Market Uncertainty Sparks Interest in Defensive Stocks
As the stock market ended last week on a sour note, investors are increasingly turning to defensive shares to weather the storm. With the Federal Reserve hinting at a slower pace of policy easing and President-elect Donald Trump’s pro-business agenda facing growing concerns, dividend stocks are emerging as a reliable choice.
AFC Gamma: A High-Yielding REIT in the Cannabis Industry
One such dividend stock that has caught the attention of Wall Street analysts is AFC Gamma (AFCG), a real estate investment trust (REIT) that operates in the cannabis industry. By providing commercial real estate loans and financial services to state-licensed cannabis operators, AFC Gamma has carved out a lucrative niche in a rapidly growing market.
AFC Gamma’s dividend yield is an impressive 14.3%, with a recent payout of 33 cents per common share. The company’s financial results have been strong, with distributable earnings per share (DEPS) of 35 cents per common share in the last reported quarter, beating forecasts and covering the dividend payment with room to spare.
Seaport analyst Sonny Randhawa is bullish on AFC Gamma, citing its strength in the cannabis industry and potential for continued growth. Randhawa’s Buy rating comes with a $13 price target, implying a one-year upside of 42%. With the dividend yield added in, the total return on this stock could reach 56% in the coming year.
Four Corners Property Trust: A Traditional REIT with a Solid Portfolio
Another dividend stock worth considering is Four Corners Property Trust (FCPT), a traditional REIT focused on restaurant properties. With a portfolio of over 1,150 properties across 47 states, representing 156 restaurant brands, FCPT has built a solid foundation for generating returns.
FCPT’s 3Q24 results showed total revenue of $66.79 million, reflecting a 3% year-over-year increase. The company’s adjusted funds from operations (AFFO) of 43 cents per share fully supports its dividend, which was recently increased to 35.5 cents per common share. The forward yield is a respectable 5%.
UBS analyst Michael Goldsmith sees upside potential in FCPT, citing its favorable cost of capital and diversification strategy. Goldsmith’s Buy rating comes with a $33 price target, implying a one-year gain of ~17%. With the dividend yield added in, the total one-year return could reach 22%.
Investing in Defensive Stocks for Uncertain Times
In uncertain market conditions, defensive stocks like AFC Gamma and Four Corners Property Trust offer a reliable source of income and potential for growth. By incorporating these dividend stocks into your portfolio, you can better position yourself to weather the storm and capitalize on future opportunities.
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