For the retail investor, the only certainty of our current market environment is uncertainty. The reasons are multiplying: high inflation is rising higher, wages are not keeping up, Russia’s invasion of Ukraine has initiated Europe’s largest war since 1945, and energy and food commodities – key ingredients in the inflation mix – are sure to rise in price as a result of that fighting.

In a time like this, it’s good to find a guide, a market expert whose trading can stand as an example. Paul Tudor Jones, the man who predicted the Crash of ’87 managed to reap a $100 million profit from it, is a prime example. A billionaire with a net worth north of $7 billion, Jones started his hedge fund, Tudor Investment, in 1980. Today, his firm manages more than $24 billion in total assets, and over $4.2 billion of those are 13F securities, or publicly traded stocks.

In a recent interview, Jones summed up his bearish view of current market conditions in no uncertain terms: “You can’t think of a worse environment than where we are right now for financial assets. Clearly you don’t want to own bonds and stocks.”

At least in part, Jones is basing his view on the Federal Reserve’s strategy shift to monetary tightening. Noting that the central bank has previously resorted to such moves only in times of financial crisis, Jones outlines his own investment ideas for coping with such a crisis.

“Simple capital preservation is I think the most important thing we can strive for. I don’t know if it’s going to be one of those periods where you’re actually trying to make money… If there was a strategy that I would want to employ right now… I’d say simple trend-following strategies. They are not too popular today… They will probably do very well in the next 5 to 10 years,” Jones opined.

A look at Jones’ recent 13F filings tells us which stocks he’s willing to pick up right now. The result is interesting – Jones is making some moves into high-yield dividend payers. These are the classic defensive play in a bearish stock environment, as the dividend stream provides a steady income flow even if share appreciation stutters or halts.

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We’ve used the TipRanks database to take a closer look at three of Jones’ picks. Importantly, these dividend stocks all received enough support from Wall Street analysts to earn a Moderate or Strong Buy consensus rating.

Outfront Media (OUT)

We’ll start with a specialty marketing company, Outfront Media. While most of us think of online or digital venues when we discuss marketing, old-fashioned billboards and posters are still out there – and still considered important part of a well-rounded marketing strategy. Outfront lives in that sector, as a provider of billboards, posters, and transit ads in urban markets. The twist – Outfront uses electronic tech to update its ads. The company boasts ad location properties in more than 70 markets, featuring over 500K displays, and making more than 16 billion impressions every week.

All of that can bring home the bacon, and Outfront does just that. The company shows a distinct pattern of earnings, with the year’s Q1 being the lowest and EPS rising through Q4. That said, the recent 1Q22 showed a lower net EPS loss than expected – only 4 cents, compared to 52 cents in 1Q21. Revenues were also up year-over-year, from $249.2 million to $373.5 million.

Technically, Outfront operates as a real estate investment trust, a REIT, owning the properties where ads are displayed, managing the properties, and leasing spaces to the advertisers. And this is where we get to the dividend, as REITs are typically among the market’s best dividend payers.

Outfront paid out a total of $51.5 million in dividends during Q1, and in May the company declared its latest payment – a common stock payment of 30 cents per share. At $1.20 per year, this payment gives a solid yield of 6%, about triple the average market dividend.

Paul Tudor Jones must like Outfront, because he bought up 103,463 shares in the last quarter, increasing his holding in the stock by 193%. His current stack in the company is now worth $3.07 million.

Barrington analyst James Goss is also impressed with Outfront, and doesn’t hold back in his comments on the company.

“OUT’s displays remain highly valuable assets. Outfront resumed payment of a quarterly dividend to common shareholders, providing a [6%] yield that adds to OUT’s investment appeal. The $0.30 per share quarterly cash dividend has now been declared twice, creating some greater element of certainty. The conversion of a substantial portion of the preferred shares in turn creates a positive factor in terms of availability of dividend payment REIT requirements to accrue to common shareholdings,” Goss wrote.

These sentiments hold up Goss’s Outperform (i.e. Buy) rating on the stock, and his $33 price target suggests a one-year upside of ~70%. (To watch Goss’ track record, click here)

His Wall Street peers are also upbeat on the prospects for Outfront, as shown by the 4 to 1 breakdown in analyst reviews, favoring Buys over Holds and supporting a Strong Buy consensus view. The shares are selling for $19.58 and the $32 average price target implies a high 63% upside this year. (See OUT stock forecast on TipRanks)

Four Corners Property Trust (FCPT)

For the second dividend stock, we’ll stick with the REIT sector. Four Corners puts its focus on restaurant properties, and currently has 937 such across 46 states. The company’s portfolio features 6.1 million square feet of leasable space, inhabited by 113 various brands. In a key metric that bodes well for investors, Four Corners’ leases have a weighted average term of 9 years remaining. The company derives 59% of its rental revenue from Darden Restaurants, the owner of the Olive Garden and LongHorn Steakhouse chains.

The company’s activity brought in $54.4 million in total revenues during 1Q22, up 16% year-over-year, and the highest total in the last five quarters. Earnings came in at 28 cents per diluted share, smack in the middle of the 26-cent to 30-cent range that earnings have held for the past two years. In a key industry metric, Four Corners saw its funds from operations (FFO) grow y/y from $28.4 million to $31.9 million, a gain of 12%.

In recent months, Four Corners has been actively buying new properties and expanding its holdings away from purely restaurants. Acquired properties included 12 NAPA Auto Parts, a Caliber Collision, two dental properties, and two Wells Fargo bank branches.

Turning to the dividend, Four Corners declared a common share payment of 33.25 cents for 1Q22. This annualizes to $1.33 per share, and gives the dividend a strong yield of 4.7%. The company has a history of keeping reliable payments, going back to 2016.

Having looked at the background, we can see why Jones added 155,189 shares, or 422%, to his existing stake in this REIT. He now holds 192,028 shares, worth $5.24 million.

RJ Milligan, 5-star analyst with Raymond James, lays out a case for investors to move into Four Corners for defensive purposes, stating: “We expect investors to rotate into a more defensive posture. We have already seen some generalist and REIT dedicated rotation into the net-lease names with higher IG exposure, and as that trade continues to unfold given the broader macro concerns, we expect FCPT to capture some of those incremental dollars looking for safety.”

Milligan’s comments line up with his Outperform (i.e. Buy) rating on the stock, while his $32 price target indicates his confidence in a 12-month upside potential of 17% for the shares. Based on the current dividend yield and the expected price appreciation, the stock has ~22% potential total return profile. (To watch Milligan’s track record, click here)

Overall, the 5-1 split in the recent analyst reviews, of Buys of Holds, gives this stock its Strong Buy consensus rating. FCPT is selling for $27.77 and its $30.40 average price target implies ~11% upside in the coming year. (See FCPT stock forecast on TipRanks)

STORE Capital Corporation (STOR)

Now we’ll turn to STORE Capital, another REIT. The company’s name is an acronym, standing for ‘single tenant operational real estate,’ and the company is a fast-growing net-lease REIT with 2,965 properties in its portfolio as of the end of 1Q22. The company’s tenants include restaurants, health clubs, auto repair and maintenance, early childhood education – in short, a wide range of small- and mid-sized businesses from every sector of the economy. STORE estimates that its target market contains more than 2 million locations, and some $3.9 trillion in addressable market value. STORE currently boasts a 99.5% occupancy rate on its holdings.

This added up to a solid first quarter in 2022, in which STOR’s FFO (funds from operations) beat the estimates. The key metric came in at 56 cents per share, 4 cents better than expected, and up from 47 cents in the year-ago quarter. For the full year 2022, the company raised its FFO guidance, to the range of $2.20 to $2.23.

That wasn’t the only good news. Revenues came in strong, too, at $221.2 million for the top line, the best result in over two years. The company’s net income in the quarter, $87 million, translated to 32 cents per share, up from 21 cents EPS in 1Q21.

STORE rewarded its investors in the quarter with a 38.5 cent common share dividend. This was the third quarter in a row with the dividend at this level; the payment has been raised three times in the last three years. At an annualized rate of $1.54, the common share payment yields 5.5%.

Looking at Jones’ share purchases, we find that the hedge billionaire picked up an additional 182,629 shares of STOR, increasing his holding by 129% to a new total of 324,467 shares. These are currently valued at $8.97 million.

In coverage for Berenberg Bank, analyst Nate Crossett writes out a bullish bottom line: “In our view, STOR has favorable levels of diversity in terms of tenant and industry exposure, featuring; 4,400 different tenants operating; 100 different industries. Overall, we believe STOR’s portfolio composition is such that STOR is relatively well insulated from extraordinary occurrences that may have an adverse effect on a single tenant, industry, or geographic area… STOR should trade at a premium to the net lease sector given its attractive growth profile, solid balance sheet, and property level characteristics…”

Crossett’s take on STORE justifies his Buy rating on the stock, and his $37 price target quantifies it with ~34% one-year upside potential. (To watch Crossett’s track record, click here)

What does the rest of the Street think? Looking at the consensus breakdown, opinions from other analysts are more spread out. 3 Buys, 2 Holds and 1 Sell add up to a Moderate Buy consensus. In addition, the $33.08 average price target indicates ~20% upside potential from current levels. (See STOR 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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