REITs, BDCs, CEFs, MLPs, big-dividend stocks and dividend growth stocks can all be appealing to income-focused investors, but where are the best opportunities for 2022? In this report, we take a closer look at income-investment performance, valuations, and go-forward opportunities.
A Compelling Big Bank: 3.4% Dividend Yield
Big Banks have changed a lot since the great financial crisis, but in a lot of ways they have remained the same. They’re now subject to dramatically more stringent regulatory rules (e.g., “too big to fail”), but their profitability (and long-term value) is still derived largely based on the same basic metrics (e.g., book value and net interest margins plus fees). And despite media stories obsessed with which tech companies have the biggest market caps, big banks continue to generate among the biggest piles of net income. In this report, we review one big bank in particular, describing why the shares are undervalued, the 3.4% dividend yield is attractive, the current market opportunity, a review of the risks, and concluding with our opinion on who might want to consider investing.
Industrial REIT: Attractive Dividend and Share Price Growth
Some investors might overlook the attractive industrial REIT we review in this report because its current dividend yield is only 1.6%. However, this dividend has been growing faster than peers (and we expect this to continue), and the yield is lower than peers because the share price has also been growing significantly faster than peers (and we expect this to continue too). In this report, we review the REIT’s attractive business model (including ongoing market opportunities), its financials, valuation and risks; we conclude with our strong opinion on investing.
A Return to Office Play: 3.1% Yield REIT
The office REIT we review in this report is attractive for a variety of reasons, including its healthy dividend (it’s well covered and has been paid for 25 consecutive years), favorable geographic economics, ongoing growth trajectory, and the trend for companies to bring employees back to the office. This article reviews the health of the business, valuation, risks, dividend safety, and concludes with some final thoughts worth considering if you are a long-term income-focused investor.
A Dividend Growth Monster, On Sale
When investors think of “big dividends” their minds often gravitate to stocks with the highest dividend yields. However, “yield on cost” can be an extremely important metric for long-term income-focused investors because it can reveal massive dividend opportunities flying under the radar. For example, the attractive undervalued dividend stock we review in this article doesn’t have the biggest current yield, but if you look backwards and forwards, the yield on cost is truly massive and it has the trajectory to continue growing dramatically larger.
Interest Rate Protection: Attractive 6.9% Yield, Floating-Rate CEF
If you are an income-focused investor, you’re likely concerned about rising inflation because it can eat away at the value of your next egg and the buying power of your income. This article reviews an attractive closed-end fund (“CEF”) that provides a big monthly income payment, plus some protection against rising interest rates and inflation through its floating rate income (i.e. as rates go up, the payments this fund provides also go up). We provide a quick overview of the fund, review its nuts and bolts through 6 important charts, and then conclude with our opinion on investing.
New Options Trade: High Upfront Income, Bullish Vertical Put Spread
Shares of this streaming TV platform have fallen 50% since July, and the stock now trades at a compelling price relative to its long-term value. However, for those of you that like high upfront income (and are real sticklers on price), the trade described in this report is worth considering. The trade strategy 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 over the next few trading sessions, as long as the share price doesn’t move too dramatically first.
Bond CEF: 7.2% Yield, Paid Monthly, Discounted Price
With inflation on the rise, and interest rates poised to move higher, does it still make sense to own bonds? Depending on your situation, the answer is a resounding, yes! And this article reviews a compelling closed-end fund (“CEF”) that owns attractive bonds, trades at a discounted price, and offers a juicy 7.2% yield—paid monthly. We currently own shares.
Top 10 Big-Dividend REITs: Inflation is Real
In case you haven’t noticed, rising inflation has been dominating economic headlines lately. The big argument is whether the recent rise in inflation is transitory (and thereby simply a short-term phenomenon following the pandemic lockdowns), or whether it is long-term (thereby making it a much bigger risk to investors). Make no mistake, inflation is real (its the hidden thief in the night that reduces the buying power of your nest egg), and if you park your money in a savings account, its going to be worth less and less every year (especially thanks to our low interest rate environment and rising inflation). In this report, we count down our ranking of top 10 big-dividend REITs (4.0% to over 10.0% yields).
Omega Is In Trouble: 4 Pros, 4 Cons, 1 Conclusion
Skilled Nursing Facility (“SNF”) REIT, Omega Healthcare Investors (OHI) announced earnings on Thursday, and the business is in trouble. Despite Omega’s long history of paying big dividends (it currently yields 9.0%), it is currently facing more significant challenges now than at any other time in its operating history. In this report, we review the business, consider four pros and four cons, and then conclude with our opinion about investing.
New Options Trade: High Upfront Income, Bullish Vertical Put Spread
This large social media company is set to announce earnings today after the close, however the share price is already down significantly in the last month due to fears related to the expected impacts of Apple’s new privacy changes. In our view, the impacts will be real, but this social media company will remain a long-term powerhouse, and the current situation has created an attractive high-income options trade. The trade strategy 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—ahead of earnings.
Realty Income: A 4.0% Yield, Monthly Pay, Dividend Juggernaut
Realty Income (O) is nicknamed “The Monthly Dividend Company” for good reason. This REIT yields 4.0% and pays dividends monthly. In fact, it has increased its dividend in 95 consecutive quarters and it has made 614 consecutive monthly dividend payments to investors. In this report, we review the business, the upcoming merger/spin-off, dividend safety, valuation, and risks, and then conclude with our opinion on investing.
A Rare 8% Yield BDC Offering Dividend Growth, Equity Upside: Oaktree Specialty Lending
While other business development companies (“BDCs”) were cutting their dividends as a result of the pandemic, Oaktree Specialty Lending Corp (OCSL) not only maintained theirs, but has also significantly increased it in each of the past five quarters. Moreover, the shares are trading at an attractive price relative to net asset value (“NAV”). In this report, we review the health of the business, the highly-experienced management team, its balance sheet, liquidity, dividend safety, valuation and risks. We conclude with our opinion on investing.
Experiential REIT: Strong 5% Yield, Attractive Valuation
If you are an income-focused value investor, the REIT we review in this report is worth considering. It’s a triple net lease REIT, with a well-covered 5.0% dividend yield and the potential for ongoing share price appreciation. It’s been largely unfazed by pandemic challenges, and has actually been wisely increasing the growth trajectory of its business in a space with high barriers to entry. In this report we review the business, dividend safety, valuation and risks, and then conclude with our opinion on investing.
Top 8 Big-Dividend REITs, BDCs, CEFs, MLPs
PIMCO CEF: The Big Premium, I'll Be Back, 10.1% Yield
Often an income-investor favorite, 2021 continues to be an interesting year for PIMCO’s lineup of big-distribution, monthly-pay, fixed-income CEFs. We’ve seen the launch of a new winner, a distribution cut from a perennial favorite, and now an imminent merger and sharply declining premiums for three classic PIMCO funds. In this report, we focus on one in particular, its 10.1% monthly distribution and its significantly shrinking price premium (versus NAV) as the big merger looms imminent. And regarding its once large premium, it is our opinion, as Arnold Schwarzenegger’s Terminator character once said, I’ll be back! We conclude with some important takeaways on who might want to invest and how.
Healthcare REIT: 5.5% Yield, Healthy Growth
The 5.5% dividend yield healthcare REIT we review in this report is attractive. Its dividend is well covered (82% payout ratio) and is likely to grow (considering this year’s double-digit FFO per share growth expectation). We also like the company’s track record of delivering normalized FFO per share growth of nearly 9% over the last 10 years. In this report, we review the health of the business, valuation, risks, dividend safety, and then conclude with our opinion on investing.
Big Q4 Dividend: On Sale for Labor Day
This attractive CEF has been paying big dividends for over 80 years! And its big annual Q4 dividend is currently on sale, as the shares trade at a very attractive discount to net asset value. Additionally, the fund is well managed, it charges very low fees for a CEF, it doesn’t use any risky leverage, and it provides very important diversification by giving income-focused investors exposure to market sectors they don’t usually participate in. If you are a long-term, income-focused investor that likes to buy things on sale, this CEF is absolutely worth considering.
50+ Big-Dividend "MOPAY" Stocks: These 3 Are Worth Considering
“Do you know the only thing that gives me pleasure? It’s to see my dividends coming in.” - John D. Rockefeller
That quote takes on special meaning for income-focused investors today as many of the world’s most popular stocks don’t even pay dividends (and many don’t even have positive net income). On the flip side, big steady dividend income is hard to find, but very special—especially when those big dividends are paid monthly (MOPAY). In this report, we share data on 50+ big-dividend MOPAY stocks, and then highlight three in particular that are uniquely attractive and worth considering.
Frothy Market Valuation: Raising Cash, 3 High Income Protection Stocks
If you care most about receiving big steady dividends and income from your investments, then you may care less about impending market volatility. However, if you are consistently selling shares to generate spending cash—then a massive market decline (even if it’s only temporary) can spell disaster. In this report, we review current market valuation metrics (suggesting big danger on the horizon), we then explain why your anxiety level may be a symptom of something else (that needs to be addressed), we delve into the important question “how much cash should you hold?” and then highlight three specific “high income protection stocks,” before finally concluding with a very important takeaway.