Seeking up to 10% Dividend Yield? Analysts Suggest 2 Dividend Stocks to Buy

The Federal Reserve has entered a rate-cutting cycle, the job market is swinging wildly from month to month, and a Presidential election is just on the horizon – it’s a perfect storm to confuse even the savviest investors.

Amid these potentially unsettling factors, Bank of America’s quant strategist Savita Subramanian is advising investors to take the boring choices.

“You want to be in safe dividends,” she says, “and I know this is the most boring call of all time, but sometimes boring is good.”

Dividend stocks, particularly the high-yield payers, bring the advantage of a steady income stream no matter how the markets turn out. Rates go up or down – you cash the dividend check.

Against this backdrop, we’ve used the TipRanks database to look up the latest info on some high-yielding dividend stocks that Wall Street’s top analysts are tagging as buys. For investors seeking high yields, these are solid choices, yielding between 9% to 10%. Let’s give them a closer look.

Redwood Trust (RWT)

Redwood Trust, the first stock we’re looking at here, is a real estate investment trust (REIT), a class of company long known for paying out reliable, high-yield dividends. At its heart, Redwood is a specialty finance company, generating returns by making credit-sensitive investments in mortgage-related assets, including residential loans. The company invests primarily in single-family and multi-family bridge loans (these make up 31% and 25% of the portfolio, respectively), with the third-largest category of investments (11% of the total) being residential jumbo securities. Redwood also acts to provide a source of steady liquidity in the owner-occupied and rental housing markets.

This adds up to a significant business footprint. The company’s portfolio, defined as Redwood’s ‘economic interest,’ totals $3.4 billion, of which 78% is organically created. The remaining 22% is third-party originated. Redwood has been in business, providing homebuyer financing and credit services, since 1994.

On the financial side, Redwood generated $67.5 million in revenues during the second quarter of this year, a figure that was up almost 56% year-over-year. The company’s earnings available for distribution came to 13 cents per share, in line with expectations. The company gave investors a bonus in the last dividend declaration, dated September 11 for the upcoming Q3, with a 6% bump in the common share dividend. The new dividend stood at 17 cents per common share and was paid out on September 30. The 68-cent annualized rate gives a forward yield of 9%.

The increased dividend caught the eye of JMP’s 5-star analyst Steven DeLaney, who expects further dividend increases as we head into next year. DeLaney writes of Redwood’s dividend potential, “Our fresh $0.80 estimate for 2025 is ~8% higher than the $0.74 of total dividends we expect the company to pay next year, while we expect EAD per share to begin covering its current quarterly payout of $0.17 per share (just last month raised from a prior $0.16 payout) in the fourth quarter of this year as the company’s multi-faceted strategies begin to bear fruit, and we have consequently built in a $0.02 increase in the quarterly dividend in the second quarter of next year.”