The big yield preferred shares of Altera (formerly Teekay Offshore, until Brookfield renamed it) will benefit in the near to mid term from from oil price contango. More specifically, Altera's shuttle tanker business is enjoying significant but temporary tailwinds due to the surge in oil storage demand. Fixed term and fixed rate contracts with blue chip clients will also help protect the top line. Altera has a comfortable near-term debt maturity schedule and sufficient cash cushion to support the dividend. The broader market sell off has created an attractive buying opportunity.
Mortgage REITs: Huge Yield, Huge Opportunity
In light of recent turmoil, the Fed has now promised to do whatever it takes to support the bond market, Agency MBS in particular. Mortgage REITs that own Agency MBS are worth considering. Specifically, Agency MBS credit spreads have dropped significantly, yet mREIT share prices continue to trade at wide discounts to book values. Mortgage REITs present huge yields and huge opportunities.