The saying “insider trading” conjures up images of smoky backrooms and shady deals, but that’s just for the movies. In real life, insiders refer to corporate officials, such as CEOs, CFOs, COOs, and managers who are responsible for running their companies profitably. They do not skimp on trading their company’s stock. While they may sell for various reasons, they only buy when they expect a rise in the stock price.
This makes insider movements one of the most common signs investors can look for in predicting stock movements in the near to medium term. Insiders, ex officio, have advance knowledge of the factors that will affect stocks, and regulatory authorities level the playing field by requiring insiders to publish their trades. Investors can keep an eye on these posts, and stocks with strong insider buying are always worth a closer look.
You can enhance positive signals from within by combining them with other factors closely associated with strong returns – such as high Dividend returns. Passive income is always a boon for investors, and when that passive income is making 8% or better, and when insiders are buying in bulk, it’s a combination that demands attention.
So let’s pay some attention to these well-deserved double-barreled stocks. using Insiders hot stock On TipRanks, we found two stocks that are showing strong insider buying in recent days, along with dividend yields starting at 8% and going up from there. If that wasn’t enough, both stocks also received support from Wall Street analysts. Let’s take a closer look.
owl rock capital (ORCC)
We’ll start in the world of Business Development Companies, or BDCs. These financial companies give their customers access to credit and capital. Its client base consists of the small and medium-sized businesses that have long been the engines of the American economy. These companies do not always have access to major banks, but Owl Rock and its counterparts provide the capital, credit, and loan facilities these companies need for growth, acquisitions, and market or product expansions.
There are 187 of these mid-market companies in Owl Rock Capital’s portfolio of investments, with a total fair market value of over $13 billion. Of Owl Rock’s investments in these companies, 98% are floating rate, and 85% are major secured investments.
It’s a high-quality portfolio that has contributed to ORCC’s earnings hike over the past year. In fact, the company’s most recent quarter, 1Q23, showed strong income that exceeded Street’s expectations by a large margin. ORCC’s total investment income was $377.6 million, which is an increase of 42% compared to the same quarter last year. Even better, the total investment income came in at $12 million more than expected.
On the bottom line, net investment income (NII) came to $177.8 million, or 45 cents a share. That was 14 cents per share higher than the Q1 ’22 figure — and it was 2 cents more than analysts had expected.
Supporting strong investment income and generous dividends. For the second quarter, the company declared a regular dividend of 33 cents per common share, which is scheduled to be paid on July 14. Converted annually, these regular dividends are $1.32 and provide an impressive yield of 9.8%.
On the Insider tradingWe find that the company’s president and CEO, Craig Packer, bought 75,600 shares of the company in May, paying about $1 million.
The chief company officer is hardly the only bull here; Kenneth Lee, 5-star analyst at RBC Capital, writes about the stock: “ORCC could be on track to deliver a 12%+ return on equity this year. Portfolio credit performance remains strong, in our view. We expect to gain Further insight into ORCC’s investment approach and potential return profile through the cycles on the upcoming Investor Day. We continue to favor ORCC as one of the few BDCs at the level, with an attractive valuation (0.85x NAV) and dividend yield (~10%).”
In my view, this adds to an Outperform (i.e. Buy) rating, and he sets a price target of $15 to indicate a 1-year upside potential of ~12%. Based on the current dividend yield and projected price estimate, the stock has a 22% total return potential profile. (To watch a record of me, click here)
As far as Wall Street in general is concerned, ORCC has a Medium Buy consensus rating, based on 5 recent reviews that include 4 Buys and 1 Sell. (be seen ORCC stock forecast)
boston real estate (bxp)
From BDC we will switch gears and look at a company from another sector known for high profits, which is a real estate investment fund. REIT at hand is Boston Properties, a major player in the US workplace real estate sector. Boston Properties is the largest publicly traded developer, owner and manager of such real estate in the United States.
A look at some numbers will give the scale. Boston Properties has 177 office properties in its portfolio, totaling 50 million square feet of leasable space. Located across six metropolitan areas, these properties are known to be some of the most sought after properties in the United States. BXP owns properties in the city of Boston that bears its name, along with New York City, Washington, D.C., Seattle, San Francisco, and Los Angeles. The company’s largest presence, with 49 locations and 15.9 million square feet, is in Boston. Washington and New York are next, with 42 properties and 22.6 million square feet between them.
Commercial real estate, especially in urban areas, is under post-COVID pressure. With many workers still telecommuting, companies are trying to shrink their office space. But even in that difficult environment, BXP has maintained its revenue and profits. The company’s top line last quarter, 1Q23, came to $803.2 million, capping nearly two years of quarterly revenue growth. The first-quarter total was also up 6.5% year-over-year, and beat expectations by $24.4 million.
In the bottom line, there are many metrics to consider. BXP’s GAAP earnings of 50 cents missed expectations by 4 cents and were 45% lower than last year’s EPS of 91 cents. However, BXP reported funds from operations (FFO) in Q1 2013 of $1.73 per share, of more interest to distributed investors, derived from a total of $272 million. Despite lower year-ago quarter results ($1.82 per share and $286.1 million total), the current foreign financing fund was more than enough to fund the company’s entire dividend.
The dividend was paid near the end of April, at 98 cents per common share. BXP has been holding its dividend at this level since late 2019; The annual rate of $3.92 per share gives a solid yield of 8%.
Take a good look at this company Insider tradingWe find out that Carol Eniger, a member of the board of directors, recently acquired 10,000 shares, paying $474,100.
Also optimistic about the stock is Evercore ISI analyst Steve Skua, who focuses on the company’s ability to generate cash.
“After making some adjustments to our model, our FFO23 estimate increased from $7.15 to $7.18 driven by slightly higher base rents and lower operating expenses compared to our new FY24 estimate of $7.58 reflecting more conservative operating expenses…” rating Outstanding performance in light of the company’s quality portfolio, healthy balance sheet, and strong development pipeline to drive long-term value in an otherwise challenged office sector,” Sakwa said.
This Outperform (i.e. Buy) rating comes with a price target of $67 which means growth of approximately 38% for the next year. (To watch the squah log, click here.)
Overall, of the 12 most recent analyst reviews recorded here, 5 are for Buy and 7 for Hold — giving the stock a Moderate Buy consensus rating. (be seen BXP stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best stocks to buya 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.