This $7 Stock With The 11% Yield Is Attracting The Attention Of Analysts

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Recently Credit Suisse became positive on Newcastle Investment (NCT), mainly due to its robust yield of 11%. It joins several other analyst firms to notice the firm this year. In this anemic yield environment, the company deserves a hard look from income investors.

"Newcastle Investment Corp. operates as a real estate investment and finance company that invests in and manages a portfolio consisting primarily of real estate securities." (Business description from Yahoo Finance)

6 Reasons NCT makes sense for income investor at just $7 a share:

  1. The stock yields 11.2% based on the current 80 cent annual dividend payout. Credit Suisse believes this distribution will increase to 92 cents in FY2013.
  2. In addition to Credit Suisse initiating the shares as an "outperform", Compass Point initiated NCT as a "Buy" in March and Barclays initiated the shares as an "outperform" in April of this year.
  3. The company has crushed earnings estimates three of the past four quarters and consensus earnings estimates for FY2012 have risen substantially over the past three months.
  4. NCT is projected to come in with 9% to 10% revenue growth for both FY2012 and FY2013.
  5. Analysts' price targets range from $7.75 to $10 a share on NCT, reasonable given the 11% yield.
  6. NCT is selling at less than 5 times forward earnings and insiders are holding onto their shares after being huge buyers of the stock last summer.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in NCT over the next 72 hours.