Remember TINA? She’s the one everyone was talking about for the past few years, when it came to buying stocks. ‘There is no alternative,’ they said – pointing out that the near-zero interest rate policy has pushed bond yields down to nothing, and that the housing crisis of 2008 had left investors wary of the real estate market – and stocks were the highest returning game in town.

Not anymore. The Federal Reserve has just cracked the whip on rate hikes, implementing a 0.75% increase to the benchmark rate. The immediate result is an end to cheap credit; the 30-year fixed rate mortgage hit 6.22% this week, double the year-ago rate. The Fed has also signaled that it will be winding down its bond purchase program, another move that will act to choke off the flood of cheap money which fueled TINA’s stock market boom.

Stepping back to take a look at the big picture, UBS’s chief investment officer Mark Haefele writes, “To mitigate large potential swings in the VIX, investors can focus on more defensive parts of the market and could outperform in the event of recession. We particularly like quality income, dividend-paying stocks…”

Using the TipRanks database, we were able to pinpoint two such picks, ‘Strong Buy’ dividend stocks with long histories of reliability and high yields, on the order of 7%. Let’s take a closer look.

Spirit Realty Capital (SRC)

First up is Spirit Realty Capital, a real estate investment trust. It’s no surprise to find a REIT as a dividend champ – these companies are required by tax codes to return a high percentage of profits directly to shareholders, and frequently use dividends as the vehicle for compliance. Spirit Realty owns a portfolio of commercial properties, occupied by major retail names. Spirit’s tenants include such well-known actors as Dollar Tree, Home Depot, and Walgreens. Overall, Spirit has more than 2,000 properties with 52.6 million square feet, an occupancy rate of 99.8%, and a total of 334 tenant companies. Spirit’s real estate portfolio value totals some $8.4 billion.

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In a point of interest to investors, Spirit focus is on long-term net leases. These maximize the rental value of the properties, and provide a degree of insulation against economic downturns. In the first quarter of this year, Spirit generated 95 cents per share in funds from operations (FFO), a key industry metric, and net earnings of 42 cents per share. Earnings were a dramatic improvement from the 4-cent net loss in 1Q21.

Also of note, Spirit renegotiated its credit facilities during Q1, and closed on a $1.2 billion multicurrency unsecured revolving credit facility – a tribute to the company’s good standing with creditors.

Spirit also keeps up its dividend, with necessary adjustments for current conditions. The company has not missed a payment since starting the dividend in 2013. The most recent declaration set a common share dividend payment of 63.8 cents. This annualizes to $2.55, and gives a strong yield of 7%. That’s more than triple the average dividend yield found among S&P-listed firms.

Spirit has picked up attention from JMP analyst Mitchell Germain, who writes: “SRC has embarked on a multi-year portfolio and balance sheet transformation, resulting in more durable earnings and compelling growth prospects. The balance sheet is well-positioned for growth, with ample liquidity following recent capital markets activity, while some planned asset sales are expected to offer accretion upon redeployment. A combination of internal growth, which is expected to trend above net-lease sector averages, and deployment, should have positive implications on earnings and dividend growth. We think shares fail to recognize portfolio and balance sheet upgrades…”

In-line with his optimistic outlook, Germain gives SRC shares an Outperform (i.e. Buy), and sets a price target of $54 to imply an upside of ~47% in the next 12 months. Based on the current dividend yield and the expected price appreciation, the stock has ~54% potential total return profile. (To watch Germain’s track record, click here)

All in all, Spirit Realty has 8 recent analyst reviews, breaking down into 6 Buys and 2 Holds. This adds up to a Strong Buy consensus rating. Shares in this REIT are currently trading for $36.61 and have an average price target of $50.84, indicating potential for ~39% upside this year. (See SRC stock forecast on TipRanks)

Fortress Transportation and Infrastructure (FTAI)

We’ll start with a company structured as a REIT, a real estate investment trust, but dealing in transportation assets. Fortress buys, owns, manages, and leases a wide range of transportation assets. A large part of the company’s portfolio is held in airline assets, including 108 commercial passenger jets and 207 commercial aircraft engines. Fortress also has major stakes in three prominent rail and water energy terminals. These facilities include capabilities in rail, truck, ship, pipeline, and storage for crude oil and natural gas products.

The largest part of Fortress’s business is equipment leasing. As noted, the company owns aviation assets, both aircraft and jet engines; these are leased out to customers. The company’s second major business segment is infrastructure, which includes operations at the firm’s port and terminal properties.

In the recently ended 1Q22, Fortress reported revenues of $137.8 million, missing the forecast by ~14%, but still improving on the year-ago number by 78%. At the bottom line, the company reported a steep net loss, of $2.30 per share.

In the background to these losses, Fortress is in process of spinning off, and splitting the company into two entities, one for aviation assets and one for infrastructure. That transaction has been filed with the SEC and is expected to take effect in the next month or so; Fortress has said it will declare the next dividend before the spin-off.

That dividend requires some attention. Fortress pays out 33 cents per common share, and has held that dividend steady going back all the way to 2015. The reliability alone would make the dividend notable, but with the annualized rate of $1.32 giving a yield of 7.6%, it makes an excellent combination with the return.

Fortress shares have seen losses of 38% year-to-date. However, BTIG analyst Gregory Lewis thinks the selloff represents a “compelling entry point,” as he believes the company’s prospects are sound.

“Management noted strong demand for cargo plane resales which could allow FTAI to continue to monetize assets and re-cycle the cash. And while it has been a long and winding road the spin-off is now filed with SEC and is forecast to be completed in the next 1-2 months which will also remove FTAI’s current partnership structure (think no more K1 filings). We continue to expect the spin-off and the removal of the partnership structure to be positive catalysts for FTAI. Bigger picture, an improving backdrop for both Aviation and Infrastructure should be longer term tailwinds for both stocks,” Lewis opined.

Lewis puts a $40 price target on the shares, ahead of the spin-off, implying ~130% upside going forward – and strongly supporting his Buy rating on the shares. (To watch Lewis’s track record, click here)

Lewis is hardly the only one bullish on this stock – Fortress has 5 recent analyst reviews, and they are unanimous, for a Strong Buy consensus rating. The stock is priced at $17.34 and its $33.60 average target indicates room for ~94% in the months ahead. (See FTAI stock forecast on TipRanks)

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