As markets continue to rise, investors are seeking ways to maximize their returns. While growth stocks are a popular choice in this environment, dividend stocks should not be overlooked. These stocks offer a combination of natural price appreciation and dividend payouts, making them a solid option for investors looking for steady returns.
Dividend investing is often seen as a defensive strategy, but it can also be a wise choice in good times as part of a balanced portfolio. The steady income stream provided by dividend payments adds to the total return potential. Analyst Jason Stewart from Janney Montgomery has been identifying dividend stocks with unique advantages, such as yields of 14% or higher and monthly payments. Monthly dividends allow investors to access income more frequently, providing greater flexibility.
One such dividend pick from Janney is Orchid Island Capital (ORC), a specialty finance company that focuses on investing in the residential mortgage-backed securities market. As a real estate investment trust (REIT) for tax purposes, Orchid Island is a high-yield dividend payer. The company’s investment portfolio includes traditional pass-through Agency RMBS and structured Agency RMBS, with a focus on single-family residential mortgage loans.
In the first quarter of 2024, Orchid Island reported a net income of $19.8 million, with an EPS figure of $0.38. The company’s earnings exceeded expectations by 30 cents per share, and it maintained a liquidity position of $215.7 million in cash and cash equivalents. Orchid Island’s monthly dividend payment is set at 12 cents per share, totaling 36 cents per share quarterly or $1.44 annualized. This translates to a forward yield of nearly 17%, offering a significant rate of return.
Analyst Jason Stewart is positive about Orchid Island’s ability to capitalize on mortgage spreads and deliver value to shareholders. He believes that the company’s diversified and liquid portfolio is well-positioned to provide long-term shareholder value in the current market environment. Stewart initiates coverage of Orchid Island with a Buy rating and a price target of $9.50, suggesting a one-year upside potential of 11.5% and a total return of nearly 28.5% considering the dividend yield.
Overall, dividend stocks like Orchid Island Capital provide investors with a solid option for generating steady returns in both good and challenging market conditions. It is important for investors to conduct their own analysis before making any investment decisions.