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3 Big Dividend Stocks Yielding Over 7%; JMP Says ‘Buy’

With markets showing volatile movements in recent sessions – down one day, up the next – some of Wall Street’s analysts are showing a renewed interest in high-yield dividends. Not that they have ever shied away from these steady income generators; rather, the market boom of this past summer led the Street to focus on share appreciation as the source of profits. Market fluctuations since early September have analysts and investors both taking a closer look at defensive plays.The research analysts at JMP Securities have been searching the markets for the ‘right’ buys, and their picks bear a closer look. They’ve been tapping reliable, high-yielding dividend payers as an investment play of choice. The TipRanks database sheds some additional light on three of JMP’s picks – stocks with dividends yielding 7% or better – and that the investment firm sees with 20% upside or better. Annaly Capital Management (NLY)The first name on the list from JMP is Annaly Capital Management. The company inhabits the mortgage-backed security niche, with $104 billion in total assets, primarily mortgage securities backed by Freddie Mac and Fannie Mae. Annaly is one of the market’s largest REITs.The corona crisis was hard on Annaly, as the economic crush of the first quarter made it difficult for loan holders to make payments. As the economy bounced back in Q2, however, Annaly’s fortunes reversed and the steep losses from Q1 turned into modest gains. Q2 revenues came in at $979 million, with EPS, at 27 cents, beating the 23-cent forecast. Looking ahead, the forecast is a 26-cent EPS for Q3. It’s important to note that Annaly has beaten the earnings forecast in each of the past three quarters.Turning to the dividend, Annaly has remained a reliable dividend payer over the past several years, with a history of adjusting the payment to keep it sustainable. The current dividend is 22 cents per common share, and was paid out at the end of September; at that rate, the yield is 12.27%. In an era of near-zero rates from the Fed, NLY’s dividend return is sky-high.JMP analyst Steven DeLaney is impressed with NLY. The 5-star analyst pointed out, “The combination of dividends paid during the [second] quarter and the sterling book value gain—the company’s best quarterly gain since the Great Recession of 2008-09 […] We believe NLY shares should trade at a meaningful premium to peers based on the company’s size, scale, and, now, its internal management structure.”DeLaney rates the stock an Outperform (i.e. Buy) along with an $8.50 price target. This figure suggests a 20% upside potential from current levels. (To watch DeLaney’s track record, click here)Overall, there have been 8 recent analyst reviews of NLY shares, breaking down to 5 Buys and 3 Holds, giving the stock an analyst consensus rating of Moderate Buy. The $8.04 average price target implies a 13% growth potential…


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