The business development company (“BDC”) we review in this report is attractive to many income-focused investors (the current yield is 9.6%, paid quarterly). However, the entire BDC industry is facing growing challenges as the benefits of rising interest rates are increasingly offset by the challenges (portfolio company defaults) caused by an economy headed towards recession. In this report, we review the company (including an overview of the business, the current market dynamics, dividend strength, valuation and risks) and then conclude with our opinion on investing.
Attractive Sector CEF: 7.0% Yield, Discounted Price
The CEF we review in this report is attractive for a variety of reasons, including its big monthly distribution payments (which have never once been reduced since the fund’s inception in 2014), its discounted price (it trades ~10.0% below NAV), its reasonable use of leverage (~20.0%) and its compelling sector-specific holdings. We review all the details in this report, and conclude with our opinion on who might want to invest.
JEPI: 11.7% Yield ETF, Critical Points Worth Considering
We recently received an inquiry from a member about the popular JP Morgan Equity Income Premium ETF (JEPI). It’s a very popular ETF thanks to its very high current yield (11.7%) which is paid monthly, and its notably lower volatility than the S&P 500 (it was down a lot less than the S&P 500 in 2022). In this report, we review all the critical JEPI details and then conclude with our opinion about investing in this very popular big-yield ETF.
SCHD: 100 Top-Dividend Growth Stocks, These 3 Worth Considering
Dividend growth stocks are particularly compelling in the current market environment because many of them have ample financial wherewithal to easily survive the Fed’s recent sharp interest rates hikes (whereas a lot of volatile pure-growth stocks do not). In this report, we explain the construction methodology behind the popular 100-stock Charles Schwab US Dividend ETF (SCHD), including data on all 100 stocks in that fund. Then we review three specific stocks from SCHD that are particularly attractive. We conclude with a critically important takeaway about the attractiveness (and risks) of investing in specific dividend-growth stocks in the current market environment.
Powerful Dividend Growth: Attractive Mega-Cap Stock, Underappreciated
A lot of investors still think of this mega-cap stock as a high-growth opportunity. In reality, it’s a stable value stock with an impressive track record of dividend growth, and the shares are trading at a compelling valuation. The current yield remains low because the share price has risen even faster than the dividend over the years. In this report, we review the business, competitive advantages, growth trajectory, cash flows, dividend, share repurchases, valuation and risks. We conclude with our opinion on who might want to invest.
Compelling 8.2% Yield, Consumer Staples Stock
You might think a stock yielding over 8% is a red flag (perhaps a company in distress), but the one we review in this report is surprisingly compelling if you are an income-focused investor. The industry is in a slow secular decline, but revenues and the dividend are set to keep growing steadily and the shares offer some margin of safety relative to the current valuation. In this report, we review the business, consider the cash flows (including dividends and share repurchases), the valuation and the risks. We conclude with our opinion on investing.
Railcars: 3.8% Yield, 10+ Years Dividend Growth
With the economy still barreling towards recession (courtesy of high inflation and interest rate hikes), the industrials company (focused on railcars) that we review in this report is attractive for a variety of reasons, including its stable cash flows, ongoing long-term growth potential, hard assets (book value), operational efficiencies, attractive current valuation and its 10+ year history of dividend growth (the current yield is 3.8%). We review all the details in this report, and then conclude with our opinion on investing.
3.1% Yield Tech Stock: 10+ Years Dividend Growth
The tech stock we review in this report has a lot of attractive qualities, including a healthy well-covered dividend, an attractive valuation, and a business positioned to benefit from legacy networking and future industry growth (including hybrid cloud solutions). It also has high margins, growing subscription revenues, high customer switching costs, a strong balance sheet, incredible cash flows and an attractive share price (relative to valuation). We review the details in this report and conclude with our opinion on investing.
Chemicals Co: Attractive 5.2% Yield Dividend Grower
Anytime you invest in a commodity-related business, there are likely significant risks related to commodity prices. However, given the financial strength and competitive advantages of the company we review in this report, combined with current and projected commodity prices and demand (respectively), the business appears undervalued and remains in a good position to keep growing its already large dividend payments (which have been increased for 11 years in a row) and share repurchases. If you are an income-focused investor that likes to invest across market sectors, this one is worth considering for a materials sector (chemicals) allocation in your prudently-diversified long-term portfolio.
Attractive Materials Company: Deep Value, Growing Dividend, Compelling Entry Point
Like much of the economy, materials companies were impacted dramatically by pandemic disruption. In particular, lockdowns in the US and internationally caused demand to halt and share prices to plummet. However, with countries and companies continuing to reopen, and share prices still depressed, highly compelling opportunities exist. In this report, we review an attractive materials company that offers a strong and growing dividend (currently yielding 2.5%) plus attractive share price appreciation potential.
Attractive Healthcare Stock: 3.5% Yield Aristocrat, Significant Upside
The current yield on this healthcare dividend aristocrat is near all-time highs as frustrated investors lose patience with the slower-than-expected pace of the post-pandemic recovery. And despite risks (which we will cover), the business remains healthy (profitable with tons of cash flow) and growth will return. If you are an income-focused contrarian investor (that likes long-term price appreciation), this impressive dividend grower is absolutely worth considering. We are long.
13.4% Yield CEF: Despite Big Premium, Steady Monthly Income Is Compelling
If you are an income-focused investor, you’re likely familiar with Closed-End Funds (“CEFs”) because they can offer big steady dividend income. However, they also present unique risks and opportunities because they often trade at significant premiums and discounts to the net asset value (“NAV”) of their underlying holdings. The monthly-pay CEF we review in this report is very large and hugely popular, and its large price premium (as compared to NAV) isn’t as unattractive as some investors think. In this report, we review the fund and then conclude with our opinion on investing.
Tempting 17.4% Yield BDC: 20% Discount to Book, But Know the Risks
The tempting Business Development Company (“BDC”) we review in this report offers a 17.4% dividend yield (the shares are down 38% this year) and it trades at a 20% discount to its book value. However, it faces significant risks including industry-wide BDC headwinds (yes—rising rates help net interest margins, but also increase portfolio-company default risks, especially with the economy heading towards recession) and company-specific challenges (the business strategy is somewhat unique). In this report, we review the business, the risks, the dividend and the valuation, and then conclude with our opinion on investing.
Forget the Fed: 10.1% Yield Bond CEF - Zero Interest Rate Risk
Income-focused investors often love bond closed-end funds (“CEFs”) for their big monthly distribution payments. However, this year has been challenging as interest rate volatility has created some painful price moves. In this report, we review one bond CEF in particular that has almost zero interest rate risk (its duration is close to zero), but still pays big steady monthly distributions to investors.
Compelling Healthcare REIT: 9.1% Yield, Improving Fundamentals
To some investors, this healthcare REIT has been an obvious short this year, and the shares have sold off dramatically while the dividend yield has climbed to an impressive 9.1%. However, there are reasons to believe the short thesis is now falling apart (for example, fundamentals are improving and macroeconomic headwinds are moderating). In this report, we share comparative data on over 25 healthcare REITs, then review this healthcare REIT’s business in particular, including a discussion of how its four big risk factors are abating, dividend safety and valuation, and then conclude with our strong opinion on investing.
Retail REIT: Despite E-Commerce, Attractive 6.1% Dividend Yield
You know the story. Brick-and-mortal retail was dying, and covid accelerated its death spiral. However, not all retail properties are created equally. For example, the A-class retail property owner we review in this report is financially strong and so is its 6.1% dividend yield. In particular, we review the business, growth potential, dividend safety, current valuation and risks, and then conclude with our strong opinion on investing.
Despite Social Pressures: This Dividend-Growth Energy Company Delivers
In the face of intense pressure to direct more cash to renewables, this blue chip energy stock has remained steadfast in its commitment to oil and gas. And this Friday’s earnings announcement will likely prove once again this strategy pays dividends (big, healthy, growing dividends). In this report, we review the company’s business strategy (and how it differs from peers), strong cash flows, dividend safety, valuation and big risks, including a special focus on social and political risks (i.e. the “woke mob”). We conclude with our strong opinion on who might want to own the shares and who might want to stay away.
Diversified Blue Chip REIT: Despite Big Risks, 6% Yield Is Attractive
When it comes to big-dividend REITs, the one we review in this report is a stalwart favorite. Having increased its annual dividend (paid quarterly) for over ten years straight, and now trading down 20% in the last month, investors are wondering if they should initiate a position (or even buy more shares). In this report, we review the business and then consider the current valuation versus two big risks. We conclude with our strong opinion on investing.
Attractive Commercial REIT: 6.7% Yield, Discounted Price
Shares of the commercial REIT we review in this report have declined sharply this year (and the dividend yield has mathematically risen to 6.7%) as investors have shifted from optimistic to pessimistic. However, there are reasons to believe the sell off has gone too far. In this report, we review the risks (including single-tenant properties, economically sensitive property types, and high short interest), and the opportunities. We conclude with our strong opinion on investing.
AGNC: Temping 17.8% Yield, Compelling Near-Term Upside
AGNC preannounced a significant decline to its book value for the third quarter, and is now a very tempting 17% yield. Especially considering some uncertainty has been removed and higher interest rates will benefit the net interest income going forward. However, there are massive market cycle risks (and opportunities) that AGNC investors need to navigate. In this report, we review AGNC’s business model, its new book value, price appreciation potential, dividend safety and long-term fundamentals. We conclude with our strong opinion about investing.