growth businesses backed by venture capital investors that need additional capital to fulfil their growth and investment goals.

Loans from Hercules provide debt capital that does not dilute the equity holdings of investors and insiders. Hercules typically receives some sort of equity stake or warrant, so generates additional profits when a client company gets bought out or enters the public markets with an IPO.

This BDC has paid a steady, well covered by cash flow dividend for over five years. The shares currently yield 9.5%.

EPR Properties (NYSE: EPR) is a very well-run net lease REIT that has done a great job of growing the business and generating above average dividend growth for investors. With the net-lease (NNN) model, the tenants that lease the properties owned by EPR are responsible for all the operating costs like taxes, utilities and maintenance. EPR’s job is to collect the rent checks. Typically, NNN leases are long term, for 10 years or more, with built-in rent escalations.

EPR Properties separates itself from the rest of the triple net REIT pack by the highly focused types of properties the company owns. The EPR assets can be divided into the three categories of entertainment, comprised of movie megaplex theaters; recreation, including golf and ski facilities; and education which counts in its portfolio of properties private and charter schools, and early childhood centers.

EPR has generated superior returns for investors by growing its dividend an average of 7% per year for eight straight years. The shares yield 6.8%.

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Source: Investors Alley 

7 Stocks Set for Monster Growth in 2018

With the market primed for success in 2018, I wanted to find stocks that go above and beyond the normal growth prospects. Here I looked for seven top growth stocks with huge upside potential and serious Street support. The best way to find these stocks is with TipRanks’ Top Analyst Stocks tool.

Why? Well, the tool reveals all stocks with a ‘Strong Buy’ rating from Wall Street’s best-performing analysts. You can then sort the stocks by upside potential to pinpoint compelling investing opportunities.

At the same time, I was careful to avoid stocks that have big upside potential simply because share prices have crashed recently. Check the price movement over the last three months to be sure shares are moving in the right direction.

With that being said, let’s get straight down into taking a closer look at these seven stocks — all of which I believe look undervalued right now:

Stocks With Top Buy Ratings: Cloudera (CLDR)

Big data cruncher Cloudera, Inc. (NYSE:CLDR) has upside potential of 27% say the Street’s top analysts. Currently, the stock is trading at $17.88 but analysts see it hitting $22.75 in the coming months. The stock has experienced some volatility in the last year, but it is now facing 2018 with a very promising setup. Indeed, in the last three months, shares have already improved 27%!

Abhey Lamba, a five-star Mizho analyst, notes that management has delivered results above consensus expectations in its first few quarters as a public company. He upgraded his Cloudera rating from “hold” to “buy” on Jan. 9. Here he explains why he is turning bullish on CLDR:

We can see from TipRanks that this ‘Strong Buy’ stock has 100% Street support. Indeed, in the last three months, CLDR has received five straight “buy” ratings, including an upgrade from Citigroup.

Source: Shutterstock

Stocks With Top Buy Ratings: Arena Pharma (ARNA)

Healthcare stock Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) has monster upside potential of almost 50%. Shares are already up 25% in the last three months. And now top analysts say the stock can leap from its current share price of $34.36 to $51.33.

Plus, it received three very recent “buy” ratings from top analysts all with bullish price targets.

The company’s development pipeline includes two important drugs: Etrasimod for chronic bowel disease Ulcerative Colitis (UC) and Ralinepag for Pulmonary Arterial Hypertension (PAH). William Tanner, a top healthcare analyst from Cantor Fitzgerald, is excited about both.

He says:

“We remain convinced that ralinepag could be a best-in-class treatment for pulmonary arterial hypertension (PAH)… Less well appreciated may be the potential of estrasimod, Arena’s S1P receptor modulator.” Arena is planning to release key Phase 2 data for estrasimod in 1Q18, and according to Tanner “positive data could create an opportunity for meaningful share price appreciation.”

Stocks With Top Buy Ratings: Dave & Busters (PLAY)

The hybrid game arcade and restaurant chain Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY) is set for a rebound in 2018. And that means big upside potential of 43% from the current share price. That would take shares all the way from $46 to $66.

However, Maxim Group’s Stephen Anderson is much more bullish than consensus. He believes the stock can soar to $83. This suggests massive upside potential of 79% from the current share price. Even though the stock has experienced some short-term sales volatility, he says that valuation remains very compelling.

The stock is ‘deeply inexpensive relative to Casual Dining Peers’ and ultimately: “Our core thesis on PLAY, which is comprised of; (1) high-margin entertainment revenue growth; (2) robust unit expansion; and (3) longer-term comp growth of at least 2%, remains intact.” PLAY should also benefit big-time from the upcoming tax reform.

In the last three months, PLAY has received an impressive eight consecutive “buy” ratings. As a result, the stock has a ‘Strong Buy’ analyst consensus. Out of these ratings, five come from best-performing analysts.

Stocks With Top Buy Ratings: CBS Corp (CBS)

Media stock CBS Corporation (NYSE:CBS) can climb a further 23% in the next 12 months say top analysts. This would see the stock trading at over $70 vs the current share price of just under $60.

Just a couple of days ago, on January 16, Benchmark’s Daniel Kurnos reiterated his “buy” rating. This was accompanied with a very bullish $78 price target (32% upside). “At just 9x 2018E OIBDA and 11x EPS, we believe CBS represents the best value in the network space” states Kurnos.

Reassuringly, Kurnos says “that the demise of Network ad revenues is greatly exaggerated.” He even says that this bearish talk is overshadowing “the positive traction CBS is seeing in its ancillary revenue streams.” The underlying business model is very strong and “the pressure on the media sector has created a buying opportunity for the content leader.”

Note that Kurnos is ranked as #210 out of over 4,750 analysts on TipRanks. Meanwhile, out of nine recent ratings on CBS, eight are buys. This means that in the last three months only one analyst has published a “hold” rating on the stock.

Source: Shutterstock

Stocks With Top Buy Ratings: Neurocrine (NBIX)

Over the last three months, Neurocrine Biosciences, Inc. (NASDAQ:NBIX) has already spiked by 29%. And top analysts believe this biopharma still has serious growth potential left to run in 2018. Specifically, the Street sees NBIX rising 33% from $76 to just over $100.

The Street is buzzing about Neurocrine’s Ingrezza drug. This is the first FDA-approved treatment for adults with tardive dyskinesia (TD). A side effect of antipsychotic medication, TD is a disorder that leads to unintended muscle movements. Oppenheimer’s Jay Olson is very optimistic about Ingrezza’s potential. He says:

“Ingrezza performance continues to overwhelm on several dimensions, and our observations suggest Ingrezza could become a pipeline within a drug that could unlock substantial unappreciated value to shareholders.” He even suggests this drug has ‘pipeline’ potential by expanding into similar disorders like Tourette Syndrome.

Encouragingly, the stock has received no less than 10 consecutive “buy” ratings from analysts in the last three months. Seven out of the 10 of these “buy” ratings are from top-performing analysts.

Sinclair Broadcast Group Inc (NASDAQ:SBGI)

Source: Shutterstock

Stocks With Top Buy Ratings: Sinclair Broadcast (SBGI)

Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) is one of the U.S.’s largest and most diversified television station operators. SBGI is already up 30% in the last three months. And top analysts see 25% upside potential ahead- with the stock due to get a big tax reform boost.

Indeed, Benchmark Capital has just named SBGI as one of its Best Ideas for 1H18. Five-star Benchmark analyst Daniel Kurnos says “We see SBGI as one of the best values in the entire media landscape.” He is eyeing $55 as a potential price target (40% upside potential).

According to Kurnos, Sinclair has multiple upcoming catalysts over the next six months. This includes the pending mega deal between Sinclair and Tribune. Sinclair is currently waiting for regulatory approval for the $3.9 billion takeover would give Sinclair control of 233 TV stations.

Top analysts are united in their bullish take on this ‘Strong Buy’ stock. In the last three months, five analysts have published buy ratings on Sinclair.

Source: Shutterstock

Stocks With Top Buy Ratings: Laureate Education (LAUR)

Laureate Education, Inc. (NASDAQ:LAUR) is the largest network of for-profit higher education institutions. This Baltimore-based stock owns and operates over 200 programs (on campus and online) in over 29 countries. Over the last three months, the stock is up 10%. But analysts say bigger upside of over 19% is on the way. Currently, this is still a relatively cheap stock to buy at just $15.26.

Furthermore, Stifel Nicolaus analyst Shlomo Rosenbaum notes that Chile’s election result is a “material positive” for Laureate. He says new President Sebastian Pinera is less likely to support legislation for free post-secondary education- the prospect of which has dampened prices to date. Rosebaum currently has an $18 price target on the stock (18% upside).

Overall, Laureate certainly has the Street’s seal of approval. The stock has scored four top analyst “buy” ratings recently. This includes a bullish call from one of TipRanks’ Top 20 analysts for 2017, BMO Capital’s Jeffrey Silber.

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Source: Investor Place