Latest news with #Kantrowitz
Business Insider
a day ago
- Business
- Business Insider
Seeking Up to 15% Dividend Yield? Piper Sandler Suggests 2 Dividend Stocks to Buy
Stock investing is all about returns, and the markets have delivered just that since hitting their trough in April. The S&P 500 bottomed out at 4,983 and has since rebounded 26%, bringing its year-to-date gain to 7% and pushing it to record levels. But is there room for more gains? Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. Make smarter investment decisions with TipRanks' Smart Investor Picks, delivered to your inbox every week. Piper Sandler chief investment strategist Michael Kantrowitz, in a recent interview, explains why he believes that markets haven't hit their ceiling yet, but he acknowledges that all gains have their limits. 'I think it's important to recognize or acknowledge that the last three months' moves were largely pricing out of macro risk. Whether you look at PEs, which have rebounded, or credit spreads, which have compressed, it's been a very macro-led tape where kind of a rising tide has lifted all boats. Going forward, we should not expect this to sustain the same level of returns, of course,' Kantrowitz stated. But investors are still looking for profits, and when the market ceiling is facing limits, high-yield dividend stocks offer a sound choice to maximize portfolio returns. Against this backdrop, Piper Sandler analyst Crispin Love has highlighted two high-yielding dividend stocks to buy – including one with a yield approaching 15%. Let's give them a closer look. We'll start with AGNC, a real estate investment trust, or REIT, whose activities mainly revolve around agency mortgage-backed securities. These assets are guaranteed against credit losses by Federal entities – Fannie Mae, Freddie Mac, and Ginnie Mae – providing a level of protection for investors. AGNC is an internally managed REIT, with a long-term goal of delivering solid returns to its shareholders. That goal is reflected in the company's highly focused investment strategy. AGNC has built a portfolio where 98% of its assets are agency MBS, including pass-through certificates, collateralized mortgage obligations (CMOs), and 'to-be-announced' securities (TBAs) – all carrying federal guarantees that help mitigate credit risk. As of March 31, the portfolio stood at $78.9 billion in value, with over 95% allocated to 30-year fixed-rate assets, underscoring AGNC's preference for stable, long-duration instruments. AGNC's consistent dividend policy is a key reason it stands out among income investors. In fact, the company pays dividends monthly – a less common but appealing feature for those seeking regular income. This monthly cadence allows investors to better match dividend inflows with ongoing expenses. AGNC's most recent declaration came on July 9 for an August 11 payment, maintaining its 12-cent monthly rate. That equates to 36 cents per quarter and $1.44 annually, translating to a generous forward yield of 15.5%. While its dividend track record is attractive, it's worth examining AGNC's underlying financials to assess the sustainability of those payouts. In its latest quarterly report for Q1 2025, the company posted net interest income of $159 million and a non-GAAP EPS of 44 cents. Although NII fell short of expectations by $284 million, the earnings per share came in 3 cents above the consensus. In setting out the Piper Sandler view here, analyst Crispin Love explains why he believes that this REIT will continue to deliver on the dividend. 'Since AGNC's 1Q25 earnings, agency spreads have tightened slightly following significant volatility around Liberation Day. We believe near-term spread levels and mortgage rates should be somewhat range-bound, but we could see continued rate volatility in 2025 given the macro landscape and uncertainty related to economic growth, inflation, and tariffs. Going forward, we believe AGNC can maintain its current dividend level, with AGNC generating mid-to-high teens returns over the near-term,' Love opined. Love's comments back up his Overweight (i.e., Buy) rating on the stock, and his $10 price target implies a one-year upside potential of 8%. Together with the dividend yield, the total one-year return on this stock may approach 23.5%. (To watch Love's track record, click here) Rithm Capital (RITM) The second dividend stock we'll look at is Rithm Capital, a REIT that was founded in 2013 and for the past decade-plus has provided a compelling investment option in mortgage servicing rights (MSRs). Early on, Rithm focused on MSR management; today, its portfolio is more varied, holding a diverse set of real estate assets. In addition to mortgage servicing rights, these assets include residential mortgage loans, commercial real estate, single-family rentals, business purpose loans, and even consumer loans. Building on this expanded investment scope, Rithm took a major strategic step in late 2023 by acquiring the asset management firm Sculptor Capital Management. The $719.8 million deal significantly broadened Rithm's operational reach and brought Sculptor's sizable asset base under its umbrella. The impact of this acquisition is evident in the company's numbers. Rithm now boasts $7.8 billion in total equity and a book value of $12.39 per common share. Its total assets stand at $45 billion, while assets under management have grown to $35 billion – a figure reflecting the addition of Sculptor's portfolio. Diving into specific segments, the company holds over $5.5 billion in mortgage origination and servicing and nearly $850 million in residential transitional lending. These robust figures support Rithm's overarching goal: to deliver stable and attractive long-term returns to shareholders. A key part of that strategy is the dividend, which the company has paid consistently for 12 years. The current quarterly dividend stands at 25 cents per common share, declared most recently on June 18 for a July 31 payment. At the annualized rate of $1, this payout translates to a forward yield of 8.4%. That yield appears well-supported by the company's latest financials. In 1Q25, earnings available for distribution (EAD) came in at $275.3 million, or 52 cents per share – 5 cents ahead of expectations and more than enough to cover the dividend. Checking in again with Piper Sandler's Crispin Love, we find that the analyst has a lot to say about Rithm – and it's mostly positive. 'With 30-year mortgage rates keeping the origination outlook still far from a normalized environment, we are focused on names that can perform in this higher for longer backdrop. One name that stands out to us for multiple reasons is RITM. Rithm is a diversified business across mortgage and asset management and is currently trading at just 5x earnings. On the mortgage side, RITM is the #3 mortgage servicer in the US which is an annuity like business that can actually outperform in higher rate backdrops. In addition, management is contemplating a potential spin of its mortgage business (Newrez), which could serve as a catalyst to shares. And lastly, RITM continues to grow in asset management following its acquisition of Sculptor in late 2023 with the potential for more acquisitions or partnerships in the space,' Love noted. The analyst quantifies this stance with an Overweight (i.e., Buy) rating, along with a $14 price target that points toward a one-year gain of 17.25%. Add in the dividend yield, and the return for RITM over the coming year can hit as high as ~26%. All in all, there are 6 recent analyst reviews on record for Rithm Capital and they are all positive – for a unanimous Strong Buy consensus rating. (See RITM stock forecast) To find good ideas for dividend stocks trading at attractive valuations, visit TipRanks' Best Stocks to Buy, a tool that unites all of TipRanks' equity insights.
Business Insider
4 days ago
- Business
- Business Insider
Your ETF investment might be dragging down your portfolio returns — here's why
Buying an ETF is a common recommendation for investors looking for diversification, but the popular investment vehicle might not be doing the job you're expecting it to, according to one Wall Street strategist. Michael Kantrowitz, chief investment officer and head of portfolio strategy at Piper Sandler, isn't a big fan of owning broad indices, especially in today's highly concentrated market. ETFs are supposed to put investing into easy mode, especially for retail investors. Anybody can purchase a basket of securities to diversify their portfolio — just pick a theme, buy the ticker, and wait. While they're definitely a helpful tool for investors, Kantrowitz urges caution. "By buying an index fund today, compared to 15 or 20 years ago, you've got a lot more idiosyncratic company-specific risk today," Kantrowitz told Business Insider. "You think you're buying an index, but you're really just exposed to seven or 10 stocks. If the AI story takes a dip, it doesn't necessarily hit all stocks, but it could really hit those index funds." Indeed, market concentration among the top Big Tech companies is at record highs. According to Apollo's chief economist Torsten Sløk, the top 10 companies in the S&P 500 are trading at a higher valuation than that seen during the dot-com bubble. Investors who buy an S&P 500 fund for diversification are actually getting an over 30% weighting in the Magnificent Seven. Additionally, using sector-specific ETFs to diversify isn't always a good idea either, Kantrowitz added. ETFs can be susceptible to tracking error, meaning that the fund doesn't precisely follow the underlying index. SEC rules stipulate that no more than 25% of a diversified fund's assets can be allocated to a single stock, which often forces sector ETFs to cap their exposure to dominant names like Apple or Nvidia, even if those companies make up a much larger share of the actual index. For example, in 2024 the S&P 500 technology sector posted a 38% gain. However, the Technology Select SPDR Fund (XLK) only rose 25%. This pattern is especially prominent in sectors with high concentration, which include communications services and consumer discretionary, Kantrowitz said. "Because there are concentration issues and weighting schemes in these ETFs, you think you're buying something and it's actually not what you're getting," he said. That doesn't mean all ETFs are prone to this risk. Lean more into active management, Kantrowitz advises, including ETFs and mutual funds, as well as individual stock picks. Kantrowitz also isn't writing off large-cap quality stocks, such as some of the Big Tech names that have dominated the index. But if you're looking for diversification, it's a good idea to look outside of traditional index ETFs.
CNBC
09-07-2025
- Business
- CNBC
Trump is right about the Fed needing to lower rates, says Piper Sandler
Piper Sandler agrees with Donald Trump that the Federal Reserve needs to lower rates, as the president's barbs at Chair Jerome Powell grow louder. "Politics aside, [Trump] isn't wrong. Just because the overall economy and market, which is increasingly a reflection of the largest businesses and wealthiest consumers, appears to be chugging along doesn't mean that lower rates aren't warranted," Michael Kantrowitz, the firm's chief investment strategist, wrote. "Historically speaking, every single broad-based improvement in the U.S. economy began with an improvement in housing, and for that to occur we'll need to see lower rates." Kantrowitz noted that just a modest decline in short- and long-term interest rates could lead to greater breadth in economic activity and stronger corporate earnings — both of which he said have been lacking in recent years. He also pointed to a somber housing market as another reason to lower rates. Kantrowitz said growing inventory and price declines as factors that pose a threat to economic growth. His note to clients comes as investors await the release of the Federal Open Market Committee's minutes from its June meeting, which will be out at 2 p.m. ET. They also come as Trump increasingly calls for the Fed to lower rates. On Wednesday, Trump said in a Truth Social post that fed rates are "AT LEAST 3 [percentage] Points too high." Trump is also reportedly considering naming a "shadow chair" until Powell departs his role. Despite Trump's comments and worries over the Fed's credibility, the U.S. stock market remains near record levels. The S & P 500 scaled to an all-time high last week and is up 6% for the year. .SPX YTD mountain S & P 500 performance over the past year. Still, a strong market does not assuage what he sees as intense levels of weak affordability and economic bifurcation. "The scar tissue from 2022's inflation shock has left policy makers and investors overly concerned that lower rates could cause another resurgence of inflation," he added. "This is recency bias at it's best, we are not in the COVID backdrop any longer and tariffs as an inflation risk akin to the 2022 experience is exaggerated." Mortgage rates have remained in a narrow range since early April, leading to historically low demand as homebuyers remain bogged down by overinflated house prices and low supply. Last week saw a strong jump in total mortgage application volume compared with the previous week, however, after a drop in mortgage rates.
Yahoo
04-06-2025
- Business
- Yahoo
Making sense of the whiplash in investor sentiment
Tariffs, earnings, and policy confusion have put investors on a roller coaster of emotions. In the video above, Yahoo Finance Anchor Julie Hyman takes a closer look at what Piper Sandler chief investment strategist Michael Kantrowitz calls "narrative volatility." To watch more expert insights and analysis on the latest market action, check out more Asking for a Trend here. Whiplash is what you and I might call it, but Michael Kantrowitz of Piper Sandler calls it narrative volatility. He and his team have been looking at what they say are really abrupt and dramatic shifts in sentiment over time. They're doing this by measuring AAII bearish sentiment, the American Association of Individual Investors, in other words, it's a measure of newsletters and where that sentiment is blowing. So what this chart looks at is the weekly sentiment indicators that come out in the sort of blue background here, and then the standard deviation from those newsletter writers on a weekly basis, and that's a four-year rolling window. So basically, this is a way of measuring, again, what Kantrowitz calls that narrative volatility. We've looked at other times when we've seen big changes in the narrative quickly, the great moderation here in the early 90s, the tech bubble popping, when you saw low narrative volatility, then back up, and down again during COVID. But now, according to this measure, at least, they say we're at the highest narrative volatility ever. In other words, tariffs on, tariffs off, things are good, things are bad, the economic outlook is strong, no, it's not. Um, and as to what to do about it? Well, we talked to Kantrowitz earlier on about that. This is what he said. The lighter line of bearish sentiment is extremely volatile and catching the wave, you know, good luck. Anyone who could catch that wave, uh, more likely to be, uh, uh, hit by the wave than catching it. So it's not really realistic to catch these short-term risk on risk off swings in the market, and we think they will persist. So this is the norm for now, the back and forth. He talked about what has been his consistent strategy, which is to get into what he calls quality stocks here, stocks with strong balance sheets, good cash flow. Um, so we'll see if that strategy continues and also if that narrative volatility sticks around, Josh. All right. Thank you, Julie. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
CNBC
30-05-2025
- Business
- CNBC
You could be repaying student loans for 30 years under GOP plan. It's 'indentured servitude': expert
Federal student loan borrowers could be in repayment for up to 30 years under proposed changes in the House Republicans' massive spending and tax package, dubbed the "One Big Beautiful Bill Act." Currently, most student loan repayment plans range from 10 years to 25 years — which already generate concerns about people bringing their education debt into middle-age and beyond, said higher education expert Mark Kantrowitz. "A 30-year repayment term means indentured servitude," Kantrowitz said. The House passed the bill last week. With control of Congress, Republicans can use "budget reconciliation" to pass their legislation, which only needs a simple majority in the Senate. The House bill's student loan provisions are unlikely to significantly change in the upper chamber before Trump signs it into law, Kantrowitz said. Under the House GOP's bill, there would be just two repayment options for those with federal student loans. (Currently, borrowers have about a dozen ways to repay their student debt, according to Kantrowitz.) If the legislation is enacted as currently drafted, borrowers would be able to pay back their debt through a plan with fixed payments over 10 years to 25 years, or via an income-driven repayment plan, called the "Repayment Assistance Plan," which would conclude in loan forgiveness after three decades. Monthly bills for borrowers on RAP would be set as a share of their income. Payments would typically range from 1% to 10% of a borrowers' income; the more they earn, the bigger their required payment. The new plans would potentially make student loan repayment terms much longer for some borrowers. The U.S. Department of Education now offers a 10-year fixed repayment program, known as the standard plan, and its IDR plans typically conclude in debt cancellation after 20 years or 25 years. "Simplifying the program with fewer repayment plans is a good idea, but not at the cost of another decade of repayment," said James Kvaal, who served as U.S. undersecretary of education for former President Joe Biden. More from Personal Finance:What the House GOP budget bill means for your money'Maycember' is almost over — here's how to recover financiallyCourt order challenges Trump's plan to move student loans to SBA Longer repayment terms will only exacerbate the problem of more Americans carrying student loans into their old age, consumer advocates say. There are some 2.9 million people aged 62 and older with federal student loans, as of the first quarter of 2025, according to Education Department data. That is a 71% increase from 2017, when there were 1.7 million such borrowers.
