This highly-profitable “creative” software company announced record revenue and operating income on Thursday (the shares are up significantly Friday in a declining market), and it’s well-positioned to keep driving profitable growth for the decade ahead. Its products benefit from strong moats (high switching costs), increasing subscription revenue and lots of cash flow to fund growth and buy back shares. This is a business that is positioned to weather the economic cycle well, and it trades at very reasonable valuation multiples, especially considering profit margins and revenue growth guidance both remain robust.
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.
100 Big-Yield CEFs: Ranking Our Top 5
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.
PIMCO CEFs: Special Year-End Distributions
To the delight of many income investors, PIMCO announced Monday that a handful of its big-yield bond funds will be offering special year-end distributions. Here is the press release from PIMCO. And you can read our analysis on these PIMCO funds here here and here.
2023 Risks and Opportunities: It Can Still Get Worse
As 2022 winds down (it’s been an ugly year so far), things can still get worse in 2023. In this report, we review overall market valuations, macro risks (e.g. monetary policy and recession) and the growing risks related to specific investment styes (e.g. growth versus value, small versus large cap, and various sector opportunities). We also share a handful of specific investment opportunities and then conclude with a few critical takeaways for investors.
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.
Intuit (INTU) Earnings Note
This global financial tech platform, and dividend-growth machine, announced quarterly results after the close on Tues, whereby it beat rev and earnings est., but provided mixed fwd guide w/ rev growing at 10-12% (impressive!) vs street est of 12-14%, and also reaffirmed FY’23 EPS guide. It announced its 45th consec qrtrly dividend (annual div has grown 11 years in a row). W/ impressive gross (>82%) and net (>16%) margins, and trading at ~28x fwd non-GAAP earnings, shares remain an attractive buy as its strong moat (high switching costs + network effects) remain firmly intact. We are long the shares in our Income Equity Portfolio w/ no intention of selling anytime soon.
Top 10 REITs: Big Dividends, Discounted Prices
If you like steady dividend income and the potential for healthy share price appreciation, REITs are worth considering. Especially this year as share prices are down and dividend yields have mathematically risen. However, not all REITs are created equally. In this report, we share data on over 100 REITs, sorted by industries (and including a brief commentary and outlook for several important REIT industries), and then countdown our top ten REIT ideas (starting with #10 and finishing with our top idea).
Top 10 Big-Yield Bond Ideas (4.7% to 13.5% Yields)
For years, income-investors have decried the artificially low interest rates set by the Fed. However, if you’ve not been paying attention, things have changed significantly in recent months. Yields are a lot more interesting now, ranging from bond closed-end funds to specific individual bonds. In this report, we countdown our top 10 bond ideas for you to consider.
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.
Bath & Body Works (BBWI): Earnings Note
Shares of this specialty retailer (home fragrance, body care, and soaps and sanitizer products) ripped 25% higher after announcing better-than-expected quarterly numbers (whereby they beat earnings and revenue estimates and raised guidance). We are currently long shares in our Income Equity Portfolio, and we have increased our “Buy Under” price following the announcement.
Portfolio Update: Disciplined Growth, Income Equity
Portfolio Updates: You’ll notice both the Income Equity and Disciplined Growth Portfolios have been updated for November. Many of the “Buy Under” prices have been updated to reflected changed market conditions (mainly interest rate hike impacts and quarterly earnings results). There were several rebalancing trades (and one new purchase) in the Disciplined Growth Portfolio, and no new purchases or sales in the Income Equity Portfolio. Rebalanced positions are shown in red (reduced) or green (increased) fonts, and new buys and complete sells are reflected in red (sells) and green (adds) highlights.
This Mega-Cap Growth Stock—On Sale and Attractive
It’s been a rough year for growth stocks as rising rates are slowing the economy and analysts revise down their previously over-extrapolated long-term high-growth targets that were based on the relatively short-lived pandemic bump. But don’t let the negative short-term sentiment fool you into believing certain long-term secular trends have ended; they have not, and attractive businesses are now trading at increasingly attractive prices. In this report, we review one mega-cap high-growth stock in particular (including the financial metrics that mislead some investors) and then conclude with our strong opinion on investing.
100 Preferred Stocks: This 7.6% Yielder is Attractive
Need Income: 5 Bond Strategies Worth Considering (5% to 13% Yields)
Huge Rally: Inflation Slowing, Upside Ahead
With this morning’s inflation numbers coming in lower than expected, the market is up a ton. One data point does not constitute a trend, and no one knows where the market will be later today, next week, next month or even next year. But over the long-term it IS going higher, and right now is a GREAT time to be an investor. This report shares some brief thoughts and ideas on where you should be invested going forward.
Meta Platforms (Facebook parent) Update
Shares down ~70% ytd, but this big tech co remains a money-printing machine. Ad rev still astronomical at $27.7B in Q3 (down 4.5% y/y, tough pandemic comp); gross profit margin astounding 79.5%. The prob is spending whereby opex was ~$15.9B (as if it were still late 2020 and int rates were still ~0.0%). The mkt is reacting positively to today’s announced layoffs of 11,000 employees (13% of workforce)—a step in the right direction considering slowing economic growth/ recession risks. To put things in perspective, every $1B in lower opex spend is ~$0.35 in EPS. W/ 12.8% fwd rev growth (& trading at 10.6x fwd EPS and only 2x EV/Sales), this business is impressive.