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Top 10 HIgh-Yield Investments

In a continuation of our free report "20 Big Yield Investments Worth Considering," this week's members-only Blue Harbinger Weekly reviews the top 10. We provide detailed reports for each, and we do currently own five of the top ten companies. And on a completely separate note, you may have noticed that we updated performance through May, and we continue to outperform the market in each of our three separate strategies. Without further ado, here are the Top 10 Big Yield Investments Worth Considering... 

Numbers 10 – 6 are Big Yield Investments with Low Volatility:

10. OneBeacon Insurance (6.4%, Common Stock)
OneBeacon is a boring, low beta, low volatility, property & casualty insurance company that offers a big safe dividend yield (6.4%). Because of the nature of its business, it is a great diversifying “widows and orphans” stock, and it that can be very valuable within the constructs of a diversified, income-focused investment portfolio. The stock is down 8.5% in the last year while the S&P 500 is essentially flat over the same time period, thus creating a more attractive entry point. You can read our full OneBeacon report here

9. Omega Healthcare (7.1% REIT)
Omega’s shares have declined further since we purchased them in early May, and we believe this has created an even more attractive entry point for new investors. Omega is a healthcare REIT, and its yield has recently climbed to over 7%.  We believe Omega offers attractive price appreciation opportunities considering its leadership position in the high growth Skilled Nursing Facilities (SNF) industry.  Further, a variety of valuation and risk metrics suggest the dividend is relatively safe and likely to grow. You can view our full write-up on Omega here.

8. Bank of America (5.8%, Preferred Stock)
We are not fans of Bank of America’s common stock, but we do like it’s Series EE Preferred Shares (BAC-A), and they continue to trade at an attractive price. The Series EE shares we just issued in April, and despite there small increase in price to $25.80 per share, they still offer nearly a 6% dividend yield. We believe the shares are less likely to get called at the earliest call date in April of 2021 because the company’s weighted average cost of capital (5.85%) is already almost as high as the 6% coupon on the preferred shares. This means if you like low risk and higher yield, you’ll likely continue to receive these dividend payments many years into the future. Again, we much prefer the preferred stock over the common shares, and you can read our full Bank of America write-up here.

7. AstraZeneca (4.7%, Preferred Stock)
We’re rounding AstraZeneca’s 4.7% dividend yield up to the 5% minimum to be included on this list because it represents a truly outstanding long-term investment opportunity for income-focused investors. We believe the market is overly pessimistic on AstraZeneca’s upcoming loss of patent protection on two major drugs, and the market is not giving it enough credit for its pipeline. We’re essentially contrarians on the stock because we believe the market is too negative. You can read our full AstraZeneca report here.

6. Prospect Capital (13.1%, BDC)
Prospect’s high yield, low volatility, and low risk are very attractive. Prospect is a financial services company that invests primarily in senior and subordinated debt and equity of private companies in need of capital for acquisitions. The shares are currently trading at a discount to the company’s net asset value, and they are attractively priced at 7-times net investment income. You can read our full Prospect report here

Numbers 5 – 1 are Big Yield Investments with higher volatility but more price appreciation potential:

5. CenturyLink (7.9%, Common Stock)
CenturyLink’s telecom business is not glamorous, but its dividend payments are big (7.9%) and stable. However, its stock price has been volatile for a telecom company (it’s down over 10% in the last month) and we believe the current price provides an attractive entry point for long-term investors. You can read our full CenturyLink write-up here.

4. Tsakos Navigation (8.8%, Preferred Stock) Series C.
This is not the first time we’ve written about Tsakos Preferred Series C, and we continue to believe it presents a very attractive investment opportunity. Tsakos is a seaborne oil transportation company that offers preferred shares (series-C) with a 9.0% dividend yield. Tsakos makes more money when oil prices are low and supply is high (i.e. current market conditions), and the company has plenty of liquidity through the series-C call date. Net income has been ramping up in recent quarters, but the share price has not. We own shares of Tsakos common stock in our Blue Harbinger Income Equity portfolio. However we believe the series C preferred shares are very attractive too. You can read our full Tsakos report here.

3. Ladder Capital (8.8%/18.2%, mRIEIT)
Ladder Capital (LADR) is a Mortgage Real Estate Investment Trust (mREIT) with a big 8.8% dividend yield. And the yield climbs to as high as 18.2% if you count its additional special dividend that was paid in December of 2015. The company generates an after tax return on equity of over 12%, and it trades at a discount to its book value. Barring a complete commercial real estate market collapse, now may be an excellent time for investors to consider adding Ladder to the higher-risk portion of their diversified long-term income-focused portfolio. You can read our full Ladder report here.

2. Williams Partners (10.1%, MLP)
We purchased shares of Williams Partners (WPZ) in our Blue Harbinger Income Equity portfolio in early May, and we believe the shares continue to offer tremendous upside potential and a very attractive dividend yield (10.1%). Specifically, we believe the market has overreacted to the challenges Williams faces (e.g. low energy prices, counterparty credit/default risk, management reorganization, and rising interest rates), under-reacted to the value it creates (e.g. energy price agnostic fee business, the value of its assets, and its future growth potential). You can read our full William’s Partners report here.

1. Triangle Capital (11.3%, BDC)
Like Williams Partners (above) we purchased shares of Triangle Capital (TCAP) in our Blue Harbinger Income Equity portfolio in early May, and we believe the shares continue to offer tremendous upside potential and a very attractive dividend yield (13.1%). Triangle is a Business Development Company (BDC) and its business is focused on generating current income (for dividend payments) by providing customized financing to lower middle market companies located in the United States. Our basic thesis is that the market dramatically overreacted to the company’s recent dividend cut, thus creating an extremely attractive buying opportunity. You can read our full Triangle Capital report here.

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