If it’s mainly big steady income payments you seek, this report reviews two fixed-income closed-end-funds (CEFs) that offer attractive yields of 9.1% and 7.7%, respectively. They both pay monthly (MOPAY), and trade at very attractive prices. This report shares the important details for you to consider.
Top 10 Big Dividends: Contrarian Value Opportunities
Value and income stocks have been challenged this year as the COVID-19 pandemic has made life difficult for many of them and as many growth and technology stocks have sailed higher. However, if you are a contrarian, there are select opportunities among the wreckage that are absolutely worth considering. Especially as many value and income stocks have started to perk up lately as news of a COVID-19 vaccine is spurring some capitulation between high-flying growth stocks and beaten down value and income names.
Realty Income, Big Monthly Dividend: COVID Challenges
Realty Income is one of the most renowned dividend stocks. Its monthly dividend track record has earned it the nickname ‘The Monthly Dividend Company’. It has made 604 consecutive monthly payments and raised its dividend for 94 quarters in a row. Since March 2020 (when COVID-19 hit the world), the company has raised its dividend twice. This signals to some the recession-resistant nature of its property portfolio and superior management skills. But will the company sail through this crisis like it has in the past? This article reviews the health of the business, valuation, risks, dividend safety, and concludes with our opinion about investing.
The Safest and Strongest Net-Lease REIT with a 5.8% Dividend Yield
This REIT is one of the largest net-lease REITs benefiting from the unmatched diversity in its portfolio and its deep expertise in sale-leasebacks. The portfolio has displayed very strong resilience to the pandemic, as its rent collections have remained strong throughout. It also has an impressive dividend history with consecutive dividend increases every year since it went public in 1998. We are also encouraged by its successful track record of operating through economic downturns and using them to build and grow a high-quality portfolio through opportunistic investing. Despite all the odds in favor, the stock has underperformed this year. We believe at the current price, the REIT offers an attractive investment opportunity from an income generation, capital preservation, and capital appreciation perspective. This article reviews the health of the business, valuation, risks, dividend safety, and concludes with our opinion about why it’s worth considering if you are a long-term income-focused and growth-oriented investor.
2 High-Yield CEFs Worth Owning: Contrarian Value Edition
New Options Trade: Very High Upfront Income, Bullish Vertical Put Spread, Chinese Internet Juggernaut
Just three weeks ago we wrote about the attractiveness of this stock, but warned of near-term volatility events at the start of November. One of those events has played out, drawing the share price lower. However, we believe the shares are now trading too low, and they could be driven even lower in the days ahead (as fearful investors panic). These conditions have given rise to this attractive options trade. The trade sounds complex (i.e. “bullish vertical put spread”), but it’s not. It puts attractive upfront premium in your pocket today, it gives you a chance to pick up shares of this attractive stock at a lower price, and it gives you a little insurance on the downside (i.e. your max loss is limited). We believe this is an attractive trade to place today—and potentially over the next few trading sessions—as long as the price doesn’t move too dramatically before then.
Forget Bonds: Try This Blue Chip Stock Instead
Stocks and bonds are fundamentally different types of investments. However, if you are seeking the traditionally very-safe income provided by investment-grade bonds, you’re probably very disappointed by our ongoing “near-zero” interest rate environment. Traditionally speaking, stocks are simply too risky for bond investors. However, not all stocks are created equally, and in this article we review the very-safe yield provided by a specific blue-chip stock that has been increasing its dividend for over 6 decades, while its share price has also steadily increased too. Specifically, we review the company’s business, dividend safety, valuation and risks, and then conclude with our opinion on investing.
Johnson & Johnson: Bedrock Dividend Growth? Time to Sell Calls?
Johnson & Johnson is one of the most revered dividend aristocrats (it has raised its dividend 58 years in a row). The company has incredibly strong fundamentals derived from its well-diversified three-pronged business model that contributes to consistent profitability and a strong balance sheet. It is one of only two AAA-rated companies (the other being Microsoft), signifying its extremely strong capacity to meet financial commitments. Johnson & Johnson’s share price hit a four-year low during the March downturn, but has since rebound and is now trading near all-time highs. Is Johnson & Johnson sill a buy at any level? Is it time to sell covered calls? We answer these questions in the conclusion of this article after first providing a detailed review of the health of the business, valuation, risks and dividend safety.
New Options Trade: 8.8% Yield Property REIT + Covered Call Income
This is an attractive long-term 8.8% yield property REIT trading at a compelling valuation, but the shares have rallied hard in recent weeks thereby creating this high-income options trade opportunity. Specifically, nervous investors may slow the short-term rally by taking profits, which is fine with us because we’d keep these attractive shares for the long-term and get paid the big dividend shortly after the options contract expires in just over 1-month from now. And if the shares do get called, that’s a 39-day gain of approximately 20%, not too bad at all. We believe this is an attractive trade to place today, and over the next few days, as long as the price of the underlying shares don’t move too far during that period.
Attractive CEF: +9% Yield, Discounted Price
Income-focused stock-market investors often make the unfortunate mistake of concentrating all of their investments in the same few big-dividend sectors of the market. However, this particular closed-end fund diversifies across important sectors, thereby reducing investor risks, increasing total return opportunities, and still offering a big yield for investors. It is also trading at a very attractively discounted price, has an experienced-leadership team, and pays investors at least a 6% annual yield—and usually more (in 2019 it paid 9.6%, and 2020 is on pace to be another very strong year). What’s more, because it pays three smaller dividends in Q1, Q2 and Q3, investment websites consistently under-report the size of the big yield, and there is still time for investors to get in now to capture the big upcoming Q4 payment. And by the way, it’s been paying healthy dividends for over 80 years straight!
Top 7 Preferred Stocks: 7.0% Yields and Up
A lot of people don’t understand preferred stocks, yet they can be quite attractive sources of income. And with interest rates near all-time lows, and market volatility and fear elevated, now is an outstanding time to consider select preferred share investments. In this report, we countdown our top 7 big-dividend preferred stocks, starting with number 7 and finishing with our top idea.
LNG Shipper: 9.6% Yield Common, 9.3% Yield Preferreds
This LNG shipping business has been improving, and there are reasons to believe the common units have significant price appreciation ahead. However, if you prefer a similar high yield without as much risk, you might also consider the preferred shares (they too offer price appreciation potential, just not as much). In particular, and despite the highly cyclical LNG shipping industry, this company has an impressive history and opportunity for consistency in the quarters and years ahead, stemming from its fully-fixed fleet for the remainder of this year and 94% fixed for 2021 (thereby largely insulating it from the current weak short-term LNG shipping market). In this article, we review the health of the business, cash flow position, balance sheet flexibility, valuation, risks, dividend safety, and conclude with our opinion about why company is worth considering if you are a long-term income-focused investor.
Mortgage REIT Preferred Shares: Attractive 8.4% Yield, Discounted Price
The common shares of this once beloved mortgage REIT suffered significant equity erosion earlier this year (and it was forced to cut its dividend by 90%) as it was hit with margin calls and forced to liquidate assets at depressed prices during the market-wide Covid-19 sell-off. Since then, the company has been limping its way back towards better health, albeit with a significantly less valuable book of business. Furthermore, the company’s three series of preferred shares still trade at attractively discounted prices and offer compelling high yields (they are also insulated, from some risks, by the company’s common shares). In this article, we review the business, the shares (common and preferred), and then conclude with our opinion on investing.
Annaly Preferred Shares: Big Yield, Discounted Price, A Few Risks to Consider
Annaly Capital is a mortgage REIT (the company basically borrows money against its book value to buy mortgage related assets, mainly agency RMBS), and it often captures the eye of income-focused investors because it offers a high yield. Mortgage REITs have been through a lot this year as liquidity challenges caused heightened volatility. However, not all mortgage REITs are created equally. In this article we review Annaly Capital, with a particular focus on the preferred shares. The preferreds offer compelling high yields, price appreciation potential and they are safer than the common. We consider Annaly’s current balance sheet and liquidity, credit spreads, share price action, valuation and the big risks. We conclude with our opinion on investing.
This 9.4% Yield Bond CEF Is Worth Considering
We currently own this 9.4% yield BlackRock Closed-End Fund (CEF) for its many attractive qualities. We last wrote about the compelling bond CEF opportunity in late March when the markets were falling apart due to covid fears (for example here and here), and as you can see in the following chart, shares have since rebounded strongly. However, we believe the price remains attractive, and in this article we review the compelling qualities and important risks (buying opportunities) to watch. Worth mentioning, despite volatility, it has never stopped paying (or even reduced) its big Monthly dividend payments to investors.
Microsoft: New Options Trade, Another High Income Bullish Put Spread
The tech sell off is continuing this week, and cloud stocks continue to be among the very hardest hit. Microsoft has been rapidly growing its cloud business on a massive scale, and the shares have sold off considerably harder than the rest of the market in recent weeks. And this morning’s small news (Microsoft is paying $7.5 billion cash for game developer, Bethesda Softworks) has created more jitter among investors—perfect for this trade because to prevent Microsoft shares from eventually going higher in the long-term has about a snowflake’s chance in Gahenna. In report, we revisit the high-income-generating opportunity that current exists in bullish vertical put spreads on Microsoft (not as scary as it sounds). Our previous implementation of this strategy expired (quite successfully) on Friday, and the opportunity is again very attractive.
Tsakos Preferreds: Despite Risks, Attractive +10% Dividend Yield, Capital Appreciation Potential
If you are an income-focused investor, these preferred shares are worth considering. Despite the risks (such as a high debt load, a growing amount of preferred share dividend payments, significant fleet depreciation and the first decrease in oil demand since 2009), there are reasons to believe this investment opportunity is very attractive. For example, the company has historically navigated through many crisis situations, thanks in large part to its fixed-rate chartering policy. Further, the company has a diversified fleet and a consistently improving debt profile (albeit with growing preferreds). Further still, efforts to improve the common stock’s price (via a reverse stock split), the expected recovery in charter rates (from an anticipated oil demand rebound in 2021) and a possible tanker supply imbalance (created by the implementation of IMO regulations), all bode well. Overall, we like the deeply discounted price on the preferred shares, especially considering the big stable dividend payments to investors.
New Options Trade: Very High Upfront Income, Bullish Vertical Put Spread (The Cloud-Tech Sell-Off Continues)
Cloud and technology stocks are selling off hard again this morning, and a lot of investors are fearing there is a lot more selling to come. After all, it is cloud and tech stocks that have rallied so hard this year as their natural “social distancing” qualities have made them the beneficiaries of the dramatic pandemic rebound that has been going on for months.
However, the sell off has been indiscriminate (among cloud and tech), and some very attractive businesses are getting closer to trading at very attractive prices. In this report, we review an attractive cloud-tech juggernaut, and share an attractive options trade that utilizes a “bullish vertical put spread” (not as scary as it sounds). The trade lets you generate attractive upfront income, giving you the chance to pick up shares of this attractive business at an even lower price, while also limiting your downside risk (and limiting the amount of cash you need to set aside to secure the trade as compared to simply selling a naked put option). We believe this is a very attractive trade to place today, and potentially over the next few trading sessions.
Top 10 Big-Dividend REITs
Over the last six months, Real Estate (XLRE) has been one of the worst performing sectors of the market, but that could be about to change. With the amazing growth stock rally starting to wobble, select REITs are looking particularly attractive as the world begins to get a better grip on covid. Obviously, the pandemic challenges are great and in many cases they add to the struggles of a secular demise in some brick-and-mortar commercial real estate. Nonetheless, select REITs are particularly attractive, and this report ranks our top 10 big-dividend REITs (5% yields and above), counting down from #10 to #1.
Brookfield Property REIT: 11.5% Yield, Higher Risk
Brookfield Property REIT (BPYU) offers an 11.5% dividend yield that is hard to ignore. While clearly there are concerns given its exposure to malls and retail, we believe the backing of parent, Brookfield Asset Management (BAM), will help it weather the storm. BAM’s decision to fund BPYU’s tender offer is a vote of confidence in the business, and it also signals to investors that the current valuation may be a bargain. If you have a higher tolerance for volatility and risk in your portfolio, you may want to consider adding shares. This article reviews the health of the business, valuation, risks, dividend safety, and concludes with our opinion about investing.