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.
This Healthcare Diagnosis Stock: +50% Upside in 6 to 12 months
This particular company is a rapidly growing leader in cancer prevention and diagnosis, with high margins and a large total addressable market. However, the shares have recently sold off based on short-term fear (COVID-19 has temporarily slowed screening, but will ultimately accelerate adoption) and shortsightedness related to profitability. As a result, the valuation is now quite attractive relative to the long-term opportunity. In this article, we review the business, the growth opportunities, recent performance and valuation, risks and conclude with our opinion on investing.
Why This Tiny Digital Advertiser's Shares Could Soar
The COVID-19 pandemic has created tremendous challenges and opportunities. And in the case of this tiny digital advertising firm, the opportunity has been magnified not only by the pandemic, but also by the firm’s own specific challenges and now recent merger. In fact, advertisers have significantly reduced digital ad spend in the short-term (which has magnified pressure on these shares), but as we head into 2021, digital ad spend is expected to resume rapidly, and it could slingshot these shares higher, especially considering the improved long-term business model and enormous market opportunity.
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.