Tipranks’ ‘Perfect 10’ List: These Top-Rated Dividend Stocks Yield Up to 10%

We’re in the midst of a general bullish trend, with strong year-to-date gains, but last week saw a brake on that rally, with a losing week across the main indexes.

Call it a warning sign. While sentiment remains solid, the headwinds are gathering. The Federal Reserve held interest rates steady in its June meeting, after more than a year of hikes to combat inflation, but inflation, while down to 4% annualized, is still double the target rate. Conventional wisdom says that the Fed isn’t done hiking – even if that means increasing the risk of a recession. We’re already seeing the effects of tighter credit on the real estate markets and consumer spending.

In short, now may be the time to take advantage of the buying mood and get into defensive stocks, particularly the dividend stocks. Their steady income stream, and potential for yields as high as 10%, offer protection against both inflation and economic swoons, key points in their popularity with investors.

But how to find the best dividend payers? That requires a deeper look into the data. We’ve used the TipRanks Smart Score, a sophisticated data-parsing algorithm, to do just that. The Smart Score measures every stock against 8 factors all known to correlate with outperformance, and gives them a score on a scale of 1 to 10. And when the ‘Perfect 10s’ are also paying out high dividend yields, that’s a stock that deserves a closer look.

So, here are two dividend payers, one yielding as high as 10%, that have both scored Perfect 10s from the Smart Score. We’ll look at recent comments from the Street’s analysts, too, to add some color and detail.

Franklin BSP Realty Trust (FBRT)

We’ll start with a real estate investment trust (REIT), Franklin BSP Realty. REITs are well known as dividend champs; these companies operate by buying, owning, managing, and leasing real properties of all kinds, as well as mortgage related securities – and tax regulations require that they return a certain proportion of profits directly to shareholders. Dividends make a convenient mode of compliance, and the result, for investors, frequently comes to a reliable, and high-yielding, passive income stream.

Franklin BSP Realty has a portfolio that mainly focuses on commercial real estate debt. The company both acquires and originates these debts, and provides both management and underwriting services. Franklin has built its business on a wide range of loans, from $10 million up to $250 million, and lends up to 80% of the property value. The company will facilitate mortgages on commercial properties of any type, in the US.

In the last reported quarter, 1Q23, Franklin’s total income came to $62.77 million, a solid result that was up from $55.1 million in the prior-year quarter and beat the estimates by $8.76 million. The firm’s bottom line result, a non-GAAP EPS of 44 cents, was 7 cents better than had been anticipated, and was far better than the 99-cent EPS loss reported one year earlier. Franklin ended Q1 with an impressive $1 billion in total liquidity, which included $230 million in cash.

Franklin has been paying out quarterly dividends since the end of 2021, and the current payment, of 35.5 cents per common share, has been in place since early 2022. The common share dividend was last declared on June 20 for a July 10 payout; the $1.42 annualized rate gives a robust yield of 10.5%.