Let’s talk about defending your portfolio. It’s a common impulse for most investors, when the economy starts to turn sour. We’re in a growth phase now, with economic activity rebounding strongly from the corona-crisis shutdowns, and with reopening getting into full stride, economists are predicting up to 8% GDP expansion this year. But there are clouds on the horizon. Inflation is rising, and the April jobs report was, simply put, a disaster. The Biden Administration is pushing multi-trillion dollar spending plans that are likely to boost inflation, while the expanded unemployment benefits are giving the unemployment rate an artificial boost. But with all that, the Federal Reserve has signaled that it does not intend to raise interest rates. Writing from investment banking firm Canaccord, analyst Tony Dwyer acknowledges the unsettled market conditions. “Although the major market indices remain near record levels, there has been incredible volatility underneath due to confusion around the path of inflation and the Federal Reserve insistence it is transitory. We fully expect the rotational volatility to continue over the coming weeks, with investors debating the outlook for inflation ahead of the newest economic data in early June as the Fed goes into their quiet period ahead of the June 15-16 FOMC meeting,” Dwyer noted. All of this adds up to a market environment that lends itself to defensive stock plays, as a hedge against uncertainty. And that, of course, brings us to dividend stocks. These are the classic defensive plays, giving investors a dual path toward returns, from both the share appreciation and the dividend payments. Wall Street’s analysts have been doing some of the footwork for us, pinpointing dividend-paying stocks that have kept up high yields, at least 7% to be exact. Opening up the TipRanks database, we examine the details behind two such stocks to find out what else makes them compelling buys. Black Stone Minerals (BSM) We’ll start with a hydrocarbon exploration and development company, Black Stone Minerals. This company holds rights to more than 20 million acres, spread across 60 productive basins in 40 states. The lion’s share of the operations are spread from Texas through Alabama, but Black Stone also has rights and hydrocarbon production in Montana and North Dakota, West Virginia and Pennsylvania, and the Rocky Mountain states. Black Stone reported its financial results for 1Q21 in early May. The results showed that the company has still not fully bounced back from the COVID pandemic – revenues and earnings are both still down year-over-year. On a positive note, revenues have shown three consecutive quarters of sequential increases. The top line came in at $87.1 million, and net income was reported at $16 million. The company reaffirmed its borrowing capability through its revolving credit facility during the quarter, at $400 million. During the quarter, Black Stone entered into several new development agreements, on properties in Texas, and acquired mineral and royalty rights, for $20.7 million in cash and stock, in the northern part of the Midland Basin. Also during the quarter, Black Stone declared a dividend of 17.5 cents per common share. At the current rate, the common stock dividend yields 7.07%, and has an annualized payment of 70 cents per common share. Raymond James analyst John Freeman is impressed with Black Stone’s Q1 development deals, and writes of the company: “BSM had an incredibly strong 1Q where it… announced another series of development deals in the Austin Chalk & Shelby Trough as well as its first acquisition since the pandemic. We have already seen phenomenal results in the very early development of the Austin Chalk and expect more meaningful well catalysts in the near term, this time from the Shelby Trough…” The analyst summed up, “Due to the strong progress, we are raising our production estimate for 2021 to the top of BSM’s guide (up 3%), and are now modeling a return to growth in 2022 (up ~4% vs prior model down ~1%). Alongside a soon to be growing production profile, BSM offers an attractive.. distribution yield and a rock-solid balance sheet.” Unsurprisingly, Freeman rates the stock as a Strong Buy, and sets a $15 price target suggesting an upside of ~50% for the year ahead. (To watch Freeman’s track record, click here) Overall, Black Stone has attracted attention from 5 Wall Street analysts, whose reviews break down 2 to 3 Buys versus Holds, and give the stock a Moderate Buy consensus rating. The shares are selling for $9.90; they have $11.40 average price target, indicating room for 15% upside in the next 12 months. (See BSM stock analysis on TipRanks) Blackstone Mortgage Trust (BXMT) If we’re looking at dividend stocks, we’ll naturally be drawn to real estate investment trusts (REITs). These companies, straddling the line between real estate managers and financial services, are known for their high dividend yields and long-term dividend reliability. Both stem from a regulatory requirement that REITs pay back a certain percentage of earnings directly to shareholders. Dividends are convenient mode for compliance. Blackstone Mortgage focuses on collateral-based senior mortgage loans in the North American, European, and Australian markets. The company has a real estate portfolio exceeding $368 billion in global value, and a total of $649 billion in assets under management. The AUM total includes $196 billion in real estate assets. While BXMT’s revenues have been showing sequential declines recently, the Q1 top line still came in at $185.75 million, and EPS, at 54 cents per share, was up dramatically from the 39-cent loss reported in the year-ago quarter. During Q1, Blackstone closed $1.7 billion in new real estate loans, exceeding its total 2020 loan originations. The company also reported $1.1 billion in available liquidity. The sound results supported the dividend payment, of 62 cents per common share. The dividend has been paid out at this rate since 2H15, and the company has kept up reliable payments for the last 8 years. At the current rate, the dividend annualizes to $2.48 per share and gives an impressively high yield of 7.74%. BTIG analyst Tim Hayes takes a bullish stance on Blackstone, noting: “The pipeline is robust, and management expects earnings to benefit from continued portfolio growth and higher fee income as originations/repayments normalize. ROEs on new originations are expected to be in line with pre-pandemic levels as lower funding costs offset pressure on asset yields. Credit performance remains strong and continues to trend in the right direction…. BXMT recognized 100% interest collection in 1Q21, with 98% of loans performaning [sic]…” The analyst concluded, “We view shares to be attractively valued, currently trading at a discount to historical multiples and offering a 7.7% dividend yield — a ~600-bp spread to the U.S.10-Year Treasury yield vs. the 2-year avg. pre-pandemic spread of ~475 bps.” Based on the above, Hayes rates BXMT shares a Buy along with a $35 price target. Based on the current dividend yield and the expected price appreciation, the stock has ~16% potential total return profile. (To watch Hayes’ track record, click here) Like BSM above, BXMT has 5 analyst reviews, which include 2 to Buy and 3 to Hold, for a Moderate Buy analyst consensus rating. (See BXMT stock analysis on TipRanks) To find good ideas for dividend stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched 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.