This is our monthly performance update and holdings review. We share the continuing strong performance of our three investment strategies, including the performance of every single position in each strategy. We also highlight several particularly attractive investment opportunities, right now. The theme of this report is that the valuations of growth stocks are starting to get scary expensive, whereas a bunch of attractive dividend stocks just sold-off and are now offering increasingly attractive investment prices.
Brookfield Property REIT: Big 6.9% Yield, But Know the Risks
If you are looking for a healthy, growing dividend, you may be considering Brookfield Property Partners LP (BPY) (and/or Brookfield Property REIT (BPR)—if you prefer to invest in the REIT vehicle). Not only does the dividend appear attractive, but the shares seem to be trading at a significant discount to NAV. However, concerns over its relatively high debt continue to remain an overhang on the stock. This article reviews the health of the business, valuation, risks, dividend safety, and concludes with our opinion about whether BPY (and/or BPR) is worth considering for a spot in your long-term income-focused portfolio.
New Options Trade: Healthpeak Properties, Attractive High Income
We are sharing an attractive income-generating options trade that exists because of current market conditions. Healthpeak Properties (PEAK) is a healthcare REIT (formerly known as HCP) that is wisely and proactively taking steps to reduce its exposure to troubled senior housing through its new joint venture and focus on private pay. The shares sold off in the last month due to the uncertainty of the new joint venture announcement (as well as the Fed’s interest rate messaging change), which has created a very attractive opportunity. We believe this is an attractive high-income trade to place today, and potentially over the next few days, as long as the share price doesn’t move too dramatically before then.
Oxford Square: 15.5% Yield for Brave Contrarians
Oxford Square Capital Corp (OXSQ) offers a big 15.5% yield, but you need to be a brave contrarian if you’re going to invest. This business development company (BDC) invests in syndicated bank loans and both equity and debt tranches of collateralized loan obligations (CLO); and the shares have been dragged sharply lower because of its exposure to underperforming market segments including healthcare, software and high yield credit in general. This article provides a background on the company, analyzes its portfolio and finally concludes with our opinion on whether it’s worth risking some of your capital on this huge yield with significant share price appreciation potential.
Options Trade: Ventas Bumpy Road, High Upfront Income
Healthcare REIT Ventas (VTR) continues to search for its footing and has declined ~22% in the last month. Investors didn’t like the October 25th earnings call as the company lowered its senior housing (“SHOP”) guidance. We warned of this danger facing Ventas back in late June, and have avoided investing in the stock. However, we’re now sharing an attractive, new, income-generating, Ventas options trade. We believe this is an attractive trade to place today, and potentially over the next few days, as long as the price of Ventas doesn’t move too dramatically before then.
4 Big Dividends That Have Gotten Less Expensive: Energy Transfer (ET), New Residential (NRZ), Ventas (VTR), Oxford Square (OXSQ)
The market continues to reach new all-time highs, and our investment portfolios do too. However, a handful of popular big dividend paying equities have gotten particularly less expensive in recent weeks. This week’s Weekly provides a brief update on all four of them, and whether we believe they are worth investing or avoiding altogether.
Strong 5.1% Dividend Blue Chip, Trading at a Discount
If you are looking for a big healthy blue-chip dividend yield with significant price appreciation potential, this global chemicals company is worth considering. Specifically, it is set to generate significant amounts of cash flow over the next two years, it trades at nearly 11% 2020 Free Cash Flow yield, it offers a healthy 5.1% dividend, and it trades at a significant discount to its peers. In this report, we analyze the company’s business mix, cash flow and income prospects, and finally conclude with our opinion on whether the stock offers an attractive balance between risks and rewards.
REITs Very Bad Week
Real Estate Investment Trusts (REITs) just had a very bad week. Many popular REITs (such as HCP, DLR, WELL and VTR) were down more than 7%, while the S&P 500 was up almost 1%. And importantly, there are a few real time learning opportunities here. Chicken little thinks the sky is falling, arm-chair quarterbacks are blaming the Fed, contrarians says this was long overdue, and asset allocators are whining that these are just tremors before the “big one” whereby the market’s tectonic plates are about to shift. So what do you do?
Union Pacific: Despite New Risks, Attractive Cash Flows, Dividends, Price Appreciation Potential
Despite a variety of headwinds (such as a declining coal business, a challenged auto industry, tariffs, unexpected competition from trucking, rising debt levels and network congestion), Union Pacific (UNP) continues to generate healthy cash flows, whereby the excess is prudently returned to shareholders via growing dividends and share repurchases. Plus, based on growth expectations, the shares have steady and continuing upside potential. This article reviews the business, risks, strategic initiatives, cash flows and valuation, and then concludes with our opinion about investing.
New Options Trade: P&G Shares Expensive, Yield Is Ugly Low
The market has been strong this year, but dividend yields on popular blue-chip stalwarts have been in decline (as price rises, yields mathematically fall). P&G's has clearly improved (and is now firing on all cylinders), but its valuation and dividend yield are not appealing relative to the sector and its own trading history. This report shares an attractive, Procter & Gamble, income-generating options trade.
More Gains Ahead: Reasonable Index Levels, Attractive Stock-Specific Opportunities
It may feel like the market is rising to extreme levels, but index valuations are reasonable, and highly attractive stock-specific opportunities persist. This is our monthly performance update whereby part 1 shares our overview of current market conditions, and part 2 reviews the continuing powerful long-term gains of our three investment strategies (they were all up again over the last month), as well as a performance review of every individual holding (we currently have 65 individual positions across three separate portfolios), and more details on some specific highly-attractive high-income opportunities.