2020 was a challenging year for Real Estate Investment Trusts (“REITs”). The sector (as measured by (XLRE)) was down ~3.% (and that includes dividends) as compared to +17.8% for the overall S&P 500 (SPY). And the performance was even more sharply divergent by REIT subsectors (for example, retail REITs performed even worse) versus the tech-heavy Nasdaq (QQQ) for example which gained 48.3% for the year. Obviously, the social-distancing aspects of the terrible coronavirus pandemic had a big impact on market performance, and with the continuing rollout of vaccines there are some reasons for increased optimism. However, the story is much deeper and much more nuanced than that. In this report, we countdown our top 10 big-dividend REITs (starting with #10 and concluding with our top #1 idea), including our careful consideration for current market conditions combined with company-specific opportunities.
Attractively Priced 6.8% Yield REIT CEF (MOPAY)
If you are an income-focused contrarian investor, you may be looking for opportunities among real estate securities, considering this has been one of the worst performing sectors of 2020 and it is know for its attractive dividend yields (and especially considering the potentially positive impacts of the recent coronavirus vaccines). In this report, we review an attractively priced real estate Closed-End Fund (“CEF”) that is able to offer investors a compelling 6.8% yield (paid monthly—MOPAY) thanks to its share price discount versus its net asset value (NAV) and its prudent use of leverage (~23.98%), among other important characteristics.
New Options Trade: High Upfront Income, Attractive Chinese E-Commerce
Shares of this Chinese, small-cap, “brand-focused,” e-commerce company trade in the US (on the Nasdaq) as an ADR (American Depositary Receipt), and they are currently priced attractively, especially considering the continuing powerful growth expectations for online commerce and for this company in particular. Rather than purchasing shares outright, this article review an attractive options trade that generates high upfront income (that you get to keep no matter what) and gives you a chance of picking up shares of this attractive business at an even lower price (if the shares get put to you before expiration on January 15th). We believe this is an attractive trade to place today and potentially over the next few days (as long as the underlying share price doesn’t move too dramatically before then.
Attractive 4.0% Dividend Yield Industrial REIT
This report reviews an attractive industrial REIT that will continue to benefit from e-commerce trends. It has maintained or increased its dividend for 29 years in a row and it currently yields ~4.0%. It has the highest occupancy and rent collections in the industrial REIT space (tenants include some of the largest well-know investment grade companies) and the valuation is attractive. It also has multiple growth catalysts. This article reviews the health of the business, valuation, risks, dividend safety, and concludes with our opinion on why it may be worth considering if you are a long-term income-focused investor (that likes growth too).
Safe, Stable, 4.7% Yield REIT, Attractive Sub-Industry
In recent quarters, while real estate sub sectors such as office and retail have struggled as a result of the pandemic, selective industrial REITs have emerged as outperformers primarily because of the growth in e-commerce. For example, the specific industrial REIT we review in this article has consistently expanded its asset base since its IPO in 2011 and is well placed to grow in the years ahead (through planned acquisitions and rental accretions). It also offers a 4.7% dividend yield, paid monthly. In this report, we analyze the company’s income profile, growth as well as dividend prospects and finally conclude with our opinion on investing.
Data Center REIT: Don't Miss This Opportunity to Buy Low
This data center REIT offers an attractive investment opportunity for investors seeking steady income along with long-term capital gains. It has raised its dividend for the past 15 years (it currently yields 3.5%) and is likely to continue to do so given strong industry tailwinds. We think there is a disconnect between business fundamentals and recent the underperformance of the shares (down ~18% over the last two months). This article reviews the health of the business, valuation, risks, dividend safety, and concludes with our opinion about why it’s worth considering if you are a long-term income-focused investor.
New Options Trade: Very High Upfront Income, Bullish Vertical Put Spread
This recently IPO’d business is very attractive. And the significant near-term volatility has given rise to an attractive high-income-generating options trade. The trade strategy sounds complex (i.e. “bullish vertical put spread”), but it’s not. It puts attractive upfront premium in your pocket today, it gives you a chance to pick up shares of this attractive stock at a lower price, and it gives you a little insurance on the downside (i.e. your max loss is limited). We believe this is an attractive trade to place today—and potentially over the next few trading sessions—as long as the underlying share price doesn’t move too dramatically before then.
PIMCO & DoubleLine CEFs: 9.1% & 7.7% Yields, MOPAY
If it’s mainly big steady income payments you seek, this report reviews two fixed-income closed-end-funds (CEFs) that offer attractive yields of 9.1% and 7.7%, respectively. They both pay monthly (MOPAY), and trade at very attractive prices. This report shares the important details for you to consider.
Top 10 Big Dividends: Contrarian Value Opportunities
Value and income stocks have been challenged this year as the COVID-19 pandemic has made life difficult for many of them and as many growth and technology stocks have sailed higher. However, if you are a contrarian, there are select opportunities among the wreckage that are absolutely worth considering. Especially as many value and income stocks have started to perk up lately as news of a COVID-19 vaccine is spurring some capitulation between high-flying growth stocks and beaten down value and income names.
Realty Income, Big Monthly Dividend: COVID Challenges
Realty Income is one of the most renowned dividend stocks. Its monthly dividend track record has earned it the nickname ‘The Monthly Dividend Company’. It has made 604 consecutive monthly payments and raised its dividend for 94 quarters in a row. Since March 2020 (when COVID-19 hit the world), the company has raised its dividend twice. This signals to some the recession-resistant nature of its property portfolio and superior management skills. But will the company sail through this crisis like it has in the past? This article reviews the health of the business, valuation, risks, dividend safety, and concludes with our opinion about investing.
The Safest and Strongest Net-Lease REIT with a 5.8% Dividend Yield
This REIT is one of the largest net-lease REITs benefiting from the unmatched diversity in its portfolio and its deep expertise in sale-leasebacks. The portfolio has displayed very strong resilience to the pandemic, as its rent collections have remained strong throughout. It also has an impressive dividend history with consecutive dividend increases every year since it went public in 1998. We are also encouraged by its successful track record of operating through economic downturns and using them to build and grow a high-quality portfolio through opportunistic investing. Despite all the odds in favor, the stock has underperformed this year. We believe at the current price, the REIT offers an attractive investment opportunity from an income generation, capital preservation, and capital appreciation perspective. This article reviews the health of the business, valuation, risks, dividend safety, and concludes with our opinion about why it’s worth considering if you are a long-term income-focused and growth-oriented investor.
2 High-Yield CEFs Worth Owning: Contrarian Value Edition
New Options Trade: Very High Upfront Income, Bullish Vertical Put Spread, Chinese Internet Juggernaut
Just three weeks ago we wrote about the attractiveness of this stock, but warned of near-term volatility events at the start of November. One of those events has played out, drawing the share price lower. However, we believe the shares are now trading too low, and they could be driven even lower in the days ahead (as fearful investors panic). These conditions have given rise to this attractive options trade. The trade sounds complex (i.e. “bullish vertical put spread”), but it’s not. It puts attractive upfront premium in your pocket today, it gives you a chance to pick up shares of this attractive stock at a lower price, and it gives you a little insurance on the downside (i.e. your max loss is limited). We believe this is an attractive trade to place today—and potentially over the next few trading sessions—as long as the price doesn’t move too dramatically before then.
Forget Bonds: Try This Blue Chip Stock Instead
Stocks and bonds are fundamentally different types of investments. However, if you are seeking the traditionally very-safe income provided by investment-grade bonds, you’re probably very disappointed by our ongoing “near-zero” interest rate environment. Traditionally speaking, stocks are simply too risky for bond investors. However, not all stocks are created equally, and in this article we review the very-safe yield provided by a specific blue-chip stock that has been increasing its dividend for over 6 decades, while its share price has also steadily increased too. Specifically, we review the company’s business, dividend safety, valuation and risks, and then conclude with our opinion on investing.
Johnson & Johnson: Bedrock Dividend Growth? Time to Sell Calls?
Johnson & Johnson is one of the most revered dividend aristocrats (it has raised its dividend 58 years in a row). The company has incredibly strong fundamentals derived from its well-diversified three-pronged business model that contributes to consistent profitability and a strong balance sheet. It is one of only two AAA-rated companies (the other being Microsoft), signifying its extremely strong capacity to meet financial commitments. Johnson & Johnson’s share price hit a four-year low during the March downturn, but has since rebound and is now trading near all-time highs. Is Johnson & Johnson sill a buy at any level? Is it time to sell covered calls? We answer these questions in the conclusion of this article after first providing a detailed review of the health of the business, valuation, risks and dividend safety.
New Options Trade: 8.8% Yield Property REIT + Covered Call Income
This is an attractive long-term 8.8% yield property REIT trading at a compelling valuation, but the shares have rallied hard in recent weeks thereby creating this high-income options trade opportunity. Specifically, nervous investors may slow the short-term rally by taking profits, which is fine with us because we’d keep these attractive shares for the long-term and get paid the big dividend shortly after the options contract expires in just over 1-month from now. And if the shares do get called, that’s a 39-day gain of approximately 20%, not too bad at all. We believe this is an attractive trade to place today, and over the next few days, as long as the price of the underlying shares don’t move too far during that period.
Attractive CEF: +9% Yield, Discounted Price
Income-focused stock-market investors often make the unfortunate mistake of concentrating all of their investments in the same few big-dividend sectors of the market. However, this particular closed-end fund diversifies across important sectors, thereby reducing investor risks, increasing total return opportunities, and still offering a big yield for investors. It is also trading at a very attractively discounted price, has an experienced-leadership team, and pays investors at least a 6% annual yield—and usually more (in 2019 it paid 9.6%, and 2020 is on pace to be another very strong year). What’s more, because it pays three smaller dividends in Q1, Q2 and Q3, investment websites consistently under-report the size of the big yield, and there is still time for investors to get in now to capture the big upcoming Q4 payment. And by the way, it’s been paying healthy dividends for over 80 years straight!
Top 7 Preferred Stocks: 7.0% Yields and Up
A lot of people don’t understand preferred stocks, yet they can be quite attractive sources of income. And with interest rates near all-time lows, and market volatility and fear elevated, now is an outstanding time to consider select preferred share investments. In this report, we countdown our top 7 big-dividend preferred stocks, starting with number 7 and finishing with our top idea.
LNG Shipper: 9.6% Yield Common, 9.3% Yield Preferreds
This LNG shipping business has been improving, and there are reasons to believe the common units have significant price appreciation ahead. However, if you prefer a similar high yield without as much risk, you might also consider the preferred shares (they too offer price appreciation potential, just not as much). In particular, and despite the highly cyclical LNG shipping industry, this company has an impressive history and opportunity for consistency in the quarters and years ahead, stemming from its fully-fixed fleet for the remainder of this year and 94% fixed for 2021 (thereby largely insulating it from the current weak short-term LNG shipping market). In this article, we review the health of the business, cash flow position, balance sheet flexibility, valuation, risks, dividend safety, and conclude with our opinion about why company is worth considering if you are a long-term income-focused investor.
Mortgage REIT Preferred Shares: Attractive 8.4% Yield, Discounted Price
The common shares of this once beloved mortgage REIT suffered significant equity erosion earlier this year (and it was forced to cut its dividend by 90%) as it was hit with margin calls and forced to liquidate assets at depressed prices during the market-wide Covid-19 sell-off. Since then, the company has been limping its way back towards better health, albeit with a significantly less valuable book of business. Furthermore, the company’s three series of preferred shares still trade at attractively discounted prices and offer compelling high yields (they are also insulated, from some risks, by the company’s common shares). In this article, we review the business, the shares (common and preferred), and then conclude with our opinion on investing.