We’ve updated the holdings and “buy under” prices for all three of our top idea portfolios for April, and all the details can be accessed using the links below. We do NOT trade often (we’re long-term investors), but we do have a small handful of trades to update you on. We believe the changes position the portfolios for more long-term success.
Hated 5.9% Yield Dividend-Growth Stock, Attractive
The stock we review in this report is hated. And it is hated for multiple reasons. However, the market is misinterpreting some of the data, and the fear is overdone. After reviewing the details of this impressive dividend aristocrat (including its business, dividend safety, valuation and risks) we conclude with our strong opinion on investing (hint: we currently own shares in our Income Equity portfolio).
Lithium: Limited Supply, Increasing Demand
As lithium demand grows (and supply remains limited), the basic materials stock we review in this report is attractive. The shares are down 35% from their 52-week high, but the business continues to strengthen (i.e. revenues are growing very rapidly, the market opportunity is huge and profit margins remain strong). In this quick note report, we consider the company’s latest strategic effort, its valuation and our opinion on investing (i.e. we own shares).
Two (2) New Buys: 1 Income Equity, 1 (More) Disciplined Growth
We do NOT buy or sell often, but this is just a quick update to let readers know we have made two more new purchases (the second and third new buys this week). One in our Income Equity Portfolio and now a second buy this week in our Disciplined Growth Portfolio. We’ll be completing our monthly portfolio tracker sheet updates shortly after April begins, but wanted to let readers know right away of these two additional new purchases.
New Buy: Top Growth Stock: Solar Energy Disruption
The industrial sector business we review in this report continues to grow rapidly as it benefits from the solar energy secular trend. Specifically, it provides electrical balance of system solutions (for solar, battery energy and EV charging applications) to mainly engineering and construction firms. And its valuation is increasingly attractive, especially considering the competitive advantages of this highly profitable $3B+ market cap company. We review all the details, and then conclude with our opinion on investing in this rapidly growing business.
Cell Tower REIT: Growing Dividend, Paying Down Debt
The specialty REIT we review in this report focuses mainly on cell towers. The dividend is well covered and has a steady history of increases. Further, the company is virtually guaranteed revenue growth from rent escalators, not to mention the growing secular trends of mobile data usage and the Internet of Things. Further still, the company is working to improve its balance sheet. We review all the details, and then conclude with our opinion on who might want to consider investing.
Big-Dividends Report: 100 BDCs, REITs, Down Big
The Fed hiked rates, the FDIC continued to bail out depositors and select big-yield opportunities became decidedly more interesting. Specifically, many big-dividend REITs and BDCs are down big this year; and some of them are actually attractive. In this report, we share updated data on over 100 big-yield REITs and BDCs, and then conclude with information about our top 27 favorite big yielders, ranked.
Update: 40 Big-Yield BDCs, Silicon Valley Bank Warning
As mentioned in our previous note, BDCs are like banks, only riskier. Not only are BDCs facing increasing stress due to slowing economic growth and increasing interest rates (i.e. the tradeoff between higher floating rate interest payments received and higher default risk on loans), but some BDCs (such as those focused on venture capital) are dramatically over-exposed to fallout from the Silicon Valley Bank mess. In this note, we share updated data on 40 BDCs, and then dive deeper into 4 specific venture-capital-focused BDCs—and how we expect them to fare in light of the SVB mess—buyer beware!
Ares: 40 Big-Yield BDCs, Silicon Valley Bank Warning
Business Development Companies (“BDCs”) are like banks, only riskier. And some BDCs are heavily concentrated in the venture capital (“VC”) space, just like Silicon Valley Bank (SIVB) that just shuttered its doors as the result of a VC-led bank run. In this report, we review Ares Capital (including its investment industry exposures and risks) and then compare it to 40 other BDCs, including four in particular that are heavily concentrated in the VC space. We conclude with our strong opinion about investing in BDCs, Ares Capital and VC-focused BDCs in particular.
Small Cap Stock: To Benefit from IIoT, Attractive Valuation
The small cap stock we review in this report enables machines to communicate with each other and it is well positioned to benefit from vast and expanding new opportunities related to the Industrial Internet of Things (“IIoT”). It’s also being valued incorrectly because supply chain issues are being misunderstood (and they will clear up) and because it’s being valued like a traditional hardware company without proper recognition for its growing subscription revenue model (which warrants a higher multiple). In this report, we review the business, the expanding market opportunity, valuation and risks, and then conclude with our opinion on investing.
PDI and PTY: Ugly ROC, Buyer Beware
The PIMCO Dynamic Income Fund (PDI) and PIMCO Corporate & Income Opportunity Fund (PTY) are absolute favorites among many income-focused investors. They both have long track records (one decade and two decades, respectively) of successfully delivering big monthly income payments (they currently yield 13.5% and 10.6%, respectively) and because they’ve sourced all that big income over the years without the return of capital (“ROC”) that plagues so many other high-income funds. However, a look under the hood reveals that these two PIMCO trophy funds have, in fact, been using ROC to fund their distributions (despite marketing materials that suggest otherwise). In this report, we review all the important details and then conclude with our strong opinion on investing—caveat emptor!
6.1% Yield Bond ETF: Matures in December
Bonds have been a disaster for many investors over the last year. As interest rates have risen, bond prices have fallen, and “safe” bond funds have delivered very negative returns (such as (BND) (HYG) and (PDI), to name a few, see chart below). In this report, we review a bond ETF that pays monthly, offers a 6.1% yield and avoids all the interest rate risk (i.e. if you hold it until maturity in December, your annualized yield to maturity will be 6.1%). We review all the important details and then conclude with our strong opinion on who should consider investing.
CEF: 6.9% Annual Yield, Attractive Strategy
If you are truly a long-term income-focused investor, the closed-end fund (“CEF”) we review in this report is attractive for a variety of reasons. For starters, it offers a 6.9% yield and it trades at a compelling discount to its net asset value (“NAV”). However, we particularly appreciate the fund’s flexible, low-turnover and prudently-concentrated long-term strategy (not to mention its very long-term track record of success). After reviewing these qualities, plus multiple critical risk factors, we conclude with our opinion on why this fund remains such an extremely attractive long-term opportunity for income-focused investors.
Top 25 Big-Yield Funds, Ranked (6.0% to 12.0%+ Yields), ETF and CEF Edition
If you like your investments to pay you high income now—this report may be right for you. We countdown our top 25 big-yield Exchange Traded Funds (“ETFs”) and Closed-End Funds (“CEFs”) with yields of 6.0% to over 12.0%, and carefully highlighting the important nuances of these two distinct investment vehicles, while also avoiding the gimmicky yield traps that sadly dupe so many unsuspecting investors. We start with some high-level advantages and disadvantages of ETFs versus CEFs, then rank our top big-yield funds, starting with #25 and counting down to our top ideas.
PFF: 40 Big-Yield Preferred Funds, Compared
Preferred Stocks are often misunderstood. They can grab the attention of income-focused investors because of their big yields, but beyond that—many investors just don’t understand how they work. In this report, we review the nuances of preferred stocks (that investors absolutely need to know), and then share data on 40 big-yield preferred stock funds, with a special focus on PFF, plus a few more in particular that are worth considering. We conclude with our opinion on who might want to invest, and how best to go about doing that.
9.6% Yield BDC: Risks and Rewards Increasing
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.
Big-Yield BDC Update: 2 Contrarian Opportunities Worth Considering
Big-yield BDCs have posted particularly strong gains so far in 2023. However, attractive opportunities remain considering prices are still down from 2022, and the recession that’s already priced into the market may be milder than expected. In this quick note, we share updated data on over 40 BDCs, and then quickly highlight 2 high-yielders that present particularly attractive contrarian opportunities.
Top 10 Big-Yield CEFs, Ranked (6.0% to +11.0% Yields)
Close-End Funds (“CEFs”) are often an income-investor favorite thanks to their big yields (often 6.0% to 11.0%, or higher) which are frequently paid monthly. In this report, we share updated data on over 100 big-yield CEFs (sorted by style, and including a variety of important data points), and then we countdown our top 10 big-yield CEFs (starting with #10 and finishing with our top ideas) for you to consider.