These 7%+ yielders could be Warren Buffett stocks

Billionaire US investor Warren Buffett is a big believer in investing in assets that will produce rising levels of cash over long periods. In a recent interview, I saw him emphasise how his focus is on finding businesses that will grow, not just share prices.

Today I'm going to look at two stocks which both offer dividend yields of more than 7%. If these payouts prove sustainable, these could be great Buffett-style stocks to tuck away in your portfolio.

A slice of UK plc

Regional REIT (LSE: RGL) floated in 2015 and owns a portfolio of 150 commercial properties around the UK, all of which are located outside the M25.

About 63% of sites are offices, with 26% industrial. Retail accounts for 11% and is considered non-core by the company, whose focus is on replicating the mix of businesses in the UK economy.

A safe 7% yield?

In half-year results published this morning, Stephen Inglis, Group Property Director, said that demand for office and light industrial sites was "steady" and that he expected occupancy to increase.

Operating profit excluding property gains rose from £13.4m to £14.3m during the first half. The interim dividend was increased by 2.9% to 3.6p per share.

Looking at the business, portfolio occupancy by value increased from 82.7% to 83.3%. The group's average unexpired lease length to first break is 3.5 years. So earnings visibility should be reasonably good in the short-medium term, but is less certain after 2021.

The group's loan-to-value ratio is fairly high at 47.3%, but this is partly the result of an acquisition in March and is expected to fall. The group is also in the process of refinancing its borrowings following this deal, which I expect will reduce interest costs.

Although Regional REIT's rental income could be hit by a recession, the business appears to be in reasonable shape at the moment. The shares trade slightly below their EPRA net asset value of 106p and the forecast dividend of 7.9p per share gives a yield of 7.8%. Based on this valuation, I'd be tempted to have a closer look.

Double up on pubs?

Pub chains have reported mix trading conditions this year. Marston's (LSE: MARS) is no exception. The group's share price has fallen by nearly 25% so far in 2017. However, the latest trading update seemed cautiously optimistic to me.

Like-for-like sales were up by between 1.3% and 1.9% across its different brands, and were ahead of the market average in a number of cases.

Ralph Findlay, Marston's chief executive, says that he remains confident of "further profitable progress" for the full year. Broker consensus forecasts suggest that the group will generate a net profit of £84.6m this year, up by around 6% on last year.

The stock currently trades on a forecast P/E of 7.4 and at 20% discount to its book value of 125p per share. A dividend of 7.55p per share is expected, giving a prospective yield of 7.3%. This payout should be covered comfortably by forecast earnings of 14p per share, but I think it looks a little stretched in terms of the group's cash flow.

Based on the firm's latest figures and the risk that trading conditions could get tougher, I'd probably rate this stock as a 'hold' until we know more.

5 stocks for UK Buffett investors

Warren Buffett tends to restrict his investments to the US, his home market. But the UK stock market also features a number of Buffett-style stocks that could boost your investment performance.

In a new report, 5 Shares To Retire On, our top analysts have selected five top dividend stocks with proven long-term growth potential. All five have an impressive track record of dividend and earnings growth.

If you'd like full details of these stocks, download this free, no-obligation report today. To get your copy, simply click here now.

Roland Head has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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