IBM offers an attractive (3.5%) dividend yield, but the dividend alone is not enough if the stock can’t provide some long-term capital appreciation. In this article, we review IBM’s shrinking legacy business, its attempt at growth via “strategic imperatives,” its dividend, share buybacks, valuation, and risks. And we also provide our strong views on whether it’s time to buy or sell Big Blue.
Triangle Capital: Amazing Dividend or Dangerous Trap?
Triangle Capital is a Business Development Company (BDC) with an enormous 9.3% dividend yield. The share price has barely budged this year starting out at $19.11 and currently sitting at $19.32. However, the company cut its regular quarterly dividend by $0.09 per share back in May. The big question for income-focused investors: Is this amazing 9.3% dividend yield safe, or is it a dangerous trap to avoid?
Omega Healthcare: Big Dividend, Big Evolving Risks
Omega Healthcare (OHI) pays a big growing dividend (7.2%), and it has recently underperformed many of its healthcare REIT peers. Some investors are quick to sing its praises as a “value play,” but it is most certainly exposed to very real risks. Specifically, the evolving skilled nursing facilities industry calls into question the source of Omega’s future revenues particularly with regards to entitlement reform. This article provides our views on Omega, and addresses the all-important question: Is Omega worth the risk?
New Residential: Huge Profits as Banks De-Risk—But is it Safe?
If you like big dividends and discounted prices, you may have noticed that mortgage REIT New Residential (NRZ) pays an enormous 13.5% dividend and its shares have declined nearly 8% in the last two months. NRZ emerged following the financial crisis as banks had to shed risk. NRZ continues to generate big profits with its mortgage servicing rights business, its heavy use of leverage, and its expanding call rights securities strategy. But the big question… is it safe?
EastGroup Properties: Is This 3.6% Dividend Yield REIT 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.