EastGroup Properties (EGP) is an industrial REIT that offers a 3.6% dividend yield, and it just sold off 9% in the last two weeks. In this article we consider whether the sell-off makes this an attractive income play for investors, or whether it’s just a value trap. Is EastGroup Properties Safe?
Prospect Capital: Is it Still Safe?
Given the very strong price appreciation this year (PSEC was trading at $5.21 in February, and it now trades at $8.10), we review the question "Is it still safe to own Prospect Capital?" We consider the business, the big 12.4% dividend, the dividend coverage ratio, the financial strength, price vs. NAV, and the biggest risk that we believe could potentially drive the price much lower (as we saw in the first two months of this year).
Accenture: Growing Dividend, Attractive Valuation
Accenture is a management consulting, technology and outsourcing services company that offers a growing dividend (currently a 2% dividend yield), and an attractive valuation indicating significant price appreciation potential. The shares have fallen over 5% in the last two weeks making for a more attractive buying opportunity for long-term investors. We own shares of Accenture in our Blue Harbinger Disciplined Growth Strategy.
Our Top 6 High Yield REITs After Friday's Selloff
Starwood Property Trust: Big Dividend, Thrives In Turmoil
Starwood Property Trust (STWD) is a big dividend (8.6%) mortgage REIT that could actually benefit from an uptick in market turmoil. Further, we believe Starwood inappropriately sold off on Friday (it was down more than 3%) because it was incorrectly lumped in with other big-dividend payers that sold off when the Fed suggested it may raise rates sooner than expected.
New Purchase: Emerson Electric (EMR) “Part 2”
As we reported on Friday afternoon (see also Emerson Electric Purchase “Part 1”) the new stock we purchased is Emerson Electric (EMR). To some, this may seem like a boring company that has not performed well over the last two years. However, in our contrarian view, this is a tremendous time to buy. Here's why...
**New Purchase – Blue Harbinger Update**
We are excited to share a new purchase in our Blue Harbinger Disciplined Growth strategy. Members can view the details by logging in now. This is a long-term buy which means we plan to own the stock for many years to come (assuming it continues to execute on its strategy). We believe it is trading at a significant discount to its underlying value, plus it offers an attractive 3.5% dividend yield.
Emerson Electric: Attractive Business, Price & Dividend
Emerson Electric (EMR) is a big dividend (3.6%) industrial engineering company that is currently trading at an attractive price. The stock has recently under-performed the market for a variety of reasons, but it continues to easily maintain its “dividend aristocrat” status. We believe Emerson has significant growth prospects ahead, and current market conditions have created a very attractive buying opportunity for long-term investors.
CVR Partners: Big Yield, Big Upside
We like CVR Partners (UAN) because we believe the market is overly pessimistic, and the company has better days ahead. Not only will it benefit as the overall global population grows, but it will benefit as it rebounds from its current low point in its business cycle. We believe the recent price decline makes now an attractive opportunity for income-focused investors to pick up this big 9.9% variable distribution yield.
Our Top 3 Covered Call Stocks
This members-only post highlights our top 3 covered call stocks. Essentially, we believe writing covered calls on these three stocks is a "win-win" opportunity for income investors because if they get called you will collect the proceeds from the sale (plus the premium you will have already received), and if they don't get called then you're left holding a very attractive long-term investment that pays a big safe dividend.
Autoliv: Attractive Growth, Valuation and Dividend
Autoliv (the world's largest automotive safety supplier) was down 8.5% on Friday after announcing disappointing earnings. However, the company is still very profitable, it has vast growth potential, and its shares are undervalued by the market in our view. Additionally, the company’s dividend yield just rose to 2.23% which is above average compared to the S&P 500’s dividend yield of only 2.04%.
Phillips 66: Big Dividend, Attractive Long-Term Opportunity
Phillips 66 has recently under-performed the market because investors are too focused on the short-term crack spread impacts, rather than on the long-term growth into chemicals and midstream businesses. It is also a cash generation machine with a big growing dividend. Warren Buffett recently increased his ownership to nearly 15%. It announces earnings this Friday (7/29). We own it in our Income Equity strategy.
Ventas: Adding this Big Dividend REIT to our Watch List
Ventas (VTR) is a healthcare REIT with a diversified investment portfolio, an attractive dividend yield (4.1%), and the winds of an enormous demographic trend at its back. The dividend is very safe, and despite the recent strong price performance we believe this REIT has many years of continued growth ahead.
TE Connectivity: Big Dividend, Attractive Price
TE Connectivity is a profitable, high-margin, growing, industrial engineering company that pays a big dividend and the stock trades at an attractive price. Further, the stock still has not recovered from the recent Brexit-induced volatility relative to the rest of the market. We don't currently own shares in any of of Blue Harbinger strategies, but we've placed it high on our "watch list."
M&T Bank: A Big Growing Dividend with Shrinking Risks and Lots of Price Appreciation Potential
Chatham Lodging: An Undervalued Big-Monthly-Dividend Hotel REIT
Chatham Lodging Trust (CLDT) is a hotel Real Estate Investment Trust (REIT) with a big 6.1% dividend yield, and significant price appreciation potential. The market has dramatically overreacted to slowing growth among hotel REITS, and Chatham in particular offers an attractive investment opportunity for long-term income-focused investors because of its attractive valuation and potential for more dividend increases.
Why American Express Could Rise 30%
The bad news for American Express over the last 18 months has been large and steady. And so too has the share price decline. We believe the bad news is now in the rear view mirror (knock on wood), there is good reason to be optimistic, and the shares could easily rise 30%. We own shares in our Blue Harbinger Disciplined Growth portfolio.
Union Pacific: Back on Track with Room to Run
After suffering significant stock price declines from over $120 per share in early 2015, to around $67 in January 2016, we believe Union Pacific is back on track, and it has significant upside price potential ahead. The market is overly pessimistic, the market cycle is slowly beginning to turn, and the dividend (2.5%) is attractive. If you are a long-term investor, Union Pacific is worth considering. We own it.
AstraZeneca: Big Dividend, Big Long-Term Prospects
We are contrarians with regards to AstraZeneca. Whereas the market consensus is becoming increasingly negative (the stock is down 12.4% this year while the S&P 500 is up 2.7%), we believe the patent loss fears are overdone, and the market is not recognizing the dramatic long-term potential of the AstraZeneca pipeline. If you are a diversified long-term income-focused investor, AstraZeneca is worth considering.
OneBeacon: 10 Reasons to Own this Big Yielder
OneBeacon (OB) 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 for long-term, income-hungry investors.