Blackstone & Oneok: Dividend Favorites

04/17/2017 2:50 am EST


Tony Daltorio

Editor, Investors Alley Premium Digest

The New York Fed said it expects the Fed balance sheet to be "normalized" by the end of 2021 at a level of around $2.8 trillion. So the taper looks to be gradual.

Still though, I would rather play the U.S. market on the safe side and own stocks that will not be dependent on a rapidly growing economy. That has me leaning towards those stocks that pay dividends. Here's two that should do well, no matter what the Fed does. 

From my perspective, I like Blackstone Mortgage Trust (BXMT). I love its close relationship with the real estate division of the Blackstone Group (BX). Blackstone is the largest real estate private equity group in the world with $102 billion of assets under management.

And most of BXMT's loans are based on LIBOR (the London Interbank Offered Rate), the benchmark rate the world's leading banks charge each other for short-term loans. In other words, many of its loans are short-term and not impacted by any rise in longer-term rates. It has a yield north of 8% and the stock is up more than 16% over the past year. 

I also like Oneok (OKE), whose stock has roared ahead by 92% over the past year in the big energy stocks rebound. The company owns one of the nation's premier natural gas liquids (NGLs) systems. It also recently announced the buy-out of its limited partnership -– Oneok Partners L.P. (OKS).

From a dividend viewpoint, I like the fact that it did not cut its regular dividend, despite the energy rout. And I like the fact that the free cash flow yield for the past 12 months has been higher than the current dividend yield -– 6.90% versus 4.40%. 

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