In view of the still difficult market environment, BlackRock relies on two dividend stocks. What they are and what Wall Street analysts think of the stocks.
• BlackRock: Inflationary pressures could increase further
• BlackRock buys 1,731,800 DHT shares in Q2
• BlackRock acquires 1,631,088 NewtekOne shares in the second quarter
BlackRock relies on dividend stocks
In a recent report, TipRanks takes stock of the current market landscape. This also raises the question of how resilient stocks actually are. The first thing to note here is that although inflation is continuing to fall, it is still above the target of two percent. Finally, with inflationary pressures still lingering, earnings stagnated somewhat in the second quarter. Still, most companies managed to surpass the already low bar. Wei Li, BlackRock’s global chief investment strategist, explained the impact on investors in a recent note, with a focus on improving profit margins.
“US profits are flat. Market expectations for a rise in profit margins next year look rosy as labor shortages continue to weigh on wages… We see inflation on a rollercoaster as labor shock supersedes spending imbalance. If the “As companies look to hedge their margins against this wage pressure in a sluggish economy, it could contribute to inflationary pressures and potentially lead to even higher interest rates from central banks,” Li said, according to TipRanks.
With that outlook, BlackRock is currently betting on dividend stocks. TipRanks examined the two stocks to find out what Wall Street analysts are saying and whether these stocks are compelling investments.
NYSE title DHT Holdings stock
The first stock is DHT, a holding company active in the global marine transportation sector. The Company is an independent crude oil tanker company with a modern fleet of 24 crude oil tankers, the largest oil tankers currently plying the trade routes.
In the last reporting quarter, DHT was able to score with solid amounts. The holding company earned $152 million in shipping, up from $99.2 million in the same period last year. Meanwhile, profit more than doubled to $112.9 million from $54.1 million in the prior-year quarter. DHT’s non-GAAP EPS for the most recent quarter was 35 cents, in line with expectations.
The next dividend payout of $0.35 per share is Aug. 30, which translates to annual earnings of $1.40 per share and an impressive 14.5 percent yield, according to TipRanks.
BlackRock swiped at DHT shares, acquiring as many as 1,731,800 shares in the past quarter. The investment and asset manager now holds a total of 9,579,402 shares in the shipping company, valued at over $91 million.
However, the company’s shares are not only popular with BlackRock, but also with analysts, as TipRanks reports. For example, top analyst Jonathan Chappell of Evercore writes, “The Q3 raise is the only change in EPS or dividend estimate through 2024 as DHT continues to keep costs at manageable levels and our outlook for crude oil tanker markets versus our bullish view.” unchanged for the next six months… A seasonal spike in VLCC rates early in the winter season should act as a catalyst for the stock.” As such, Chappell rates the stock as Outperform and sets a price target of $13.
A total of four analysts provided a rating for DHT, with all unanimous in rating the stock a ‘buy’. The consensus rating is a “strong buy”. The average target price for the DHT shares is $13.43.
NASDAQ value NewtekOne stock
The second stock is that of technology and financial services company NewtekOne. The company specializes in partnering with the business community, offering a range of financial solutions tailored to businesses of all sizes – from small businesses to large corporations. It was also only in January 2023 that the company acquired National Bank of New York City and became a bank holding company as part of that acquisition.
NewtekOne revenue of $52.1 million missed expectations by $1.1 million in Q2, but still represents an increase of more than 170 percent year-on-year. However, non-GAAP EPS of $0.26 was 9 cents ahead of estimates.
The last dividend payment took place on July 21, 2023. The company paid 18 cents per common share. This results in an annual profit of 72 cents per common share and a return of 4 percent. Again, BlackRock appeared positive and the investment and wealth manager bought 1,631,088 shares of the company’s stock during the quarter, valued at approximately $29 million.
And B. Riley’s top analyst Bryce Rowe also has his sights set on the stock. He was particularly impressed by the acquisition of the National Bank of New York City: “We continue to believe that NEWT is in the early stages of the transition from a BDC to a bank/financial holding company, which will begin with the completion of the acquisition of National Bank of New York City started in early January. Q2’23 was the first full quarter as a financial holding and demonstrated why transitioning from a BDC to a financial holding makes sense for NEWT,” he was quoted as saying by TipRanks. Speaking about the company’s future, Rowe also adds: “We believe NEWT’s valuation has the potential to perform higher due to the asset-light nature of its operating model, which is expected to generate a return of over 3.0 percent – by comparison to an estimated average of about 1.09 percent for banks valued at $5 billion to $50 billion in 2023.” The analyst has therefore raised his target price from $20 to $21.
Overall, there are only two analyst ratings for NewtekOne’s shares, each containing a buy and hold recommendation, resulting in a moderate buy recommendation.
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