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Markets ended 2020 on a high note, and have started 2021 on a bullish trajectory. All three major indexes have recently surged to all-time highs as investors seemingly looked beyond the pandemic and hoped for signs of a rapid recovery. Veteran strategist Edward Yardeni sees the economic recovery bringing its own slowdown with it. As the COVID vaccination program allows for further economic opening, with more people getting back to work, Yardeni predicts a wave of pent-up demand, increasing wages, and rising prices – in short, a recipe for inflation. “In the second half of the year we may be on the lookout for some consumer price inflation which would not be good for overvalued assets,” Yardeni noted.The warning sign to look for is higher yields in the Treasury bond market. If the Fed eases up on the low-rate policy, Yardeni sees Treasuries reflecting the change first.A situation like this is tailor-made for defensive stock plays – and that will naturally bring investors to look at high-yield dividend stocks. Opening up the TipRanks database, we’ve found three stocks featuring a hat trick of positive signs: A Strong Buy rating, dividend yields starting at 9% or better – and a recent analyst review pointing toward double-digit upside.CTO Realty Growth (CTO)We'll start with CTO Realty Growth, a Florida-based real estate company that, last year, made an exciting decision for dividend investors: the company announced that it would change its tax status to that of a real estate investment trust (REIT) for the tax year ending December 31, 2020. REITs have long been known for their high dividend yields, a product of tax code requirements that these companies return a high percentage of their profits directly to shareholders. Dividends are usual route of that return.For background, CTO holds a varied portfolio of real estate investments. The holdings include 27 income properties in 11 states, totaling more than 2.4 million square feet, along with 18 leasable billboards in Florida. The income properties are mainly shopping centers and retail outlets. During the third quarter, the most recent reported, CTO sold off some 3,300 acres of undeveloped land for $46 million, acquired two income properties for $47.9 million, and collected ~93% of contractual base rents due. The company also authorized a one-time special distribution, in connection with its shift to REIT status; its purpose was to put the company in compliance with income return regulation during tax year 2020. The one-time distribution was made in cash and stock, and totaled $11.83 per share.The regular dividend paid in Q3 was 40 cents per common share. That was increased in Q4 to $1, a jump of 150%; again, this was done to put the company in compliance with REIT-status requirements. At the current dividend rate, the yield is 9.5%, far higher than the average among financial sector peer companies.Analyst Craig Kucera, of B. Riley, believes that CTO has plenty of options going forward to expand its portfolio through acquisition: “CTO hit the high end of anticipated disposition guidance at $33M in 4Q20, bringing YTD dispositions to nearly $85M, with the largest disposition affiliated with the exercise of a tenant's option to purchase a building from CTO in Aspen, CO. Post these dispositions, we estimate >$30M in cash and restricted cash for additional acquisitions, and we expect CTO to be active again in 1H21.”To this end, Kucera rates CTO a Buy along with a $67 price target. At current levels, his target implies a 60% one-year upside potential. (To watch Kucera’s track record, click here)Overall, CTO has 3 reviews on record from Wall Street’s analysts, and they all agree that this stock is a Buy, making the analyst consensus of Strong Buy unanimous. The shares are priced at $41.85, and their average price target of $59.33 suggests room for ~42% growth in the year ahead. (See CTO stock analysis on TipRanks)Holly Energy Partners (HEP)The energy sector, with its high cash flows, is also known for its high-paying dividend stocks. Holly Energy Partners is a midstream transportation player in sector, providing pipeline, terminal, and storage services for producers of crude oil and petroleum distillate products. Holly bases most of its operations in the Colorado-Utah and New Mexico-Texas-Oklahoma regions. In 2019, the last full year for which numbers are available, the company saw $533 million in total revenues.The company’s revenues in 2020 slipped in the first and second quarters, but rebounded in Q3, coming in at $127.7 million. Holly reported at distributable cash flow – from which dividends are paid – of $76.9 million, up more than $8 million year-over-year. This supported a 35-cent dividend payment per regular share, or $1.40 annualized. At that rate, the dividend yields a strong 10%.Noting the dividend, Well Fargo analyst Michael Blum wrote, “Our model suggests the distribution is sustainable at this level as [lost revenue] is offset by inflation escalators in HEP's pipeline contracts and contributions from the Cushing Connect JV project. About 80% of HEP's distribution is tax-deferred.”Blum gives HEP a $20 price target and an Overweight (i.e. Buy) rating. His target implies a 38% upside for the next 12 months. (To watch Blum’s track record, click here)"Our rating primarily reflects the partnership's steady, fee-based cash flows, robust yield and conservative balance sheet,” Blum added.For the most part, Wall Street agrees with Blum’s assessment on HEP, as shown by the Strong Buy analyst consensus rating. That rating is supported by 6 reviews, split 5 to 1 Buys versus Hold. The average price target, at $18.67, suggests that the stock has room to grow ~29% this year. (See HEP stock analysis on TipRanks)DHT Holdings (DHT)Midstreaming is only one part of the global oil industry’s transport network. Tankers are another, moving crude oil, petroleum products, and liquified natural gas around the world, in bulk. Bermuda-based DHT operates a fleet of 27 crude oil tankers, all rated VLCC (very large crude carrier). These vessels are 100% owned by the company, and range in tonnage from 298K to 320K. VLCCs are the workhorses of the global oil tanker network.After four quarters of sequential revenue gains, even through the ‘corona half’ of 1H20, DHT posted a sequential drop in revenues from 2Q20 to 3Q20. The top line that quarter fell from $245 million to $142 million. It’s important to note, however, that the 3Q revenue result was still up 36.5% year-over-year. EPS, at 32 cents, was a dramatic yoy turnaround from the 6-cent loss posted in 3Q19.DHT has a history of adjusting its dividend, when needed, to keep it in line with earnings. The company did that in Q3, and the 20-cent per regular share payment was the first dividend cut in 5 quarters. The general policy is a positive for dividend investors, however, as the company has not missed a dividend payment in 43 consecutive quarters – an admirable record. At 80 cents per share annualized, the dividend yields an impressive 14%.Kepler analyst Petter Haugen covers DHT, and he sees potential for increased returns in the company’s contract schedule. Haugen noted, “With 8 out of 16 vessels ending their TC contracts by end Q1 2021, we believe DHT is well positioned for when we expect freight rates to appreciate in H2 2021E.”Getting into more details, Haugen adds, “[The] main underlying drivers are still intact: fleet growth will be low (1% on average over 2020- 23E) and the US will still end up being a net seaborne exporter of crude oil, making further export growth from the US drive tanker demand. We expect spot rates to improve again during 2021E, shortly after oil demand has normalised. We expect average VLCC rates of USD41,000/day in 2022E and USD55,000/day in 2023E.”In line with his comments, Haugen rates DHT a Buy. His $7.40 target price suggests that this stock can grow 34% in the months ahead. (To watch Haugen’s track record, click here)The rest of the Street is getting onboard. 3 Buys and 1 Hold assigned in the last three months add up to a Strong Buy analyst consensus. In addition, the $6.13 average price target puts the potential upside at ~11%. (See DHT stock analysis on TipRanks)To find good ideas for dividend stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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