Angel Oak Mortgage REIT, a notable player in the real estate investment trust sector, demonstrates a steadfast commitment to delivering robust capital returns, particularly through its dividend payouts. Most recently, the company declared its dividend on February 6 of this year, subsequently distributing payments on February 28. Each common share received a dividend of 32 cents, annualizing to $1.28 per share, which translates to an impressive yield of 15%. This announcement marked a significant milestone, representing the 10th consecutive quarter in which the company has maintained the 32-cent dividend payment.

As an externally managed REIT, Angel Oak is associated with Angel Oak Capital Advisors LLC, a prominent alternative credit management firm. This affiliation endows Angel Oak Mortgage REIT with a comprehensive connection to various facets of the mortgage sector, which includes everything from sourcing and acquiring loans to asset allocation and portfolio management. This linkage to Angel Oak Capital Advisors is a critical advantage that enhances the mortgage REIT's operational capabilities.

Angel Oak Mortgage primarily focuses on acquiring first-lien non-QM loans and other mortgage-related assets from the U.S. mortgage market. Through these strategic investments, the company has adeptly crafted a portfolio that promises attractive risk-adjusted returns for its shareholders. These returns are realized not only through cash distributionssuch as dividendsbut also by capital appreciation, positioning the company favorably across varying interest rate and credit cycles.

Wall Street analysts have taken note of the potential for dividend stocks, particularly those with yields exceeding 14%. According to the TipRanks database, both Angel Oak Mortgage and similar stocks show a compelling double-digit upside potential over the next year. Investors often view dividend stocks as a reliable means of generating income, regardless of market fluctuations. Therefore, a strong dividend stock must combine consistent payments, high yields, and share price growth, making it an appealing option for those seeking a stable income stream.

While it may still be premature to declare a complete market recovery, the presence of positive momentum could potentially lead to a self-sustaining rally, presenting ample opportunities for investors looking to maximize income. Early in the month, President Trumps tariff announcements sparked concerns regarding trade wars, a weakening dollar, and the looming threat of recession. Despite this, since the low point of the S&P 500 on April 8, the index has rebounded impressively, gaining 11% after the Trump Administration expressed a willingness to de-escalate tariff conflicts, which was met with a similar response from Beijing. Coupled with a first-quarter earnings season that has exceeded expectations, the mood among investors is shifting toward optimism.

Angel Oak's financial results underpin its commitment to dividends. In its latest release for the fourth quarter of 2024, the company reported net interest income totaling $9.9 million, representing a 20% increase year-over-year and aligning with market expectations. Additionally, the distributable earnings stood at 42 cents per share, exceeding forecasts by 16 cents, providing ample coverage for the dividend payout.

Analyst Randy Binner from B. Riley highlights the critical aspects of Angel Oak's business model, notably its high dividend yield and the overall quality of its portfolio. He emphasizes, The dividend yield, combined with our implied return to target, creates an attractive risk-reward scenario in our perspective. We anticipate another strong quarter of net interest income generation and will be keenly observing updates on growth opportunities in the non-QM sector, particularly in light of potential changes within the government-sponsored enterprises (GSEs). Notably, the 10-year Treasury yields experienced fluctuations from 379 basis points to 457 basis points in the fourth quarter of 2024, which affected the economic book value.

Binner further notes the presence of prepayment and refinancing protection within the portfolio, as the mortgage rates are weighted towards higher coupons. He observes favorable delinquency trends in the fourth quarter of 2024, which he expects to continue into the first quarter of 2025, citing that residential mortgages represent a robust credit risk area compared to other sectors experiencing spread widening. These insights justify Binner's Buy rating for the stock, with a price target of $12, indicating a potential upside of 41% over the next year. When considering the dividend yield, total returns on this stock could reach as high as 56% in the coming year.

In summary, recent analyst evaluations of Angel Oak Mortgage REIT have collectively painted a positive picture, resulting in a consensus rating of Strong Buy. The stock is currently priced at $8.48, with an average target price of $12.17, suggesting a 43% upside potential in the upcoming year.

In addition, we turn our attention to TXO Energy Partners, another notable company attracting investor interest. TXO, like Angel Oak, has garnered a reputation for delivering commendable dividends. The energy production firm generates income from its solid hydrocarbon acreage positions located in some of the nation's most productive energy regions, including the Williston Basin in North Dakota and Montana, the San Juan Basin straddling the Four Corners area, and the renowned Permian Basin on the TexasNew Mexico border.

TXO's strategic land acquisitions are guided by various factors such as low geological risk, minimal decline rates, and high recovery potential in relation to drilling and completion costs, allowing the company to develop a portfolio rich in profitable oil and natural gas plays. Management has focused on acquiring proven oil and gas production sites known for their consistent hydrocarbon output, aspiring to create a portfolio that offers more predictability and reliability than higher-risk unconventional recovery ventures.

Financially, TXO reported $109.3 million in net cash generated from operating activities during the 2024 calendar year, providing a solid cash flow for distributions: $79.1 million, which is more than double the equivalent figure recorded at the end of 2023. This strong cash flow supports dividends, with the most recent declaration on March 4 announcing a payment of 61 cents per common share, which was distributed on March 21. This annualized rate of $2.44 results in a robust yield of 14.5%, marking the eighth consecutive quarter of dividend payments for TXO.

Stifel analyst Selman Akyol has recognized TXO's solid capital return and low-cost business model as attractive investment features. He remarks, TXO Partners presents an appealing investment opportunity, underpinned by its capital return framework supported by low production decline rates, manageable capital expenditures, and low leverage. Each basin TXO operates in offers unique growth opportunities. Furthermore, the management team possesses extensive experience and a proven track record of extracting incremental value from assets, as well as identifying potential acquisition targets. TXO aims to distribute 100% of its cash available for distribution, resulting in an annualized yield of 14.4% for the fourth quarter. Although distributions are subject to variability based on commodity prices, Akyol believes that low production decline rates support a higher payout.

Akyol substantiates his bullish view on TXO with a Buy rating and a price target of $20, indicating an 18% potential gain over the next year. When combined with the dividend yield, this stock could yield a total return of 32.5% within a year. Despite only two recent reviews available, both have been positive, leading to a Moderate Buy consensus rating for TXO. The stock is currently priced at $16.95, with an average target price of $21.50, signaling a potential one-year upside of roughly 27%.

To explore further investment opportunities in stocks that are trading at attractive valuations, investors can utilize TipRanks Best Stocks to Buy tool, which consolidates comprehensive equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analysts. It is crucial to conduct your own analysis before making any investment to ensure alignment with your financial goals.

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