Two analysts' favourite dividend stocks yielding up to 11%

The year 2025 has started with optimism in equity markets, but some investors remain cautious due to persistent inflationary pressures and high interest rates. In such an environment, dividend stocks are a popular choice to provide stable income and diversify a portfolio.

Today, we'll feature two companies - Franklin BSP Realty Trust and BrightSpire Capital - that offer dividend yields of up to 11%. According to hedge manager Bill Smead, they are so interesting at the moment.

Franklin BSP Realty Trust $FBRT: Stability and growth in the world of real estate

Franklin BSP Realty Trust (FBRT) is a real estate investment trust (REIT) that specializes in making mortgage loans in the commercial real estate sector. The company's portfolio primarily includes mortgage loans for multifamily properties, such as apartment complexes. As of September 2024, the company had 157 loans with an average size of $33 million, with 74% of these loans backed by multifamily properties.

In the last quarter of 2024, Franklin BSP closed $380 million in new loan commitments and funded $325 million in loans. As a result of this activity, the company is achieving stable earnings that support its dividend policy. The current dividend yield is 11.2%, supported by the company's robust liquidity - which stood at $1.1 billion at the end of the third quarter of 2024, including $346 million in cash.

Analysts, such as Janney's Jason Stewart, rate Franklin BSP positively due to its strong balance sheet and market-leading position. Stewart said the company is uniquely positioned to benefit from the current state of the commercial real estate market thanks to the new 2023 and 2024 loans. He also expects the share price to rise 29% over the next year, which combined with the dividend promises a total return of up to 40%.

BrightSpire Capital: A diversified portfolio

BrightSpire Capital $BRSP is another real estate investment company that focuses on building a diversified portfolio of commercial real estate. The company's portfolio includes 76 loans totaling $3.9 billion, with 41% comprised of multifamily properties and 38% office space. Geographically, BrightSpire's focus is on the western and southwestern regions of the U.S., with smaller operations in the northeastern U.S. and Europe.

Despite a slight drop in earnings in the third quarter of 2024 (to 21 cents per share, down from 28 cents a year earlier), the company maintains a dividend yield of 11.2%. Alliance Global analyst Gaurav Mehta sees great potential in BrightSpire due to its renewed lending activity and strong balance sheet. He believes the current share price is attractive, creating an opportunity for 30% share price growth over the next 12 months. Combined with the dividend, the total return could then reach up to 41%.

Disclaimer: There is plenty of inspiration to be found on Bulios, but stock selection and portfolio construction is entirely up to you, so always conduct a thorough analysis of your own.

Source: Yahoo Finance