The markets these days are flashing warning signs for investors. High inflation and slowing GDP growth threaten a return to the stagflation of the late 70s, while China’s strict anti-COVID lockdowns and the Russia-Ukraine war are working together to keep supplies of oil, food, and manufactured goods short, supply chains tangled – and prices high. In short, it’s an investment environment that cries out for defensive plays.

Dividend stocks are clear choice for investors looking to buy in. Their appeal is obvious – a reliable, high yield dividend represents a steady income stream even when markets turn south.

So how to make your portfolio choices? Following the market leaders is a viable strategy. After all, the big fund managers had to make some good decisions to reach the top, and their stock picks can work at smaller scales, too.

Steve Cohen, the billionaire trader behind Point72 Asset Management, has shown that he can survive the vicissitudes of Wall Street. After recovering from Federal investigations earlier this decade, he went back into the trading business and built Point72 into a $24 billion giant. And in the first-quarter he moved heavily into high-yield dividend stocks.

We’ve pulled up two of Cohen’s recent moves, and used the TipRanks database to take a closer look at them. These are Buy-rated stocks – and perhaps more interestingly, they both offer dividend yields of at least 4%. We can turn to the Wall Street analysts to find out what else might have brought these stocks to Cohen’s attention.

VICI Properties (VICI)

We’ll start in the world of real estate investment trusts (REITs). These companies invest in real properties, mortgage loans, and mortgage-backed securities, and they have long been known as leaders among the market’s dividend payers. VICI takes a ‘specialty’ view of the concept, and focuses its investments in leisure properties, primarily casinos, gaming, hospitality, and entertainment. The company’s portfolio features 43 gaming locales, along with 450 restaurants, bars, and clubs, and even four major golf courses. Altogether, VICI’s holding has grown to more than 122 million square feet and includes over 58,700 hotel rooms.

In April of this year, VICI announced an important expansionary move, when it completed its acquisition of MGM Growth Properties. The $17.2 billion transaction adds 15 marquee assets to VICI’s portfolio, and increases the company’s annual rents collected by more than $1 billion. With this acquisition, VICI now owns a total of 10 resorts on the famous Las Vegas Strip, boasting 1.2 million square feet of casino gaming space, more than 40,000 hotel rooms, and almost 6 million square feet of convention and meeting space.

VICI could support that move thanks to its strong financial position. The company’s 1Q22 revenues grew ~11% year-over-year, to reach $416.6 million, while net income attributable to shareholders, and funds from operations (FFO) together hit $240.4 million, or 35 cents per share. On the negative side, that per-share income missed expectations by 8 cents.

The company felt confident enough, however, to keep up its common share dividend payments. The latest declaration, for a dividend of 36 cents per common share, was paid in early April. At an annualized rate of $1.44, this gives the dividend a yield of 4.9%. That is approximately 2.5x the average found among S&P listed firms.

Steve Cohen was clearly interested, and opened his position in Q1 with 633,800 shares. At current prices, these shares are now worth $18 million.

Cohen isn’t the only one bullish on this stock. Covering VICI for JPMorgan, analyst Anthony Paolone takes a bullish stance, writing: “We think VICI has strong earnings visibility following the closing of the MGP deal and the Venetian transaction… We believe the company’s free cash flow reinvestment alone – when combined with contractual increases – should drive bottom line earnings growth of about 4% as a starting point; and we think it has a sizable addressable market that should growth beyond this. At the current dividend yield of about 5%, we think VICI reflects a compelling opportunity…”

These comments back up Paolone’s Overweight (i.e. Buy) rating here, while his $35 price target indicates a potential 23% upside ahead. (To watch Paolone’s track record, click here)

Paolone is hardly alone in his upbeat view of this one – VICI shares have a unanimous Strong Buy consensus rating, based on 9 analyst reviews. The stock is selling for $28.5 and its $36.22 average price target implies it has a 27% one-year upside potential. (See VICI stock forecast on TipRanks)

BP PLC (BP)

From REITs we’ll turn to one of the world’s largest oil and gas firm, BP. This energy giant – boasting a market cap of $104 billion – has its hands in operations across the energy extraction and production universe, from crude oil and natural gas exploration and drilling to petroleum refining and petrochemicals to renewable sources like solar and hydrogen energy. From these operations, BP generated annual revenues of $157 billion in 2021.

While BP is actively engaged in developing the next generation of energy production, and has aimed at becoming carbon-neutral by 2050, the company’s main activity remains traditional energy sources – and these supported solid metrics in 1Q22 despite a one-time loss due to BP’s exit from Russian operations.

The Russian exit cost BP non-cash pre-tax charges of $24 billion and $1.5 billion, both related to its divestment from a 20% stake in Russia’s Rosneft company. Even with that, however, BP posted a net profit of more than $6 billion, well above the $4.1 billion analysts had predicted. The company is using this bumper profit to back up its commitment to supporting share prices. BP announced a stock buyback program of $2.5 billion, and its last declared dividend, for payment in June, was set at 32.3 cents per common share. The annualizes to more than $1.29, and yields a solid 4.2%.

Clearly, billionaire Cohen was willing to overlook the one-time loss, as he expanded his existing position in BP by an impressive 3,276,969 shares. At current stock prices, his stake in BP now totals some $122 million.

5-star analyst Justin Jenkins of Raymond James is also bullish on BP, mainly on the strength of the company’s traditional oil and gas business. He writes, “BP remains an oil & gas major — with substantial leverage to improved prices — even despite the large-scale push toward decarbonization initiatives with biofuels/biogas, wind, solar, hydrogen, and EV charging investments. While this push drives large portions of the growth narrative with investors (good or bad), favorable macro tailwinds and continued resilience in BP’s O&G operations allows this shift to happen, all while sentiment in the ‘legacy’ business continues to improve.”

All of this adds up to an Outperform (i.e. Buy) rating, in Jenkins’ view, while his price target of $39 points toward a 12-month upside of 23%. (To watch Jenkins’ track record, click here)

Turning to the TipRanks data, we’ve found that Wall Street’s analysts hold a range of views on BP. The stock has a Moderate Buy analyst consensus rating, based on 7 reviews, including 4 Buys, 2 Holds, and 1 Sell. The stock’s trading price is $31.7 and its average target is $35.60, suggesting a 12% upside this year. (See BP stock forecast 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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