Raymond James, a leading investment firm, has recently recommended two high-yield dividend stocks for investors looking for steady income and growth potential. The firm’s analysts have given these stocks a buy rating and a positive outlook, based on their strong fundamentals and attractive valuations. Here are the details of the two dividend stocks that Raymond James says are worth buying now.
Golub Capital BDC: A 10% Yielder with Growth Prospects
Golub Capital BDC (GBDC) is a business development company that provides capital, credit, and financial services to small- and mid-sized businesses in the mid-market sector. These are the businesses that drive the US economy and need access to flexible and customized financing solutions.
Golub Capital has a diversified portfolio of loans and equity investments, with a focus on software, healthcare, and consumer sectors. The company has a history of delivering consistent returns to its shareholders, with a dividend yield of 10% and a payout ratio of 87%. The company also has a strong balance sheet, with low leverage and ample liquidity.
Raymond James analyst Robert Dodd is bullish on Golub Capital, citing its solid performance in the second quarter of 2023 and its attractive valuation. Dodd notes that the company’s net asset value (NAV) per share increased by 2.4% quarter-over-quarter, while its net investment income (NII) per share beat the consensus estimate by 4%. Dodd also likes the company’s portfolio quality, which showed no non-accruals or impairments in the quarter.
Dodd rates GBDC as a Strong Buy, along with a $16 price target. This implies an upside potential of 11% from current levels.
Flushing Financial: A Regional Bank with a 5% Yield
Flushing Financial (FFIC) is a regional bank that operates in the New York metropolitan area. The bank offers a range of banking products and services, including deposits, loans, mortgages, wealth management, and insurance. The bank has a loyal customer base and a strong market position in its core markets.
Flushing Financial has been growing its earnings and dividends steadily over the years, with a dividend yield of 5% and a payout ratio of 51%. The bank also has a robust capital position, with a Tier 1 leverage ratio of 9.8% and a total risk-based capital ratio of 15.6%. The bank has been able to navigate the challenges posed by the COVID-19 pandemic and the low-interest-rate environment, thanks to its prudent risk management and diversified revenue streams.
Raymond James analyst William Wallace is optimistic about Flushing Financial, highlighting its impressive results in the second quarter of 2023 and its favorable outlook. Wallace points out that the bank’s earnings per share (EPS) beat the consensus estimate by 22%, driven by higher net interest income, lower provision for loan losses, and higher non-interest income. Wallace also expects the bank to benefit from its recent acquisition of Empire Bancorp, which will expand its footprint and enhance its profitability.
Wallace rates FFIC as an Outperform (i.e., Buy), along with a $17 price target. This suggests a 20% upside potential from current levels.