3 main dividend-paying stocks with growth opportunity; Goldman Sachs says ‘Buy’
Investing is all about finding profits, and investors have long seen two main routes to this goal. Growth stocks, stocks that will give a return based primarily on the appreciation of stock prices, is one avenue. The second route is through dividend-paying stocks. These are stocks that return a percentage of profits to shareholders – a dividend, usually sent quarterly. Payouts vary widely, from less than 1% to over 10%, but the average, among stocks listed on the S&P 500, is around 2%. Dividends are a nice addition for a patient investor because they provide a steady stream of income. Goldman Sachs analyst Caitlin Burrows has taken a look at the real estate trust segment, a group of stocks long known for their high and reliable dividends – and she sees plenty of reason to expect a strong growth in three stocks in particular. As we scoured the TipRanks database, we learned that all three have been applauded by the rest of the street as well, as they boast of a ‘Strong Buy’ analyst consensus. Broadstone Net Lease (BNL) First, Broadstone Net Lease is an established REIT that went public last September in an IPO that raised over $ 533 million. The company put 33.5 million shares on the market, followed by more than 5 million other underwriters’ repossessions. It was considered a successful opening, and BNL now has a market cap of over $ 2.63 billion. Broadstone’s portfolio includes 628 properties in 41 US states as well as the Canadian province of British Columbia. These properties have 182 tenants and are worth a total of $ 4 billion. The best feature here is the long-term nature of the leases – the weighted average remaining lease is 10.8 years. In the third quarter, the most recent with full financial data available, BNL reported net income of $ 9.7 million, or 8 cents per share. Income was mainly derived from rents and the company said it received 97.9% of rents due during the quarter. Going forward, the company expects $ 100.3 million of real estate acquisitions in the fourth quarter and an increase in the rent collection rate of 98.8%. Broadstone’s high income and rents support a dividend of 25 cents per common share, or $ 1 per year. It’s an affordable payment for the business and offering investors a 5.5% return. Goldman’s Burrows considers the company’s acquisition moves to be the most important factor here. Profitable acquisitions are the main driver of Broadstone’s earnings … As management halted acquisitions following COVID-induced market uncertainty (BNL did not make any acquisitions in 1H20) and prior to its IPO , we are convinced that acquisitions will accelerate in 2021, and start with 4Q20 activity … We estimate that BNL achieves a positive investment spread of 1.8%, leading to 0.8% profit growth ( on 2021E FFO) for every $ 100 million in acquisitions (or 4.2% of our 2021E acquisition volumes), ”Burrows opined. To that end, Burrows values BNL a buy, and its price target of $ 23 implies a hike of around 27% for the coming year. (To look at Burrow’s track record, click here) Wall Street generally agrees with Burrows on Broadstone, as evidenced by the 3 positive reviews the stock has garnered in recent weeks. These are the only opinions recorded, which makes the consensus rating of analysts a very unanimous buy. The shares are currently priced at $ 18.16, and the average price target of $ 21.33 suggests a year-over-year rise of ~ 17%. (See BNL stock market analysis on TipRanks) Realty Income Corporation (O) Realty Income is a major player in the REIT field ….
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