If there’s one thing we can be certain of in Trump’s second administration, it’s that we should expect the unexpected. Earlier this week, the President announced that new, higher tariffs would take effect on goods from Canada, Mexico, and China – three of the nation’s largest trading partners. However, a one-month delay has been granted for a portion of imports from Canada and Mexico under the USMCA.
Trump’s announcement comes as fresh data paints a worrisome picture of consumer sentiment. In January, consumer spending slipped by 0.2% – its first decline since March 2023 – while February’s consumer confidence reading came in far weaker than expected. With Americans already showing signs of caution, the timing of new trade tensions raises questions about the road ahead.
In this environment, investors naturally turn defensive, and Wall Street analysts are zeroing in on high-yield dividend stocks. These reliable income generators offer a dual advantage: steady cash flow and a buffer against market volatility.
With that in mind, let’s take a closer look at two high-yield dividend stocks that analysts, as tracked by TipRanks, are backing as Buys. Each boasts a payout of at least 10%, offering a passive income stream that’s hard to ignore.
Alliance Resource Partners(ARLP)
We’ll start in the energy sector, where Alliance Resource Partners is an important name in the US coal industry. Even though the US energy sector has shifted toward natural gas for power generation and has been expanding renewable energy sources in recent years, coal remains a vital fuel source. Alliance is the second-largest coal producer in the eastern US and generates income from the combination of its coal production and its royalty assets in mineral interests across a range of US coal, oil, and gas production regions.
The company operates through four main business divisions: Appalachian coal operations; Illinois Basin coal operations; coal royalties; and oil & gas royalties. The company markets its coal production mainly to enterprise customers in the industrial and utility sectors. The company has seven main coal mines in operation and produced 32.2 million tons of coal in 2024. On the royalty side, the company owns and derives income from approximately 70,000 net royalty acres.
These operations combined to bring in $590.1 million in total revenues during 4Q24, the most recently reported quarter. That figure was down 5.6% from the prior-year quarter and missed the forecast by $45.5 million. The company realized a net income of $16.3 million in the quarter and an EPS of 12 cents. Total revenue in 2024 came to $2.4 billion.
Despite the miss on quarterly revenue, Alliance still offers investors a sound return. In January, the company declared a common share cash dividend of 70 cents. At the $2.80 annualized rate, the dividend gives a strong forward yield of 11.29%.
The sound return reflects Alliance’s strong industry position and a generally upbeat long-term outlook. Benchmark analyst Nathan Martin expands on that outlook, noting: “With an increased focus on grid reliability and the expectation for growth in baseload power demand, we’ve seen multiple coal-fired plant retirements extended. We believe ARLP will benefit from this theme as well as its efforts to continue diversifying outside of coal.”
Martin goes on to rate ARLP shares as a Buy, with a target price of $29 that points toward a one-year gain of ~17%. (To watch Martin’s track record, click here)
There are only two recent analyst reviews on file for this stock, but they both agree that it’s one to buy, making the Moderate Buy consensus unanimous. The shares are priced at $24.83, and the average price target of $30.50 implies a 12-month upside of ~23%. (See ARLP stock forecast)
AG Mortgage Investment Trust (MITT)
For the next dividend stock on the list, we’ll look at a REIT, or real estate investment trust. This class of companies – known for generating income through owning and managing various types of real estate, originating or investing in mortgage loans and mortgage-backed securities, or a combination of these – stands out for its strong dividend payments.
AG Mortgage Investment is a pure-play residential REIT, which has built up a diverse and risk-adjusted portfolio of residential mortgage-related assets. The company focuses on the US markets, and its portfolio, at the end of 2024, was valued at $6.7 billion. Of that total, $6.1 billion was in securitized loans; most of the remainder was in warehouse loans or other residential mortgage products.
This REIT is externally managed by an affiliate of the larger TPG Angelo Gordon company, which in turn is part of the TPG private equity firm from Fort Worth, Texas. AG Mortgage Investment Trust uses its access to the larger equity firm to provide financing on a long-term, non-recourse, non-mark-to-market basis.
Of particular note to dividend-minded investors, AG Mortgage declared a 19-cent per common share payment in December of last year, and paid out the dividend this past January 31. The dividend annualizes to 76 cents per share and gives a forward yield of 10%.
Turning to the company’s financial results, we find that AG Mortgage missed the forecast on EPS in its last reported quarter, 4Q24. The company reported 18 cents per share at the bottom line, by non-GAAP measures, a figure that was 2 cents per share less than had been expected. Of more immediate interest to dividend investors, the company’s ‘earnings available for distribution,’ or EAD, which supports the dividend, came in at 76 cents per share, significantly higher than the 17-cent EAD reported in 4Q23.
Analyst Jason Weaver covers this stock for Jones Research and he bases his stance on the overall quality of the company’s investment portfolio.
“With the portfolio now positioned largely in mortgage credit and producing term funded double-digit ROEs, the stage is set for future growth… The credit quality of MITT’s non-agency portfolio remains toward the higher end of peers, showing the origination capabilities of the platform… At 71% of current BVPS, shares remain substantially below the mortgage REIT peer average and are significantly undervalued,” Weaver opined.
These comments support Weaver’s Buy rating on MITT shares, while his price target, now set at $8.50, implies a 13% potential upside on the one-year horizon. (To watch Weaver’s track record, click here)
MITT doesn’t get much attention from analysts, but the limited coverage skews positive. The three most recent reviews split 2-to-1 in favor of Buy over Hold, resulting in a Moderate Buy consensus. With shares at $7.49 and an average price target of $8.25, the stock suggests a 10% upside over the next year. (See MITT stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a 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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