In a tougher market, some investors are sticking to familiar dividend names for safety. But outside the safety of the blue-chip group, there are lesser-known companies that still offer high returns and enough quality to merit a closer look. These under-the-radar names may not get much attention, but that’s often where exciting income opportunities begin.
But of course, high returns don’t automatically mean good investments. That’s why today I’m looking for high-yield stocks that still pass the scrutiny of Wall Street.
Using Barchart’s Stock Screener, I selected the following filters to get my list:
% Annual Dividend Yield (FWD): It was left blank so it could be sorted later from largest to smallest.
Market capitalization ($K): 300 million dollars – 10 billion dollars. “Small” and “medium” businesses that are often overlooked.
Current Analyst Rating: 3.5-5. Stocks that analysts call “moderate buy” or “strong.”
Number of analysts: 12 or more. A higher number indicates stronger consensus confidence.
Dividend investing ideas: Best Dividend Stocks. This Barchart-curated list helps further narrow the field to companies that have already been analyzed for dividend strength, payout consistency, and analyst ratings.
I set up the screen, accessed the results and got 14 companies. I’ll cover the top three with the highest future annual dividend yield.
Let’s start with the first dividend stocks:
Blue Owl Capital Corp. is a business development company (BDC) that provides loans to middle-market companies in the U.S. It helps established private companies finance growth, acquisitions and other business needs, while being part of the broader platform behind Atlas Holdings’ recent investment. I’ve included Blue Owl Capital before on my list of best mid-cap dividend stocks, and even back then, its returns were in the double digits.
Today, Blue Owl stock currently trades with a market capitalization of approximately $5.7 billion and pays an annual forward dividend of $1.48, which translates to a yield of approximately 13%, the highest on this list and one of the highest yields available.
With that, a consensus among 14 analysts rates OBDC stock a “Strong Buy,” and price targets suggest potential upside of up to 36%.
The next dividend stock on my list is Sixth Street Inc. Specialty Loansanother business development company that makes loans to middle market companies. Provides investors with access to private credit through a portfolio focused primarily on directly originated loans and other income-generating investments. Sixth Street focuses on emerging players in high-growth sectors such as healthcare, energy, technology and more.
Sixth Street pays $1.84 a year, yielding about 9.7%. For a company with a market capitalization of around $1.8 billion, that’s a pretty hefty figure.
Meanwhile, a consensus among 12 analysts rates the stock as a “Moderate Buy,” with mid-to-high price targets suggesting 18% to 32% upside potential for the stock over the next year.
The last dividend stock on my list is OneMain Holdings Inc., a consumer financing company that offers personal loans and related products to non-prime customers in the U.S. OneMain was also in the news recently, thanks to its Credit Worthy financial education program, when Texas moved to require personal finance courses for high school students. What a great idea!
One thing I like about OneMain is that the stock has already shown a significant recovery after falling below $50 in March. This tells me that buyers were willing to step in and support the stock at that level. When choosing a dividend, price doesn’t always matter, but it’s good to see evidence of potential income. and capital appreciation.
Looking back, OneMain has a market capitalization of almost $7 billion and pays an annual forward dividend of $4.20, which translates to a yield of around 7%.
Analyst sentiment is also leaning bullish, with 17 analysts rating the stock a “Moderate Buy” by consensus. The mid and high target prices also suggest an increase of between 15% and 44% over the next year, the highest on this list.
These are three of the highest-yielding hidden dividend stocks currently backed by Wall Street. These names are not for everyone, as they may not offer the same level of stability or long track record as Dividend Aristocrats or Dividend Kings, but every established dividend name had to start somewhere.
That said, for investors willing to look beyond the usual blue-chip names, these companies may deserve a closer look.
As of the date of publication, Rick Orford had no (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com
