- These mid cap stocks to buy now offer very high dividend yields and a price prediction with great upside potential.
- ZIM Integrated Shipping Services (ZIM): a global container shipping company with a dividend yield of nearly 30%.
- Braskem (BAC): This chemical company in Brazil recorded very strong growth in revenue and net profit in 2021.
- FS KKR Capital (FSK): A financial services company with a history of strong profitability at a very attractive valuation.
Mid-cap stocks slightly outperformed the broader US stock market, as measured by the S&P500 in 2022. In a year of high volatility and major risks ahead, this outperformance signals that investment opportunities exist everywhere, but stock picking is difficult. the S&P MidCap 400 measures “the performance of 400 mid-sized companies, reflecting the distinctive risk and return characteristics of this market segment”.
At the close of trading in the US on May 20, the S&P MidCap 400 posted losses of 16.1% compared to a loss of 18.1% for the S&P 500. Not a huge difference, but it shows that mid-cap stocks offer returns that may be better than the overall index.
These three mid-cap stocks to buy have very high dividend yields. They are sufficient to add significant passive recurring income with very good risk/return characteristics, growth and relative stability.
|ZIM||ZIM Integrated Shipping Services||$70.07|
|FSK||FS KKR Capital||$20.92|
ZIM Integrated Shipping Services (ZIM)
ZIM Integrated Shipping Services (NASDAQ:ZIM) is a global container shipping company founded in 1945 and headquartered in Haifa, Israel. ZIM stocks are very attractive now for several reasons.
First, the company decided to offer shares to the public for $15 each in January 2021. As of May 20, the closing price was $64.70, indicating a successful initial public offering (IPO) in terms of financial performance almost a year and a half later.
The second reason why ZIM stock is attractive is its very high forward dividend and its yield of $19.50 and 30.1%, respectively. Finally, the one-year price target is $87, offering almost 24% upside potential.
ZIM reported record results for full year 2021 and first quarter 2022. Net income for the first quarter was $1.7 billion, a 190% year-over-year increase, and revenue revenue was $3.7 billion, a year-over-year increase. by 113%.
Need another reason to be bullish on ZIM stocks? It trades at a price-to-earnings (P/E) ratio of 1.7x.
Braskem (NYSE:BAC) produces and sells thermoplastic resins, operating through three segments in Brazil, the United States, Mexico and Europe. Braskem shares are cheap, trade at a P/E ratio of 2.5x and offer a high forward dividend yield of 14.4%.
Its dividend yield history is not stable. However, that’s not a bad thing as long as the fundamentals are strong and the valuation is compelling. The price-to-sales (P/S) ratio of 0.3x makes the stock very cheap.
Braskem’s sales growth appears to have accelerated over the past two years. It went from a rate of 11.9% in 2020 to 80.4% in 2021.
Net income growth in 2021 was stellar at 309%, making a big turnaround after two consecutive years of net losses. The company also generates high but volatile free cash flow, which has also gained a lot of momentum over the past two years. BAK stock has a one-year target of $24 for an upside potential of around 35%.
FS KKR Capital (FSK)
FS KKR Capital (NYSE:FSK) is a financial services company specializing in investments in debt securities. The forward dividend and yield are $2.72 and 13.2% respectively. FSK stock is now trading at a P/E ratio of 3.4x.
From 2018 to 2020, the quarterly cash dividend was 19 cents. In June 2020, it was raised to 60 cents and then to 65 cents in September 2021. It dropped to 62 cents in December 2021, but was raised to 68 cents payable in June 2022.
Its sales growth is volatile, but its profitability is strong. Over the past five years, the company has only been profitable in 2020. In 2021, it recorded net profit growth of 474.1% to $1.5 billion.
For the first quarter of 2022, FS KKR Capital reported net investment income of 77 cents per share. This is a quarterly increase of nearly 17%, compared to 66 cents per share for the quarter ended December 31, 2021.
Analysts are bullish as the one-year target of $23.06 offers 11% upside potential.
As of the date of publication, Stavros Georgiadis, CFA had (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.