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5 High Yield Stocks to Buy as Rate Hike Expectations Collapse

Zacks Equity Research

Federal Reserve has become conservative about increasing interest rates as the targeted inflation rate is yet far from achievable. The U.S. monetary policy is likely to be more accommodating owing to headwinds like economic slowdown in China, poor U.S. labor market conditions since the release of disappointing job report in May and weak energy prices.

CME Group's FedWatch Tool predicts that probability of the Fed rate hike is only 4% for Jun 15, 2016. Until Dec 14, 2016, the rate hike expectations are below 50%.

Stocks Worth Investing In

We believe that real estate investment trust (REIT) companies or stocks from the utilities or telecom sector make good investment options. These companies have heavy debt load but capable of offering highest dividend yields in the market, supported by their colossal size.

Thus these companies are the best bets amid low interest rates, which are not likely to increase in the near term. Given that the interest payments for loans borrowed to run large scale corporate operations would be lower, investment in these stocks will undoubtedly be a prudent choice.

Zacks to the Rescue
 
With the help of the Zacks Stock Screener, we have zeroed in on five stocks that carry a Zacks Rank #1 (Strong Buy) or #2 (Buy), and also have a dividend yield of over 4.5%.

Our Picks

Vivendi SA VIVHY conducts services within media and content businesses primarily in France and the rest of Europe. The company also extends its services in the U.S. and globally. This Zacks Rank #2 stock from the Utilities sector has a dividend yield of 13.31%.

Cherry Hill Mortgage Investment Corp. CHMI is a renowned residential real estate finance company. The organization invests in, finances and conducts residential mortgage assets in the U.S. The company holds a Zacks Rank #2 and has a dividend yield of 12.4%.

Eagle Point Credit Company Inc. ECC is a type of closed ended fund that is managed and launched by Eagle Point Credit Management LLC. The company invests in fixed income markets of the U.S. The Zacks Rank #2 stock from the Finance sector has a dividend yield of 14.1%.

Orchid Island Capital, Inc. ORC is a well-known finance company that allocates fund in residential mortgage-backed securities, mainly in the U.S. This company from the Finance sector has a Zacks Rank #2 and a dividend yield of 16.11%.

Mobile TeleSystems PJSC MBT offers specialized telecommunication services in the Commonwealth of Independent States and Russia. The company sports a Zacks Rank #1, has a dividend yield of 7.09% and belongs to the Computer and Technology sector.

Given that interest rates are not likely to increase any time soon, we expect investors to gain from high yield stocks, like the ones recommended above.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
MOBILE TELE-ADR (MBT): Free Stock Analysis Report
 
CHERRY HILL MTG (CHMI): Free Stock Analysis Report
 
ORCHID ISLAND (ORC): Free Stock Analysis Report
 
EAGLE POINT CRD (ECC): Free Stock Analysis Report
 
VIVENDI-ADR (VIVHY): Free Stock Analysis Report
 
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Zacks Investment Research