When it comes to income investing, investors have a lot of choices. And considering the current macroeconomic environment (inflation, the fed, market declines, recession risks) many investors are left flummoxed concerning their next move. In this report, we share our top 10 big-dividend opportunities, including two ideas from each of the following five categories: REITs, BDCs, Bond CEFs, dividend-growth stocks and energy investments. The yields range from 4% to over 9%, and we share some high-level macroeconomic perspective before we get into the countdown.
Verizon: 5.2% Yield, 4 Risks Worth Considering
The share price of steady dividend-growth stock, Verizon, is still down more than 11% following its latest earnings release. And the 5.2% dividend yield is increasingly tempting for many income-focused investors (especially in our current volatile market). But the outsized dividend doesn’t come without risks. In this report, we review Verizon’s business, its dividend safety, the current valuation and four big risks the company currently faces. We conclude with our opinion on who might want to consider investing.
STAG's 4.4% Yield: 3 Big Risks Drive Price Lower
If you are an income-focused investor, you probably like investing in REITs for their often big, steady, dividend payments. However, you may have noticed that following years of strong outperformance, the industrial REIT sector (including monthly-dividend payor, STAG Industrial (STAG)) has recently sold off hard. This report reviews STAG’s business, including information on the 3 big risk factors contributing to its relatively lower valuation multiple—as compared to industry peers (especially following the recent big Industrial REIT sector sell off), and then concludes with our opinion on investing.
Owl Rock’s 9.1% Yield: Credit Spread Risks, Rewards
Business Development Companies, or BDCs, make the loans that big banks generally will not (or cannot, due to regulatory rules). However, like big banks, BDC bottom lines usually come down to simply net interest margins (i.e. the margin between the rate they borrow at and the rate they lend at), assuming they can survive any macroeconomic turmoil, considering they have much higher sensitivity than do the big banks. Interest rates are trending sharply higher (as the Fed fights inflation), and this can be very good (or very bad) for big-dividend BDCs (like Owl Rock). In this report, we share our opinion on whether Owl Rock’s big 9.1% dividend yield is attractive and worth considering, or whether the risks are simply too great and if investors should avoid the shares.
Attractive 7.1% Yield BDC: Monthly Dividend, Compelling Valuation
The well-managed, blue-chip, Business Development Company (“BDC”) we review in this report currently trades at a compelling price, it offers a healthy dividend, and it sits at an attractive spot in the current business cycle. But is it worth investing? This report reviews all the details and then concludes with our opinion on investing.
CEF Rover: Bond CEFs Are Ugly--Could Get Uglier
This quick note shares data on over 100 big-yield (7% to 14%+) bond Closed-End Funds (“CEFs”), including discounts/premiums, recent returns, amount of leverage, and more. Returns have been ugly this year (as interest rates have risen), and they could get uglier considering the Fed is set to keep raising, losses will be magnified by the use of leverage, and forced “fire sales” could make matters worse as the funds mathematically bump up against regulatory leverage limits. Caveat Emptor.
Income Equity Portfolio: MANY New Buys!
I don’t trade often (because I believe in long-term investing), but recent market dislocation has created some very attractive buying opportunities. Year-to-date, the Blue Harbinger Income Equity Portfolio has significantly outperformed the S&P 500 (this has been due to its large overweight to very high-income securities, in particular). However, going forward, the strategy is focused more heavily on steady dividend/income growth—through compelling blue-chip capital appreciation opportunities. This report has all the details.
This Steady Dividend Growth Stock Is Attractive
If you are into wide-moat, blue-chip, dividend-growth stocks, you might want to consider the impressive industrial stock in this report. It’s not a high-flying growth stock, nor does it offer a massive dividend yield, but it does have a healthy growing dividend (2.0% yield), ongoing share repurchases, strong operating margins and a business that is virtually impossible for competitors to replicate. It’s also a high book value business (which can be valuable in times of inflation). We will review this attractive business in detail in this report (including valuation and risks), and then conclude with our opinion on investing (we currently own shares in our income portfolio).
8.7% Yield Bond CEF: Max Interest Rate Pain, Taper Tantrum Looms
As the Fed continues on its path of aggressive interest rate increases (to tame inflation), infamous growth stock investor, Cathie Wood, says “equities and bonds seem to be warning the Fed that its policy measures could cause an economic and/or financial crisis.” Both stock and bond markets are down sharply this year (largely in response to the Fed), but there are reasons to believe things could be about to change (for example, high inflation rates could still prove somewhat transitory thereby making the Fed more receptive to the market’s growing taper tantrum), and now may be an attractive time to consider investing in select high-yield bond CEFs. In this report, we review one in particular that is increasingly attractive.
This Stock: 360 Degrees of Attractiveness
If you are looking for an investment opportunity that is attractive in every direction, you might want to consider this professional services consulting company. It’s classified in the information technology sector, but benefits handsomely from the massive opportunities that exist across the many compelling industries it serves. In this report, we review the company’s healthy growing dividend, share repurchases, massive cash flow, strong balance sheet, powerful earnings and revenue growth trajectories, and the attractive valuation for this very impressive business model.
Attractively Valued 4.5% Yield Consumer Staples Stock
Short-term headwinds have dragged the share price lower, but this steady, blue-chip consumer staples company has a wide moat, significant competitive advantages and the stock is currently trading at an attractive price. In this report, we review the business, the challenges (both short-term and long-term risks), the valuation, opportunities and finally our opinion on who might want to invest.
7% Yield mREIT Preferred Shares: Increasingly Compelling
If you have been paying attention to the Fed’s abrupt monetary policy shift this year (from pandemic doves to inflation hawks), you’ve likely noticed a variety pain points, ranging from a sputtering stock market to falling bond prices (and it’s all to address record high inflation). You may have also noticed a lot of “income and value” equities have performed much better than “growth equities” this year as the pandemic “growth stock” trade now sits firmly in the doldrums (for example, the Blue Harbinger Income Equity portfolio is positive this year while the overall market is down, and growth stocks are down even more). However, one type of income security that has been experiencing significant short-term pain this year, is the mortgage REIT.
Inflation Antidote: 25 Big-Dividend REITs, We Own These 5
With inflation screaming higher, the energy sector (and many commodity industries) have posted strong positive returns this year, while the rest of the market has languished. However recently, the financials sector (which is generally boosted by rising interest rates) is also starting to come on strong. And as the market continues to adjust to our starkly different macro environment (i.e., the Fed has shifted focus to battling inflation, which means increasing interest rates), what sector might be next in line for an upswing? Real Estate is worth considering, especially if you like a healthy dose of high dividend income to go along with the potential for compelling price appreciation. In this report, we share data on over 25 big-dividend REITs, including the ones we currently own.
Big-Yield CEFs: Discounts Are Widening (Bonds, REITs, MLPs, US Equities)
The prices of big-yield MLP CEFs have been rising, but not as fast as their NAVs, thereby creating some interesting opportunities, such as those offered by ClearBridge (including tickers: EMO, CEM and CTR). We share the data (including yields, premium/discounts and leverage) for 60 CEFs in this report, including multi-sector bonds, real estate and US Equities.
Powerful Dividend Growth, Attractive Value: This Business is Worth Considering
With the markets down significantly this year, there are attractive babies being thrown out with the bathwater, and this report reviews one such opportunity. Specifically, we review a highly profitable, rapidly expanding, common sense software application company that pays a healthy growing dividend and has a large total addressable market opportunity to keep growing the business for years to come. If you have the psychological wherewithal—this one is worth considering.
25 Big Dividends Down Big: Is 3M Worth Considering?
Many investors are struggling psychologically with the overall market declines this year. And one way they cope is by taking comfort in owning stocks with big healthy dividend yields. In this report, we share data on 25 big-dividend stocks (that are down big), and then take a closer look at one in particular, the 3M Company, before finally concluding with our opinion on investing in the market and 3M in particular.
3.8% Yield Industrial REIT, Worth Considering
Aside from backward looking financial metrics (which are good for this particular REIT), forward guidance is also attractive, and so too is the industry outlook attractive. Further, the balance sheet is strong for this monthly-dividend payer, and the valuation is reasonable (especially after the recent indiscriminate market declines). The dividend is well covered, and the company is getting ahead of the industry-trend towards environmental, social and governance (“ESG”) considerations. In this report, we review the business and conclude with our opinion on who might want to invest.
3.3% Yield Specialty REIT: Despite Price Weakness, Fundamentals Growing Stronger
Despite ugly performance for REITs this year, select names remain attractive. For example, shares of the specialty REIT we review in this report are down, but the fundamentals continue to strengthen (and the long-term outlook is compelling). In this report, we review the REIT’s highly-attractive business strategy (which positions it well for growth and income), fundamental strength, valuation and risks, and then conclude with our opinion on investing.
Big-Dividend REITs are Down: These 2 Are Worth Considering
So far this year, REITs have been the worst performing sector of the market. And that has created some attractive opportunities for income-focused investors. In this report, we review year-to-date market performance (what has been working and what hasn’t), we then dive into big-dividend REIT performance, and finally we highlight two big-dividend REITs that we believe are particularly attractive and worth considering for investment.
Another Standout BDC: 7.1%+ Dividend Yield
If you are looking for a high-income opportunity that is attractive on a risk-versus-reward basis, the BDC we review in this article is worth considering. Not only does it offer regular, supplemental and special dividends, but it stands out versus its BDC peers in terms of strong financial metrics and strong deal flow trajectory going forward. It also has support from a larger parent organization, it has significant interest rate hedging (by virtue of its largely floating rate portfolio and debts) and the recent share price pullback makes for an increasingly attractive entry point. In this report, we review the details and conclude with our opinion on investing.