{"id":78382,"date":"2026-06-05T19:04:11","date_gmt":"2026-06-05T19:04:11","guid":{"rendered":"https:\/\/www.europesays.com\/ch\/78382\/"},"modified":"2026-06-05T19:04:11","modified_gmt":"2026-06-05T19:04:11","slug":"11-plus-dividend-yield-and-double-digit-upside-ubs-picks-2-dividend-stocks-to-buy","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/ch\/78382\/","title":{"rendered":"11%-Plus Dividend Yield and Double-Digit Upside: UBS Picks 2 Dividend Stocks to Buy"},"content":{"rendered":"\n

Dividend stocks<\/a> have long been a favorite among income-focused investors, and for good reason. They offer the potential for a double reward \u2013 regular cash payments that land in your account regardless of market swings, along with the opportunity for long-term share price appreciation.<\/p>\n

Claim 55% Off TipRanks<\/a> <\/p>\n

And this brings us to real estate investment trusts (REITs), a classic choice for dividend investors. These companies own, manage, and lease real estate properties, and the sector is generally divided into residential and commercial REITs. For those seeking a more specialized investment, commercial mortgage REITs (mREITs) invest in commercial real estate debt, giving investors exposure to the sector without the need to own individual properties.<\/p>\n

For dividend investors, the key attraction is the typically high yield these companies offer. REITs receive favorable tax treatment when they distribute most of their taxable income to shareholders, helping support their generous dividends.<\/p>\n

mREITs have been out of favor recently, however, as higher interest rates<\/a> and weaker occupancy trends have put pressure on the commercial real estate sector. Yet, UBS analyst Marissa Lobo believes conditions are improving and that the market\u2019s recovery still has room to run.<\/p>\n

\u201cThe commercial real estate market continued to show signs of improvement. This can be seen from increasing transaction volume and improving price levels from 2025. We expect continued improvement in the level of problem assets in commercial real estate as the asset class continues to recover from its credit cycle. However, more recently macro volatility associated with the Iran conflict has introduced a new layer of borrower hesitation that has slowed momentum at the margin. The continued optimism for CRE market recovery is supported by the recent Evidence Lab CRE broker survey, which showed a positive outlook for the market in general, although the pace of activity and expectations has moderated as the sector is further along in the recovery,\u201d Lobo opined.<\/p>\n

Reflecting that optimism, Lobo recommends two dividend stocks to buy. More specifically, she favors a pair of mREITs offering dividend yields of 11% or higher, along with double-digit upside potential. Do other analysts see it the same way? We turned to the\u00a0TipRanks database<\/a>\u00a0for answers. Here are the details.<\/p>\n

Seven Hills Realty Trust (SEVN<\/a>)<\/p>\n

We\u2019ll start with Seven Hills Realty Trust, a REIT focused on commercial real estate finance, particularly mortgages. The company originates and invests in first mortgage loans secured by transitional middle-market commercial properties. Seven\u2019s loan portfolio totals $776 million across 26 floating-rate first mortgage loan commitments, with an average loan size of roughly $30 million.<\/p>\n

Seven targets what it defines as middle-market transitional CRE \u2013 commercial properties valued at up to $100 million that are undergoing redevelopment, renovation, or repositioning. These projects are intended to enhance the properties and increase their value over time.<\/p>\n

The company also benefits from a sizable management platform. Seven is externally managed by Tremont Realty Capital, a wholly owned subsidiary of alt-asset manager The RMR Group and an SEC-registered investment adviser. Through this relationship, Seven has access to nearly 900 real estate professionals operating from 30 offices nationwide. RMR oversees more than $37 billion in assets under management and brings decades of experience in commercial real estate investing, financing, and operations.<\/p>\n

Looking at the company\u2019s first-quarter 2026 performance, Seven reported revenue of $8.34 million, narrowly missing expectations by $313,500. Earnings available for distribution, a key measure of dividend-paying capacity, came in at $0.24 per share, beating the consensus estimate by a penny.<\/p>\n

The company\u2019s dividend was declared on April 9 and paid on May 14. The quarterly payout of $0.28 per common share annualizes to $1.12 and provides a robust forward yield of 13.2%.<\/p>\n

For UBS\u2019s Lobo, this company offers a high-quality path for investors seeking CRE exposure. She writes of Seven: \u201cSEVN is an externally managed mREIT focused on first-mortgage loans to middle-market transitional CRE. We believe the market undervalues its high-quality portfolio, disciplined underwriting, and durable floating-rate spread income stream. SEVN trades at a meaningful discount to origination-active CRE mREIT peers (0.59x vs. ~0.85x P\/B), partly reflecting small-cap liquidity constraints and a temporary rights offering overhang. Credit remains strong across its 26-loan, $776M portfolio (zero non-accruals, zero realized losses). As capital from the recent rights offering is deployed, we expect portfolio growth to drive ROE from ~6.5% (1Q26) to 8%+ (by 1Q27E) and dividend coverage, supporting multiple expansion to our ~0.70x P\/B target.\u201d<\/p>\n

Against this backdrop, Lobo gives SEVN stock a Buy rating, and her $10 price target implies a one-year upside potential of 18%. Add in the dividend yield, and the total return here can reach 31% over the course of a year.<\/p>\n

Overall, SEVN\u2019s 2 recent positive analyst reviews give the stock its Moderate Buy consensus rating. The shares are priced at $8.48 and their $9.75 average target price indicates room for a 15% gain over the next 12 months. (See SEVN stock forecast<\/a>)<\/p>\n

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Starwood Property (STWD<\/a>)<\/p>\n

Starwood Property Trust, the second dividend stock<\/a> we\u2019ll look at here, is a REIT built around a diversified portfolio. Its business spans loan originations and investments, ownership of high-quality stabilized properties, infrastructure financing in the power and energy sectors, and commercial real estate investing and servicing. This broad exposure allows the company to pursue opportunities across multiple areas of the real estate market.<\/p>\n

At the end of the first quarter of 2026, Starwood had successfully deployed a cumulative $117 billion of capital since inception. The company\u2019s managed portfolio currently totals approximately $31 billion and includes a mix of debt and equity investments across its various business segments.<\/p>\n

Starwood is also active in expanding and managing its portfolio. According to management, the company had invested approximately $4 billion across its portfolio through early May and remains focused on increasing earnings through disciplined originations.<\/p>\n

The company\u2019s primary method of returning capital to shareholders is through its dividend. On March 31, Starwood declared its latest dividend of $0.48 per common share, which was paid on April 15. The annualized payout of $1.92 per share translates to a forward yield of 11.3%.<\/p>\n

Turning to the latest financial results, Starwood generated $512.5 million in revenue during 1Q26, surpassing Wall Street\u2019s forecast by $16.2 million. The company reported non-GAAP earnings of $0.39 per diluted share, which fell $0.03 short of expectations. While revenue came in ahead of estimates, earnings missed the consensus forecast.<\/p>\n

That diversified business model is one of the key reasons UBS\u2019s Lobo remains constructive on the stock. In outlining her bullish stance, Lobo points to Starwood\u2019s multiple earnings streams and what she views as an attractive risk-reward profile.<\/p>\n

\u201cUnlike pure-play CRE lenders, STWD operates five distinct earnings cylinders: commercial lending, infrastructure lending, owned property, special servicing and net lease. This diversification currently offers better risk-adjusted returns (energy infrastructure lending) and some downside protection from increased level of problem assets in the industry (special servicing). As temporary headwinds including elevated cash balances, non-accrual resolution costs and net lease ramp dilution clear over 2026-2027, we expect run-rate ROE to recover towards 10-11%. Our $20 price target applies a premium multiple of 1.07x undepreciated book, which we believe is warranted by the platform\u2019s structural differentiation, 17-year dividend track record and downside protection,\u201d Lobo commented.<\/p>\n

The noted price target, at $20, implies a one-year upside of 17%, which can jump to almost 28% when the dividend\u2019s forward yield is brought in. Unsurprisingly, Lobo rates this stock as a Buy.<\/p>\n

All in all, the Moderate Buy consensus rating on this stock is based on 3 recent analyst reviews, which include 2 Buy ratings and 1 Hold. The shares are priced at $17.09, and the $19.17 average price target suggests an upside of 12% on the one-year horizon. (See STWD stock forecast<\/a>)<\/p>\n

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.<\/p>\n

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