Following a bull run in 2020 and 2021 investors might have expected a period of cooling down of markets. With inflation reaching 40-year highs, energy, and oils prices skyrocketing investors may well be seeking to make more defensive plays in the markets.
Long-term investors rarely care about day-to-day fluctuations of the market which is well expressed by the analysts from Wells Fargo (NYSE: WFC) Chris Harvey. Harvey believes that we will probably not experience a recession in 2022 despite bearish calls on Wall Street.
The analyst is not alone in his bullish predictions, his colleague Finan O’Shea also added buy ratings for two companies that boast over 8% dividend yield, which investors should have on their watchlists.
Crescent Capital BDC (NASDAQ: CCAP)
Crescent is a business development company whose shares are spotting an impressive 9.19% dividend yield. The company focuses on originating and investing in the debt of private U.S. middle-market companies. Currently, the debt portfolio stands at over $1 billion encompassing over 130 companies.
Since its inception, CCAP has returned consistent net asset value and dividend combination with $7.71 share in cumulative dividends, ending the most recent quarter with a net asset value of $20.24.
Four-year average dividend growth stands at 9.69% and with a 9.19% yield, it’s one of the strongest in its niche. Future-proofing should be assured with $88.2 million invested across six new portfolio companies as well as the existing 11 portfolio companies.
The stock performance was in a bit of a rut in 2022 trading down for most of the year, recently it recovered and seems to have found a new resistance point around $17.5. In more recent trading sessions huge volume spikes occurred with sellers, in the end, dominating and keeping the stock between the 50 and 200-day Simple Moving Averages (SMA).
Analysts are in agreement giving the stock a strong buy rating, predicting that the average price for the next 12-months will be $20, which is 12.11% higher than the current trading price of $17.84. There are not a lot of analysts covering the stock; however, they’re in agreement that the CCAP is undervalued at these price levels based on their predictions.
Barings BDC, Inc. (NYSE: BBDC)
Roughly six months ago the company merged with Sierra Income Corporation adding $2.2 billion worth of investments to the company’s portfolio. With the merger, a share repurchase plan of $30 million was announced.
In their latest earnings, they announced that the company generated a net investment income per share of $0.23 bringing the annual figure to $1.19. The quarterly dividend was raised by 4.5% reaching $0.23 per share and currently, it stands at 8.47% with a decent 72.2% dividend payout rate.
Shares have been trading in choppy and volatile sessions in 2022 with higher than usual volumes seen in March and April. Currently, the stock is above all SMAs possibly read to test the above resistance around $11. Patient investors could possibly find good entry positions in the short-term with high volatility in the stock.
Analysts give the stock a strong buy rating settling on the next 12-months price predictions which are over 10% from the current trading price of $10.86. With higher than usual volatility in the share price the most bullish price of $13 could easily be reached soon.
Stockbond is the name
With high and relatively safe dividends and high-quality loan portfolios these two stocks could be termed “stockbonds”. Bond-like characteristics are attributed to these stocks due to their quality portfolio which could be likened to an investment-grade bond. Also, they could be likened to junk bonds because of their high yield, however, both of these companies possess high-quality portfolios.
Investors looking for passive income streams could possibly benefit from adding one of these stocks to boost their yield. The riskier nature of the yield has some drawbacks but with high quality portfolios, it should be safer than junk bonds and other high-yielding instruments.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.