Stocks edged higher this morning in anticipation of remarks from Fed Chair Jerome Powell after the two-day FOMC meeting. Investors will be tuned in, hoping for clarity on the timeline for when the central banks will begin to cut back their $120 billion monthly emergency bond purchases. Powell is expected to address the media at 2:30 pm.
The tapering of the central bank’s $120 billion per month emergency bond-buying program is the first step in a process that will inevitably eventually lead to rising interest rates. While the first rate hike may still be on the distant horizon, many investors are now looking for ways to prepare their portfolios.
Specific sectors are more sensitive to interest rate changes than others, which can create very attractive opportunities. In today’s trade alert, we’ll delve into the sector that is perhaps most sensitive to these changes and reveal a ticker from within the sector that stands to benefit in the months and years to come.
Stocks from the financial sector often benefit from higher interest rates through increased profit margins. Specialty finance company Oaktree Specialty Lending Corporation (OCSL) provides customized, one-stop credit solutions to companies with limited access to public or syndicated capital markets. OCSL generates income and capital appreciation by providing co companies with flexible and innovative financing solutions, including first and second lien loans and preferred equity.
Ahead of rate hikes, companies that pay high dividends are often bought for the income they generate for investors. Oaktree has been named a Top 10 dividend-paying financial stock by Dividend Channel in its most recent “DividendRank” report. The report noted that OCSL displayed both attractive valuation metrics and strong profitability metrics. The report cited OCSL’s low price to book ratio of 1.0 and their high annual dividend yield of 8.02%. By comparison, the average stock in Dividend Channels coverage universe yields 3.2% and trades at a price-to-book ratio of 2.7. The report also cited the strong quarterly dividend history at Oaktree and favorable long-term multi-year growth rates in key fundamental data points.
OCSL’s share price has climbed more than 15% over the past 6 months, reflecting continued willingness to pay more for the potential upside. Of 7 analysts offering recommendations for OCSL, all 7 rates the stock a Buy. There are no Sell or Hold ratings for the stock. A median 12-month price target of $7.75 represents a 7.86% increase from the current price.
Where to invest $1,000 right now...
Before you consider buying Oaktree Lending, you'll want to see this.
Investing legend, Keith Kohl just revealed his #1 stock for 2022...
And it's not Oaktree Lending.
Jeff Bezos, Peter Thiel, and the Rockefellers are betting a colossal nine figures on this tiny company that trades publicly for $5.
Keith say’s he thinks investors will be able to turn a small $50 stake into $150,000.
Find that to be extraordinary?
But you have to act now, because a catalyst coming in a few weeks is set to take this company mainstream... And by then, it could be too late.
Jeff’s no. 1 Pick
Jeff Brown is arguably America’s #1 most accurate technology investor.
In 2015, he singled out Bitcoin before it shot up almost 100x… He also recommended the #1 tech investments of 2016, 2018, 2019, and 2020… And—this year—he’s already picked two of the three top-performing stocks!
Recently, Mr. Brown sat down with Chris Hurt to discuss the state of the stock market… And discuss his new #1 pick.[Full Story…]