Dividends

Enterprise Products: Big Dividend, Big Upside

High dividend Master Limited Partnerships have been decimated as measured by the Alerian MLP index which is down roughly 50% since August 2014. We believe Enterprise Product Partners inappropriately sold off with other MLPs and now has significant price appreciation potential. We also believe Enterprise’s big 6.4% dividend yield is very safe, and it will continue to grow.

Prospect Capital: Big Dividend, Discounted Price

Prospect Capital offers a big 14% dividend yield and it is trading at a significant discount to its net asset value. Its overall net investment income continues to grow, and the shares trade at a historically attractive 7x multiple. The market has somewhat indiscriminately sold-off Prospect shares with a high degree of correlation to other business development companies, high yield bonds, and energy prices. Prospect currently offers an attractive opportunity for income-seeking investors.

Liberty Property Trust: Big Dividend, Safe and Unloved

Liberty Property Trust (LPT) is a real estate investment trust (REIT) with a big 6.5% dividend yield.  However, because the company cut its dividend during the financial crisis, and it has not increased its dividend since then, LPT receives very little love.  We believe this is a REIT worth loving because its dividend is relatively safe, its long-term strategy is smart, and it offers a better total return opportunity than many of its peers.  Further, we expect LPT may resume dividend increases within the next 12 to 18 months.

Stag Industrial: High Dividend, High Risk

Stag Industrial is a highly-diversified, well-managed, Real Estate Investment Trust (REIT) with a high 7.6% dividend yield.  Despite Stag’s well-run business, it is a higher risk than its industrial REIT peers due to its high-growth, single-tenant, secondary/tertiary investment strategy.  Barring a severe economic downturn, we believe Stag’s growing dividend is safe, and we expect the stock to deliver superior total returns.

Retired? Need Income? Don’t Get Too Clever!

Low rates have risk-averse investors hunting for income.  But remember, there’s no free lunch. If you want higher returns, you have to take on more risk.  This CNBC article highlights three options for generating more income.  However, investors often forget that long-term capital gains can be an additional important source of income in a diversified portfolio.