Are you looking for defense stocks that pay dividends to take now? Deutsche Bank offers 2 names to consider

Last week, the Fed’s open market committee raised its key interest rate by 0.75%, the largest such increase in nearly 30 years. This move marks a move to an aggressive stance against inflation and the Fed’s attempt to prevent a potential recession.

In fact, preliminary data leaked from the Fed to Atlanta earlier this week showed that the United States is in a technical recession. While official figures will not be released before the end of the second quarter, early figures suggest that 2Q22 will end with 0.0% GDP growth. After a contraction of 1.5% in Q1, these are two consecutive quarters of negative or zero growth – the definition of recession.

From the investor’s point of view, such an environment means that it is time to strengthen the protection of the portfolio. Defensive games will receive much more attention in the future, as Deutsche Bank noted in a recent report on current conditions.

Against this safeguard, investment bank analysts have selected potential winners among dividend stocks, the classic defensive games for downturns of all kinds. We sought the details of two of these choices using TipRanks database. Now let’s dive in and look at the numbers and the DB comment together.

Digital Realty Trust (DLR)

First, the Digital Realty Trust belongs to this long-standing champion category in the dividend sector, the Real Estate Investment Trust (REIT). These companies are required to directly return a high percentage of shareholders’ profits and often use dividends as a means. As a result, REIT can usually be relied upon for reliable, high-yield dividends.

Some REITs are universal, investing in any type of property, while others have a narrower focus. Digital Realty is one of the latest and its focus is on data centers. The company owns properties in the data center and provides solutions for colocation and interconnection between its properties and the business of its tenants. With a market capitalization of $ 36.2 billion and an enterprise value of $ 56 billion, the company is the 7th largest REIT traded on Wall Street.

Some recent announcements from the company will help demonstrate the scale of its operations. Last month, DLR announced it had signed a 158-megawatt contract for new solar power plants for its operations in California and Georgia. This month, too, the company announced the expansion of its international presence with a commitment to open a new data center project in Israel. This move will improve DLR operations in the Eastern Mediterranean region.

On the financial side, Digital Realty reported revenue for the first quarter of the 22nd year of $ 1.1 billion, in line with the previous quarter and a modest 3% increase over the previous quarter. These revenues maintained a net income of $ 76.9 million, resulting in earnings per share for ordinary shareholders of 22 cents per discounted share. That number fell sharply from $ 1.32 diluted EPS reported in 1Q21. However, funds from operations (FFO) per share, a key indicator in the industry, rose from $ 1.50 in 1Q21 to $ 1.60 in a recent report, earnings of 6.7%.

FFO supported the company’s $ 1.22 ordinary dividend shares. This payout increases on an annual basis to $ 4.88 per ordinary share. At this percentage, it carries 3.8%, almost twice the average dividend found in wider markets. Even better for investors, the dividend has been tripled in the last three years, and the company has a 17-year history of maintaining payment reliability with a gradual increase.

In his review of Digital Realty for Deutsche Bank, an analyst Matthew Nicknam sees this company with a solid foundation from which to overcome economic difficulties. He writes: “Customer demand is strong in both hyper-scale and corporate customers, which has led to increased lease volumes in recent periods. Although we do not believe that record volumes can be extrapolated in the future (especially with deteriorating macro conditions), we believe that recent strength and a very healthy lag (~ $ 400 million +) help reduce the risk of growth prospects in 2023 d.

Nicknam does not stop there. It also improved its position on shares of (Hold) (Neutral) on “Buy” and set a price target of $ 144, which implies a one-year potential up 13% for the shares. (To watch the recordings of Nicknam, Press here)

Overall, analysts’ consensus rating for moderate buying for this stock was derived from 10 recent reviews, which included 7 for purchase versus 3 for retention. The shares are currently selling for $ 127.13 and have an average target price of $ 159.80, which gives ~ 26% average growth for next year. (See the forecast for DLR shares on TipRanks)

NetApp (NTAP)

The next dividend we will look at is NetApp, a San Jose-based company working in cloud data services and data management. NetApp works with large enterprise customers – including names like AstraZeneca, DreamWorks and even Dow Jones – on a range of data applications, all aimed at getting accurate data in the right place at the right time where the customer can get the most efficient and cost-effective use. mu.

Data has become big business and even after seeing stock losses in recent months (NTAP shares have fallen 31% since the beginning of the year, lower than the S&P 500), the company still boasts a market capitalization of over $ 14.5 billion.

Financial results for the last quarter, Q4 of fiscal 2022, were strong. NetApp reported net income of $ 1.68 billion, compared to $ 1.56 billion in the fourth quarter of the 21st year. Hybrid Cloud Segment is a leader with $ 1.56 billion in total revenue. NetApp ended the quarter with $ 4.13 billion in cash and other liquid assets.

This strong cash is sent back to the company’s shareholders. NetApp has an active share repurchase and dividend payout program, totaling $ 361 million for fiscal 4Q22 and $ 1.05 billion for the full fiscal year. The dividend on ordinary shares is set at 50 cents per share, or $ 2 per year, and a yield of 3%.

Deutsche Bank’s 5-star analyst has it all Sydney Ho wishes to upgrade these shares from “Hold” (ie neutral) to “Coupe”. Explaining his position, Ho writes: “We believe that the lower productivity of NTAP’s share so far of -30% from a drop of -30% (compared to a drop of -18% for IT hardware partners) creates an opportunity to buy. We are also encouraged that the company will change its use of cash in the short term from M & As to repurchase shares, which should be positive for EPS growth.

Believing that the risk reward is “captivating”, along with upgrading and optimistic prospects, Ho’s $ 84 goal suggests a one-year potential for a 32% increase. (To watch Ho’s recordings, Press here)

Overall, analysts’ consensus assessment of NTAP is a moderate purchase based on 13 reviews. They include 6 purchases against 7 arrests. The current price for trading the shares is $ 63.73, and the average price target of $ 88.38 suggests an increase of 39% next year. (See the forecast for NTAP shares in TipRanks)

To find good ideas for trading dividend stocks with attractive ratings, visit TipRanks’ The best stocks to buyrecently released a tool that brings together all of TipRanks’ equity insights.

Disclaimer: The views expressed in this article are those of the analysts submitted. The content is intended for informational purposes only. It is very important to do your own analysis before making any investment.

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