Insiders Pull the Trigger on 2 Dividend Stocks With Double-Digit Upside
February 6, 2025
0 6 minutes read
Finding the best stocks for your investment portfolio isn’t about mastering some hidden trick – it’s about understanding the game. Just like in Kenny Rogers’ The Gambler, where “every hand’s a winner, and every hand’s a loser,” success depends on how you play the cards you’re dealt. A gambler reads faces; an investor reads the market’s signals.
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Few signals are clearer than insider trading activity. The insiders are the corporate officers with responsibility for ensuring that their company brings in a profitable return – think C-suite residents and Boards of Directors. They know what’s happening behind the scenes, and they use that knowledge to inform their own trading. To keep the playing field level, Federal regulators require that these officers make their inside trading moves public.
When you watch insider trades, just remember that they’ll sell for any number of reasons – but they’ll only buy when they are sure the stock will go up.
This makes insider trades a valuable signal for investors. And when those trades are combined with other favorable factors in a stock, such as high dividend yields or solid upside potential, the result is a brightly flashing neon signal that this is a stock deserving of your closer attention.
A dip into the TipRanks database has brought two such stocks to our attention. Each offers a dividend return along with a double-digit upside potential – and each has seen a recent insider buy of $1 million or more. Let’s take a closer look.
Sunrise Realty Trust(SUNS)
The first stock on our list, Sunrise Realty Trust, is a real estate investment trust, a REIT. Sunrise is new to the public trading markets, but not new to the business. The company was formed as an independent, publicly traded entity in July of last year, through a spin-off separation transaction initiated by the parent company AFC Gamma. AFC Gamma was already a REIT, with business activities in both the cannabis and commercial real estate sectors. The firm chose to retain its cannabis business while spinning off the commercial real estate side as Sunrise Realty Trust.
The result is a new REIT with a focus on commercial real estate, CRE, in the Southeast of the US. The company has several properties in its portfolio, all located in desirable urban markets in Florida and Texas. Sunrise acts as an institutional lender, originating and funding loans on these properties. The company has focused its lending activities on a narrow niche, mainly upscale and/or luxury residential projects, hotels, and commercial spaces. The company has chosen the Southeast as its area of activity due to the region’s expanding demographic and economic profile.
Shares in Sunrise started trading on the NASDAQ on July 10, and since then the company has paid out two common stock dividends. The first, paid out on October 15, was for 21 cents per common share (a partial quarter cash dividend); the second, paid out on January 15, was for 42 cents. The January payment gives an annualized rate of $1.68 per common share and a forward yield of 14%.
Turning to the insiders, we find that Sunrise Executive Chairman Leonard Tannenbaum made a hefty purchase of SUNS shares during the final week of January. He picked up one million shares, paying $12 million for the tranche of stock. Tannenbaum’s holding in this newly public REIT totals over $35.5 million.
Sunrise has caught the attention of Alliance Global analyst Gaurav Mehta, who particularly likes the company’s potential for expansion and its forward dividend yield.
“Our Buy rating is based on a strong loan pipeline that provides an opportunity to grow, no legacy loans with issues, a focus on southern US with above-average employment and population growth, and an attractive common dividend yield of 14%,” Mehta noted.
That Buy rating is supported by a $14.50 price target, implying a one-year upside potential of 22%. Factoring in the dividend yield, the stock’s potential one-year return could reach as high as 36%. (To watch Mehta’s track record, click here)
SUNS is still a bit under the radar, and only has 2 recent analyst reviews. They both agree, however, that it’s a stock to buy, making the consensus view a Moderate Buy. The shares are selling for $11.87 and their $14.75 average price target indicates room for a 24% upside over the next 12 months. (See SUNS stock forecast)
Ally Financial (ALLY)
Next up is a Detroit-based bank holding company, Ally Financial. Ally’s services to customers include automotive loan financing, online banking, vehicle insurance, corporate banking, and mortgage loans. The company is invested in its hometown, and its headquarters are located in one of Detroit’s premier modern skyscrapers, the Ally Detroit Center, overlooking the city’s financial district.
Ally has been in business since 1919. Until 2010, the company was known as GMAC, General Motors Acceptance Corporation, and acted as the customer financing arm of automotive giant GM. The company remains a major name in automotive financing, and in the full year 2024, Ally originated $39.2 billion worth of volume in consumer auto loans. The company has $192 billion in total assets and boasts approximately 11 million customers.
In recent months, Ally has moved to focus on its core business of banking services and auto financing and, to that end, has divested itself of its credit card business. Last month, the company reached an agreement with CardWorks, Inc., under which Ally will sell off its credit card portfolio, which includes $2.3 billion in credit card receivables with 1.3 million active cardholders. The transaction is expected to close later this year.
Ally pays out a regular common share dividend and made its last declaration on January 17. That declaration was for a 30-cent payout, scheduled for February 14. The company has held the dividend at this level for 13 quarters; the $1.20 annualized common share payment gives a forward yield of 3.1%.
The company’s most recent insider buy came from CEO Michael George Rhodes, who bought 25,634 shares during the last week in January. Rhodes paid over $1 million for this purchase.
Turning to Ally’s financial position, we find that the company has recently reported its results for Q4 and full-year 2024. For the fourth quarter, Ally reported revenues of $2.1 billion, up 5% year-over-year and $80 million better than had been expected. The company’s bottom line came to 78 cents per share by non-GAAP measures, beating the forecast by 21 cents. For the full year, Ally’s revenues were $8.2 billion, and the non-GAAP EPS came to $2.35.
Investors should also note that Ally reported a strong position against potential losses. The company calculated its Q4 core return on tangible common equity (core ROTCE) as 11.3%, and the corresponding figure for the full year as 8.5%. The company managed this even as Q4 net interest margin (NIM) registered a year-over-year gain of just 11 basis points, reaching 3.3%. The company reports that the modest gain was driven by “lower funding costs,” a factor that should improve for Ally in the long term with completion of the card business exit.
These are key points for Citi analyst Keith Horowitz, who covers Ally. The 5-star analyst has looked under the hood of this Detroit bank and writes, “While exiting the card business poses headwind to NIM (disclosed ~20bps on full-year basis), mid-teens ROTCE target remains intact and mgmt. sees it as achievable with high-3s NIM, in tandem with sub-2% auto losses and expense discipline. We see ~4% NIM in ’26 through deposit repricing (4Q beta was better than our estimate at ~36%) and fixed-rate asset repricing with origination yields expected to improve off 4Q seasonal low of 9.6% (mgmt. guided to high-9s to 10% in near term). We continue to expect large upside in the name over the med-term on underlying trends driving ROTCE towards mid-teens target in ’26.”
For the long haul, Horowitz describes ALLY as a “‘Show me’ story starting to deliver,” and rates the stock as a Buy. He complements the upbeat rating with a $55 price target that points toward a one-year upside potential of 44%. (To watch Horowitz’s track record, click here)
Overall, there are 17 recent analyst reviews for Ally, and their breakdown – 9 to Buy, 7 to Hold, and 1 to Sell – gives the stock its Moderate Buy consensus rating. ALLY shares are trading for $38.18, and their $44.86 average target price implies a 17.5% upside in the next 12 months. (See ALLY stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
