Multi-decade high inflation and the Fed’s decision to hike interest rates several times this year have caused the benchmark stock indexes to suffer severe volatility since the beginning of the year. However, impressive corporate earnings reports and the expected economic recovery have been major supports. According to FactSet, of the 56% S&P 500 members that had reported fourth-quarter results as of February 4, 76% beat EPS estimates, and 77% topped revenue estimates.
The Labor Department’s consumer price index data for January is expected to show a 7.2% year-over-year increase in inflation. If so, this would represent the fastest inflationary increase since February 1982. Since this could increase stock market volatility further, dividend-paying stocks could be ideal bets now to ensure a steady income stream. According to IHS Markit, dividends in the United States are expected to increase 5.4% this year to $670 billion. Also, investors’ interest in dividend stocks is evident in the SPDR Portfolio S&P 500 High Dividend ETF’s (SPYD) 4.3% returns over the past three months.
Wall Street analysts expect high dividend-yielding stocks UWM Holdings Corporation (UWMC), Global Net Lease, Inc. (GNL), and loanDepot, Inc. (LDI), which are currently trading below $15, to deliver solid upside in the coming months.
UWM Holdings Corporation (UWMC)
UWMC in Pontiac Mich., is in the residential mortgage lending business in the United States. The company originates mortgage loans through the wholesale channel. It aims to provide highly efficient, accurate, and expeditious lending support.
On Nov. 9, 2021, Mat Ishbia, Chairman and CEO of UWMC, said: “UWM broke company records yet again in Q3 for overall originations and purchase originations, demonstrating continued momentum for both UWM and the broker channel. I’m proud of our newest technology launches, BOLT, The Source, and UWM Appraisal Direct.”
While the four-year average dividend yield for UWMC is 1.69%, its current dividend translates to a 9.3% yield. On Nov. 9, 2021, UWMC declared a cash dividend of $0.10 per share on its outstanding shares of Class A common stock, payable on Jan. 6, 2022.
UWMC’s total net revenue increased 42.4% sequentially to $690.31 million in the third quarter, ended Sept. 30, 2021. Its adjusted net income came in at $254.67 million, up 137.8% sequentially. Also, its adjusted EBITDA was $290.38 million, up 38.5% sequentially.
Analysts expect UWMC’s revenue to come in at $3.04 billion in 2022. Its EPS is estimated to come in at $0.76 for its fiscal year 2022. The stock closed yesterday’s trading session at $4.28. Wall Street analysts expect the stock to hit $7.20 in the near term, which indicates a potential 68.2% upside.
Global Net Lease, Inc. (GNL)
GNL in New York City is a publicly-traded real estate investment trust that is listed on the NYSE. It focuses on acquiring a diversified global portfolio of commercial properties, emphasizing sale-leaseback transactions.
On Nov. 4, 2021, James Nelson, CEO, said, “We have met or exceeded pre-pandemic performance levels across the company, including rent collection, cash NOI, and adjusted EBITDA figures. More importantly, GNL’s reputation as a premier partner for strategic sale-leaseback transactions among U.S. and European companies has grown during the same time, most recently evidenced by our acquisition of Trafalgar Square in Guernsey.”
GNL’s current dividend translates to an 11.52% yield, and its four-year average yield is 10.59%. On Jan. 3, 2022, GNL declared a dividend of $0.40 per share of common stock payable on Jan. 18, 2022.
For its fiscal third quarter, ended Sept. 30, 2021, GNL’s revenue from tenants came in at $95.76 million, up 15.8% year-over-year. Its net income came in at $2.37 million, compared to a $502,000 loss. And its EPS was $0.02, compared to a $0.01 loss per share.
GNL’s revenue is expected to be $416.35 million in fiscal 2022, representing an 8.1% year-over-year rise. The company’s EPS is also expected to increase 600% year-over-year to $0.1 in fiscal 2022. The stock closed yesterday’s trading session at $13.95. Analysts expect the stock to hit $22.33 in the near term, which indicates a 60.1% potential upside.
loanDepot, Inc. (LDI)
LDI engages in the origination and servicing of conventional and government mortgage loans in the United States. The Foothill Ranch, Calif.-based concern offers traditional agency-conforming and prime jumbo, home equity, Federal Housing Administration, and VA loans.
On Feb. 1, 2022, LDI Founder and CEO Anthony Hsieh said, “The results of 2021 are only a preview of what’s to come as we leverage our brand, develop and apply innovative technology solutions, drive down costs and add more products and services to help our customers successfully navigate one of the most important financial transactions of their lives.”
On Dec. 16, 2021, LDI announced that it had declared a regular cash dividend of $0.08 per share on its Class A common stock and Class D common stock. Its current dividend translates to an 8.96% yield.
LDI’s cash and cash equivalents came in at $419.57 million for the period ended Dec. 31, 2021, versus $284.22 million for the period ended Dec.31, 2020. Its total assets were $11.81 billion, compared to $10.89 billion for the same period. And its total liabilities came in at $10.18 billion for the period ended Dec.31, 2021, versus $11.09 billion for the period ended Sept. 30, 2021.
For its fiscal year 2023, analysts expect LDI’s revenue to be $2.9 billion, representing a 5.7% year-over-year rise. In addition, the company’s EPS is expected to increase 17.9% year-over-year to $1.38 in 2023. The stock closed yesterday’s trading session at $3.57. Wall Street analysts expect the stock to hit $6.90 in the near term, which indicates a potential 93.3% upside.
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UWMC shares were trading at $4.34 per share on Tuesday morning, up $0.06 (+1.40%). Year-to-date, UWMC has declined -26.69%, versus a -5.90% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...
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