The coronavirus has created major challenges for some sectors more than others, and property REITs have been hit hard. Uncertainty has lead to fear, dramatically lower market prices, and high upfront premium income available in the options market. This report shares an attractive options trade on a compelling big-dividend REIT. We believe the this is an attractive trade to place today, and into early next week, so long as the underlying stock price doesn’t move dramatically before then.
Gladstone: Danger Ahead for this Popular 9.0% Yield BDC
If you count the recently declared ordinary and supplemental dividends, popular Business Development Company (“BDC”) Gladstone Investment Corp (GAIN) yields approximately 9.0%. And this is tempting to a lot of investors considering it pays monthly, the price is still down, and it appears to be in a strong liquidity position. However, GAIN’s portfolio of middle market companies is at risk of being negatively impacted by the coronavirus—more so than other BDCs. In this report, we analyze Gladstone’s business model, the coronavirus impacts, valuation, dividend safety and additional risks. We conclude with our opinion about investing.
Portfolio Tracker Tool Note
Forget FAANG: Top 12 Big Dividends
Some investors cannot handle the volatility and lack of income from FAANG stocks, and the Fed's near-zero interest rate policy creates challenges to income-focused investors too. Popular growth stocks are near all-time highs, while value and dividend stocks are down significantly. This report shares our Top 12 big dividends, selected from REITs, BDCs and Preferred Stocks.
Main Street Capital: Dividend Uncertain, Upside Clear
Income investors had grown to love Main Street Capital’s (MAIN) big, safe, monthly dividend so much that its share price had risen to a dramatic premium relative to its net asset value (“NAV”). Then the coronavirus hit. The share price plunged, once loved supplemental dividends have been suspended, and even the “sacred” regular dividend is now at risk. In this report, we analyze the company’s background, impacts of the coronavirus on its business, earnings power, the dividend, valuation and risks to understand whether now is the right time to establish or add to existing positions.
Ares 12% Yield: It Sticks Out Like A Sore Thumb
Ares Capital (ARCC) is a big-dividend business development company (“BDC”) that has sold off hard during the pandemic because of its exposure to small (“middle-market”) businesses (i.e. the business than have been hit particularly hard). In this article we review the business (including important sector exposures), the balance sheet liquidity (to deal with the crisis), dividend safety, valuation and risks, and then conclude with our opinion on why this particular BDC stands out like a sore thumb.
New Options Trade: High Upfront Income from International Trade Uncertainty
A lot of people believe the market is due for another leg down in the short-term. We acknowledge that risk is on the table, but no one can predict short-term market moves (if they tell you they can—just know they cannot). However, if you like generating big upfront income, that also gives you a chance to own an attractive big-dividend business at an even lower price, then you may want to consider this trade. We believe the trade highlighted in this article is an attractive one to place today, and potentially over the next few days, so long as the underlying stock price doesn’t move dramatically before then.
New Options Trade: High Upfront Income, Proactive Dividend Deferment, Saratoga Investment Corp
We are sharing a new options trade that generates high upfront premium income. Business Development Company (“BDC”) Saratoga Investment Corp (SAR) (they provide financing to small middle-market companies) was recently firing on all cylinders, but has decided to proactively defer dividend payments to shareholders as a result of the coronavirus. We believe the trade highlighted in this article is an attractive one to place today, and potentially over the next few days, so long as the underlying stock price doesn’t move dramatically before then.
Where Are The Best Opportunities Now? (Holdings and Performance Review)
If you are not exhausted from recent stock market swings—congratulations! You either have nerves of steel or you’ve been wisely “Rip-Van-Winkling” the sensationalist media pundits as a sage long-term investor should. As you can see in the chart—the market has been very volatile this year. This report highlights some of the best investment opportunities now. We also review our current holdings and recent portfolio performance.
Super Contango: Altera’s 11.9% Yield Preferred Shares to Benefit
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.