Every investor strives for a favorable portfolio return. The only remaining question is how. The stock market generates a massive amount of data, which by its very nature creates a barrier to entry.
Some investor follow one or more market legends along a low-resistance path. Among these legends are the heavyweights of the investment world, such as Steven Cohen.
The affluent trader at Point72 Asset Management has proven that he can withstand Wall Street's storms. He returned to the trading profession after recovering from federal inquiries earlier this decade, and transformed Point72 into a $22 billion juggernaut. He also made some risky bets in a few high-yield dividend stocks in the third quarter.
We evaluated two of Cohen's most recent movements using the TipRanks database. These are firms that pay dividends and have a minimum annual yield of 5%. We may turn to Wall Street specialists for further information on what else might have piqued Cohen's interest in these stocks.
Plains GP Holdings (PAGP) is a corporation located in the United States.
Plains GP Holdings (PAGP) operates in the oil and gas midstream business as a mid-cap company. Plains GP, among other assets, owns and operates 19,000 miles of pipelines, 8,000 crude oil rail tankers, 2,500 tractor-trailers, 20 river transport tugs, and 50 barges. From northern Alberta through Colorado, down to Texas and the Gulf, and up to the Mississippi, the network spans over the Rocky Mountain range. The corporation also owns holdings in the Great Lakes and Chesapeake Bay basins, including ports and refineries. Plains GP has a third-quarter revenue of $10.98 billion and forecasts $1.4 billion in full-year free cash flow in 2021, up to $50 million after dividend payouts.
The current quarter's dividend of 18 cents per ordinary share is supported by strong cash flow. This is the sixth quarter in a row that payments will be made at this level. The annual dividend yield of $0.72 is 6.8%, which is greater than Treasury bonds and more than three times the S&P 500 average dividend yield.
In the most recent quarter, Steven Cohen made a significant investment in PAGP, purchasing roughly 1.66 million shares. These shares are currently worth $18.06 million at current market values. Cohen's first official task is crucial.
Wells Fargo, like Cohen, is a fan, citing the company's excellent cash position as one of the reasons.
"The company generates one of the highest free cash flow (FCF) returns in the industry, and when debt is lowered in 2022, it is expected to transfer more of this FCF to unitholders." PAA is one of the few midstream corporations having a pre-planned stock repurchase program, ensuring predictable buybacks in the future. PAA intends to buy back 2-5 percent of its market value each year for the next five years, according to Blum.
To that end, Blum grades PAGP stock as Overweight (Buy), forecasting a 28 percent increase in the next year with a $14 price objective.
The majority of the people on the street agree with you. With four Buy recommendations, one Hold recommendation, and one Sell advice, PAGP has a Moderate Buy consensus rating. From the current share price of $10.9, the average 12-year price projection of $12.70 has climbed by 16.5 percent in a year.
LyondellBasell, located in the United States, is a chemical corporation
The second company on the list is LyondellBasell, a worldwide chemical conglomerate. This multinational corporation is the world's largest participant in the technological area of polyethylene and polypropylene, owning and licensing the majority of the industry's concepts and patents. LYB is also a key participant in the more mundane refining of polymers and chemicals, as well as a global leader in polyolefin technology development.
This chemical firm is up against a host of roadblocks that might spell disaster soon. Prices for polyethylene and propylene are falling, but natural gas, which the company utilizes as an ethane feedstock, is rising.
Certain signs, on the other hand, should encourage investors to be hopeful. While earnings per share of $5.25 fell short of expectations of $5.78, revenues in 3Q21 were $12.69 billion, up 87 percent over the previous two years' total of $11.99 billion. The firm produced $2.1 billion in cash from operations, which is used to pay shareholders $500 million in dividends and share repurchases.
The dividend has been increased to $1.13 per common share, representing a hefty 5% yield and a $4.52 annualized rate. This yield is over three times that of similar firms' average payouts or the return on Treasury bonds.
For example, Cohen was so excited about the stock that he bought 136,101 shares. This asset is currently worth $12.6 million.
LyondellBasell's stock has piqued the curiosity of a JPMorgan analyst, who believes the company's position in terms of shareholder return potential is appealing.
"Lyondell's dividend yield is 5%, and its financials are impressive: its net debt to EBITDA ratio is over 1.4x based on our year-end 2022 estimates." Free cash flow accounts for 14-15 percent of the company's share price. The dividend yield and free cash flow yield are expected to boost the LYB share price. "We believe the Lyondell share price has already priced in the adverse tendencies to a significant degree," Zekauskas continued.
As a consequence, Zekauskas grades LYB stock as Overweight (e.i Buy) and sets a $118 price objective, representing a 27% increase in the next year. There are no apparent winners or losers among the remainder of the analyst community.
The consensus rating is Moderate Buy, with 6 Buys and 5 Holds. The stock has a potential upside of 21% with an average price objective of $112.30.
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