As the bull market stretches further into its record-long 10th year, many investors are shifting their strategies to strong, reliable dividends for income. That's not a bad idea, but you don't have to settle for yields in the 3% to 5% range. Instead, our top high-yield stocks offer yields between 6% and 8%.
But that's not all that makes these dividend stocks exceptional.
We're going to show you companies with high dividends, strong balance sheets, and a signal that their share prices are about to press much higher in the future. To determine the latter, we recommend using the Money Morning Stock VQScore™. This proprietary system tracks thousands of companies and assigns them a score based on their upside potential. The higher the score, the more likely the stock will break out in the near future.
The combination of high yield and breakout potential can create massive windfalls when investors reinvest their dividends. Today we're looking at the two high-yield stocks with significant upside in the coming months.
This first high-yield stock pays an incredible 8.43% yield, plus it also has a near-perfect VQScore...
High-Yield Stocks to Buy, No. 2
The first high-yield stock to own is KKR Real Estate Finance Trust Inc. (NASDAQ: KREF), a specialty real estate finance firm with about $7 billion in assets under management as of March 31, 2019. The company generates cash by focusing on senior loans, ranging from $50 million to $400 million, and on the top 30 markets in the United States.
The trust is managed by KKR Real Estate Finance Manager, which falls under the umbrella of private equity giant KKR & Co. Inc. (NYSE: KKR). KKR is known for its investments in "smart money" assets like private equity, energy, infrastructure, credit, hedge funds, and real estate.
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Real estate has benefited over the last year thanks to U.S. tax reform. The industry is experiencing a wave of capital inflow as investors focus on cash-generating assets late in the economic cycle.
KREF pays an 8.43% yield, and it's reliable given the remarkable track record of its parent company. It also has a VQScore of 4.15, which puts the stock squarely in our "Buy Zone" and suggests further gains soon. The stock has a potential upside of $23 per share, which would represent a gain of 11.1% on top of a rock-solid dividend.
But our favorite high-yield dividend stock has a perfect VQScore of 4.75. Shares are already up 30% this year, but our research shows shares could rocket 100% higher.
High-Yield Stocks to Buy, No. 1
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We stick to real estate again with Brookfield Property Partners LP (NYSE: BPY), perhaps one of the best-managed companies in the business. The firm is a limited partnership that owns, operates, and invests in commercial properties in the United States, Australia, and Europe.
And we're not talking about suburban condos or strip malls here. We're talking about some of the most premier properties on the planet.
The firm's portfolio includes Canary Wharf in London, Brookfield Place in Toronto, Potsdamer Platz in Berlin, and Brookfield Place (typically known as the World Financial Center in the Battery Park neighborhood of New York City).
This company reported solid earnings earlier this week, but it also has a VQScore of 4.75, perfect by our standards. Shares are already up 30% this year, but the VQScore signals there is still plenty of room to run.
The stock is currently trading at $20.13 and offers investors a current yield of 6.56%. However, analysts project the stock could rise to around $25 per share in the future.
That represents a pop of 24.1% from Wednesday's closing price.
Digging under the hood, it's clear why. BPY stock trades at an incredible price-to-book value of 0.83, which is nearly half of the industry average (1.64 times book). If it traded in line with its industry peers, BPY stock would be sitting at roughly $40 per share, nearly a 100% gain from today's price.
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