Seeking Up to 15% Dividend Yield? Piper Sandler Suggests 2 Dividend Stocks to Buy

Business Insider

6 days ago

Stock investing is all about returns, and the markets have delivered just that since hitting their trough in April. The S&P 500 bottomed out at 4,983 and has since rebounded 26%, bringing its year-to-date gain to 7% and pushing it to record levels. But is there room for more gains?
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Piper Sandler chief investment strategist Michael Kantrowitz, in a recent interview, explains why he believes that markets haven't hit their ceiling yet, but he acknowledges that all gains have their limits.
'I think it's important to recognize or acknowledge that the last three months' moves were largely pricing out of macro risk. Whether you look at PEs, which have rebounded, or credit spreads, which have compressed, it's been a very macro-led tape where kind of a rising tide has lifted all boats. Going forward, we should not expect this to sustain the same level of returns, of course,' Kantrowitz stated.
But investors are still looking for profits, and when the market ceiling is facing limits, high-yield dividend stocks offer a sound choice to maximize portfolio returns. Against this backdrop, Piper Sandler analyst Crispin Love has highlighted two high-yielding dividend stocks to buy – including one with a yield approaching 15%. Let's give them a closer look.
We'll start with AGNC, a real estate investment trust, or REIT, whose activities mainly revolve around agency mortgage-backed securities. These assets are guaranteed against credit losses by Federal entities – Fannie Mae, Freddie Mac, and Ginnie Mae – providing a level of protection for investors. AGNC is an internally managed REIT, with a long-term goal of delivering solid returns to its shareholders.
That goal is reflected in the company's highly focused investment strategy. AGNC has built a portfolio where 98% of its assets are agency MBS, including pass-through certificates, collateralized mortgage obligations (CMOs), and 'to-be-announced' securities (TBAs) – all carrying federal guarantees that help mitigate credit risk. As of March 31, the portfolio stood at $78.9 billion in value, with over 95% allocated to 30-year fixed-rate assets, underscoring AGNC's preference for stable, long-duration instruments.
AGNC's consistent dividend policy is a key reason it stands out among income investors. In fact, the company pays dividends monthly – a less common but appealing feature for those seeking regular income. This monthly cadence allows investors to better match dividend inflows with ongoing expenses. AGNC's most recent declaration came on July 9 for an August 11 payment, maintaining its 12-cent monthly rate. That equates to 36 cents per quarter and $1.44 annually, translating to a generous forward yield of 15.5%.
While its dividend track record is attractive, it's worth examining AGNC's underlying financials to assess the sustainability of those payouts. In its latest quarterly report for Q1 2025, the company posted net interest income of $159 million and a non-GAAP EPS of 44 cents. Although NII fell short of expectations by $284 million, the earnings per share came in 3 cents above the consensus.
In setting out the Piper Sandler view here, analyst Crispin Love explains why he believes that this REIT will continue to deliver on the dividend.
'Since AGNC's 1Q25 earnings, agency spreads have tightened slightly following significant volatility around Liberation Day. We believe near-term spread levels and mortgage rates should be somewhat range-bound, but we could see continued rate volatility in 2025 given the macro landscape and uncertainty related to economic growth, inflation, and tariffs. Going forward, we believe AGNC can maintain its current dividend level, with AGNC generating mid-to-high teens returns over the near-term,' Love opined.
Love's comments back up his Overweight (i.e., Buy) rating on the stock, and his $10 price target implies a one-year upside potential of 8%. Together with the dividend yield, the total one-year return on this stock may approach 23.5%. (To watch Love's track record, click here)
Rithm Capital (RITM)
The second dividend stock we'll look at is Rithm Capital, a REIT that was founded in 2013 and for the past decade-plus has provided a compelling investment option in mortgage servicing rights (MSRs). Early on, Rithm focused on MSR management; today, its portfolio is more varied, holding a diverse set of real estate assets. In addition to mortgage servicing rights, these assets include residential mortgage loans, commercial real estate, single-family rentals, business purpose loans, and even consumer loans.
Building on this expanded investment scope, Rithm took a major strategic step in late 2023 by acquiring the asset management firm Sculptor Capital Management. The $719.8 million deal significantly broadened Rithm's operational reach and brought Sculptor's sizable asset base under its umbrella.
The impact of this acquisition is evident in the company's numbers. Rithm now boasts $7.8 billion in total equity and a book value of $12.39 per common share. Its total assets stand at $45 billion, while assets under management have grown to $35 billion – a figure reflecting the addition of Sculptor's portfolio. Diving into specific segments, the company holds over $5.5 billion in mortgage origination and servicing and nearly $850 million in residential transitional lending.
These robust figures support Rithm's overarching goal: to deliver stable and attractive long-term returns to shareholders. A key part of that strategy is the dividend, which the company has paid consistently for 12 years. The current quarterly dividend stands at 25 cents per common share, declared most recently on June 18 for a July 31 payment. At the annualized rate of $1, this payout translates to a forward yield of 8.4%.
That yield appears well-supported by the company's latest financials. In 1Q25, earnings available for distribution (EAD) came in at $275.3 million, or 52 cents per share – 5 cents ahead of expectations and more than enough to cover the dividend.
Checking in again with Piper Sandler's Crispin Love, we find that the analyst has a lot to say about Rithm – and it's mostly positive.
'With 30-year mortgage rates keeping the origination outlook still far from a normalized environment, we are focused on names that can perform in this higher for longer backdrop. One name that stands out to us for multiple reasons is RITM. Rithm is a diversified business across mortgage and asset management and is currently trading at just 5x earnings. On the mortgage side, RITM is the #3 mortgage servicer in the US which is an annuity like business that can actually outperform in higher rate backdrops. In addition, management is contemplating a potential spin of its mortgage business (Newrez), which could serve as a catalyst to shares. And lastly, RITM continues to grow in asset management following its acquisition of Sculptor in late 2023 with the potential for more acquisitions or partnerships in the space,' Love noted.
The analyst quantifies this stance with an Overweight (i.e., Buy) rating, along with a $14 price target that points toward a one-year gain of 17.25%. Add in the dividend yield, and the return for RITM over the coming year can hit as high as ~26%.
All in all, there are 6 recent analyst reviews on record for Rithm Capital and they are all positive – for a unanimous Strong Buy consensus rating. (See RITM stock forecast)
To find good ideas for dividend stocks trading at attractive valuations, visit TipRanks' Best Stocks to Buy, a tool that unites all of TipRanks' equity insights.