The Dow’s peak-to-trough plunge of 16% in December awakened investors from the lull of the longest bull market on record.
Following the worst December for the S&P 500 since the Great Depression, many investors are looking to bulk up on income-producing stocks rather than speculate on the latest high-flying tech play.
Income generation is a critical goal of any investor, particularly individuals who live on a fixed budget or are trying to prolong their retirement nest egg.
However, these aren’t just any income plays.
By using our proprietary Money Morning Stock VQScore™, we’re able to find great companies with high yields and significant price upside.
That means not only are we collecting double-digit dividends, but the stock price of one of the companies on our list is expected to surge over 100% higher in the next 12 months.
Let’s dive in so you can start making money right now…
Income Play No. 3: BlackRock Capital Investment Corp.
The first high-income stock to buy is BlackRock Capital Investment Corp. (NASDAQ: BKCC), a business development corporation (BDC) that falls under the umbrella of the world’s largest asset manager, BlackRock.
And BKCC is starting to look like one of the best bargains on Wall Street.
The firm’s portfolio consists of senior secured debt, equity investments, unsecured debt, and subordinated secure loans.
This is all very technical and can start to sound boring.
But what’s not boring is the massive profit opportunity…
The healthy dividend – a massive 13.66% yield – is attracting attention from institutional investors like Mackenzie Capital, which just increased its position in the business-development company by a whopping 73%.
Meanwhile, Telemus Capital increased its stake by 44.5% last quarter.
We typically don’t see Wall Street analysts put price targets on BKCC.
In fact, there are only two broker price targets on FactSet, and each is a target of $6.00 a share.
The BlackRock Capital stock price [recently] opened (Jan. 10, 2019) at $5.97 per share. So it’s clear Wall Street is overlooking the stock.
However, this stock has a VQScore of 4, a perfect score that signals that this BDC is ready to break out.
We also know that BDC firms – which provide lending to companies all around the globe – produce incredible cash flow for investors.
Sit back, earn the 13% dividend yield, and wait for the stock price to appreciate.
Income Play, No. 2: Senior Housing Properties Trust
With an aging population across the United States, the long-term play is to tap into cash-generating assets that capitalize on the trend.
Senior housing is an incredible investment.
Senior Housing Properties Trust (NASDAQ: SNH) is a healthcare REIT that owns 443 properties across the United States. It generates rental income from medical office, senior housing, and managed senior housing properties.
Americans may cut down on shopping, travel, and luxury goods during a recession, but they will always pay for healthcare.
In the next 20 years, senior housing demand could surge thanks to a big increase in the number of Americans living past the age of 85.
Now, this investment does has some risks due to its credit rating (the lowest possible for investment grade), leverage, and interest-rate hikes.
With that being said, this could be a double-digit winner very soon…
B. Riley FBR Inc. projects the SNH stock price will climb to $21 per share in the next 12 months. From [a recent] opening price of $12.65, that’s a potential profit of 66%.
It pays a strong dividend of $1.56 (13.13% yield), and it also has a VQScore of 4, which signals this stock is ready for liftoff.
BKCC and SNH are two stocks that are going to reward long-term shareholders with income and stock price appreciation.
However, this next income-producing stock could be the biggest winner by far on the list.
I’m talking about triple-digit returns in the next year…
Income Play, No. 1: Pitney Bowes Inc.
Finally, we come to a company that is both an attractive high-yield play and a potential takeover target in 2019.
Pitney Bowes Inc. (NYSE: PBI) is a global commerce and mail solutions company that has struggled recently due to the competitive landscape in e-commerce and the rise of e-mail marketing.
The company’s heyday was last decade, when it made a lot of money helping direct mailers reach customers.
E-mail marketing forced the firm to rebuild its competitive strategy.
A turnaround remains in progress, but the sharp downturn looks overdone.
While mail marketing (a former bread-and-butter business) might not be its future, the focus on e-commerce solutions should provide a stronger long-term outlook.
Right now, Pitney Bowes’ dividend sits at a whopping 12.61%.
Opening [recently] at $6.74 per share, Ladenburg Thalmann and Co. expect the PBI stock price to climb to $16 per share in the next 12 months.
That’s a potential profit of 137%.
With a perfect VQScore of 4, there’s no better time to buy.
Source: Money Morning