Investors have been bemoaning the extended rally by growth and momentum stocks for years considering value has been meaningfully underperforming (value stocks are still up a lot, just not as much as growth). However, there’s been a significant market style rotation going on in recent weeks whereby the fastest “revenue growers” have sold-off hard. Pundits have also recently been obsessed with the idea of a coming recession, and view the rotation as the beginning of the end (or as chicken little would say, “the sky is falling.”) This week’s Weekly reviews the rotation, identifies attractively priced opportunities, and shares some common sense wisdom on the current market environment.
This week’s Weekly doubles as our monthly performance update. We first compare the dueling narratives on interest rates from the Federal Reserve versus the President, and then consider whether your investments were impacted by your decision to believe one story or the other. Next we review the recent performance of our three investment strategies (including every single position). All three strategies continue to deliver market-beating performance and deliver high income for investors. We also share several attractive investment ideas.
Over the last year, interest rate expectations have gone from expected rate hikes by the Fed to rate cuts, and it’s got people scared and confused. Increasingly confounding to many, rates in many regions around the world are now negative. According to Wikipedia, a Zero Interest Rate Policy (ZIRP) is for extraordinary circumstances. But let’s forget ZIRP for a moment, and instead consider attractive big yield opportunities for income-focused investors. This article focuses on Business Development Companies (BDCs), Closed-End Funds (CEFs) and Real Estate Investment Trusts (REITs). Specifically, we count down our Top 10 Big Yields from that category. And without further ado, here is the list.
Saratoga Investment Corp (SAR) is a diversified, business development company and a CLO manager that has experienced strong portfolio and dividend growth over the last several years. This article provides a background on the company, analyzes its past performance and finally concludes with our opinion on whether investors should consider making an investment in the stock.
Ares Management, L.P. is the largest BDC in the US by assets. The company holds a well-diversified, low risk portfolio of assets and has provided sustained income to investors since its IPO in 2004. This article provides a background on the company, analyzes its portfolio and finally concludes with our opinion on whether investors should consider adding exposure to the company.
If you’re looking for an attractive way to generate stable income and an interesting way to participate in the lower middle-market, then Houston based BDC Main Street Capital (MAIN) is worth considering. It delivers a consistently growing dividend per share, under average debt to equity and above average ROE and ROA, and it has significant oppurtunities for continuied NAV growth per share.
If you’re looking for stable high income, Goldman Sachs BDC (GSBD) offers an interesting way to invest in private middle-market companies while paying you a healthy 9.1% dividend yield. This article reviews the business, the portfolio, net investment income, dividend coverage, and risks, before finally concluding with our opinion about who might want to consider investing in this high yield opportunity.
They say almost everything becomes attractive at the right price. And considering the 21% sell off in 13.4% yield Monroe Capital (due to its company-specific challenges, combined with the overall industry and market sell off), it is increasingly tempting to consider the shares of this diversified business development company (“BDC”). This article provides a background on Monroe, analyzes its portfolio and finally concludes with our opinion on whether investors should consider buying shares given its high dividend yield and low valuation.
Big-dividend mortgage-related REIT, New Residential (NRZ), is down 16% in the last few months while the overall market (SPY) is still up. This article explains why it fell, what will likely happen next, and we conclude with an attractive income-generating options trade that you may want to consider.
If you like to generate high income from your investments, this disciplined equity style CEF yields 7.2% and it is currently attractive in multiple ways. For example, its discount to NAV, its well-seasoned management team, its attractive style tilt, its US economy-focus, its impressive long-term track record, and its ability to help you diversify away from the traditional high income risks, all while using great discipline to pay you the steady high income payments you need. This CEF can be an attractive addition to your diversified, long-term, high-income-focused, investment portfolio. We own it.
STAG Industrial, Inc (STAG) is an attractive monthly dividend REIT that has experienced a sizeable increase in its asset base since its IPO in 2011. The company plans to continue on its path of acquisitive growth, and its calculated strategy of aggregating properties along with purposeful diversification is expected to pay growing dividends for years to come. This article analyzes the various strengths of STAG, looks at the dividend yield, valuation, risks, and concludes with our opinion on why STAG is worth considering if you are a long-term income-focused investor.
Ventas Inc. (VTR) has significantly restructured its portfolio in the last two years to address a downturn in operational performance. The adverse impacts of these changes are expected to continue through 2019. This article analyzes the various challenges that have brought Ventas to its current position, and then considers the health of the business, valuation, risks, dividend safety, and concludes with our opinion about whether Ventas is an attractive choice for investors seeking stable long-term returns.
EastGroup Properties (EGP) has been one of the best performers in the industrial REIT sector over the last five years in terms of maximizing shareholder value. The company’s differentiated operating strategy and risk-adjusted targeted development program is expected to pave the way for future growth. This article analyzes the various strengths of EGP, looks at the dividend yield and valuation (the dividend has been consistently increasing, but the yield is still only 2.5% because the price keeps increasing too, as it should) and concludes with our opinion on whether EGP is worth considering if you’re a long-term dividend growth investor.
Realty Income (O) is a popular monthly dividend paying REIT that has recently started to invest outside the US. This article considers whether this international forage is a good idea or if the company is now desperate for opportunities. We also consider the company’s portfolio, balance sheet, competitive advantages, dividend safety, valuation, and conclude with our opinion on whether or not Realty Income is still an attractive investment opportunity for long-term income-focused investors.
At Blue Harbinger, we are disciplined long-term investors. But that doesn’t mean we don’t pay attention to short and mid-term market technicals. Technical analysis is a tertiary consideration for us, behind asset allocation (e.g. “beta,” or your mix of stocks, bonds, cash) and picking attractive individual securities (e.g. “alpha”). Here is how we monitor technical conditions, and some thoughts on whether the strong start to 2019 is just a “relief rally” within broader bear market conditions.
New Residential continues to pay attractive big dividends, but its share price is down more than 20% from its recent highs. After a brief review of how NRZ makes money, the big risks it faces, and why the business is attractive, we provide details on why the share price has fallen over 20%, and what might come next. We conclude with our views on investing in NRZ.
The S&P 500 has declined over 14% since the start of October as fearful investors have been selling, in many cases indiscriminately. Fear mongering media narratives are usually based, in part, on some truths, such as tariffs, declining oil prices and the fed. This article focuses on contrarian high yielders in which we allocate some of our investment dollars opportunistically, like when fear is higher and prices are lower, as is increasingly the case right now. Without further ado, here are our top 10 big yields worth considering.
Energy Transfer (ET) offers a big 9.5% yield, and it trades at a very attractive EV-to-EBITDA relative to peers. However, if you’re going to invest, you may want to consider the big risks ET is currently facing (i.e. the price is low and the yield is high for a reason). This article provides an overview of Energy Transfer, reviews the big risks the organization faces, and concludes with our views on whether Energy Transfer is worth considering as an investment.
Main Street Capital (MAIN) is a popular income-investor Business Development Company (“BDC”) because it offers an attractive 6.8% yield, and both the dividend payments and the security price have been increasing significantly for years. This article briefly reviews the company and its many attractive qualities, then gets into the big risk factors that investors should be aware of. We conclude with our views on whether MAIN is still an attractive security to own or if it’s time to look elsewhere.
Whether it’s caused by climbing interest rates, trade war fears, or something totally different, the market has sold-off sharply, and in many cases indiscriminately. If you are looking for high-income, at an attractive price, this 10.5% yielder is worth considering.