All posts by Tim Plaehn

Tim Plaehn is the lead investment research analyst for income and dividend investing at Investors Alley. He is the editor for The Dividend Hunter, an investment advisory delivering income investments with double digit growth in share price and dividend payments, and 30 Day Dividends, a specialty income service that takes advantage of opportunities for relatively fast, attractive profits around potential dividend payouts. Prior to his work with Investors Alley, Tim was a stock broker, a Certified Financial Planner, and F-16 Fighter pilot and instructor with the United States Air Force. During his time in the service he was stationed at various military locations in the U.S., Europe, and Asia. Tim graduated from the United States Air Force Academy with a degree in mathematics. Learn about Tim's new investment strategy for collecting income from the market each and every month without the use of options, futures, forex, covered calls, or risky trading strategies.
REITS

Buy These 3 REITs for High Yield and Tax Breaks

Before the passage of the Tax Cuts and Jobs Act qualified dividends paid by corporations had a perceived tax advantage over fully taxable dividends paid by pass-through businesses like real estate investment trusts (REITs). The new tax law levels the tax playing field for REIT dividends, putting the advantage for investors even more in the camp of the higher yield real estate investment trusts.

Under the old tax rules, REIT investors paid their marginal tax rate on dividends from their REIT shares. For the highest income investors this meant a 39.6% top marginal tax bracket and the 3.8% Medicare surtax. In contrast, qualified dividends paid by regular corporations were subject to a maximum 20% income tax, plus the Medicare surtax. At a glance, REIT investors in the top tax bracket were paying almost twice the tax rate on REIT dividends. What many investors fail to consider is that the net income a corporation generates to pay dividends was taxed at the 35% corporate tax rate, and whatever was left was the money the company had to pay dividends. REITs are pass-through entities for tax purposes, so do not pay corporate income taxes if 90% of net income is passed through to investors as dividends.

Under the new law, the top tax rate for qualified dividends remains at 20%. Corporations did get a tax rate reduction, dropping from 35% down to 21%. I hope that companies take some of those income tax savings and pass them along to investors as higher dividends. It’s too early to tell if that will happen but knowing corporate management teams, I’m not holding my breath.

REIT investors first get new, lower tax brackets. The highest rate has been reduced to 37% from 39.6%. The threshold for the highest bracket has also increased from about $450,000 of income for a married couple to $600,000. Investors in lower tax brackets will also see lower marginal tax rates. In addition –and this is the big news for investors—REIT income gets a 20% deduction before the marginal tax rate is applied. This means a top tax bracket investor has a net 29.6% tax rate on REIT dividends. Married filing joint investors can have income up to $315,000 per year —the top of the 24% tax bracket—and end up with a net REIT dividend tax rate below 20%. Sweet!

If you are new or not highly informed about REITs, it is important to understand that this is not a monolith economic sector. The REIT subsectors cover almost all the different business sectors of the U.S. economy. You can find REITs that focus on properties in sectors such as telecommunications, high-tech data, housing, finance, e-commerce, finance and healthcare, to name a few. You can build a diversified REIT portfolio that will pay a very attractive dividend yield and provide economic diversification. To get you started, here are three REITs from very separate sectors.

Starwood Property Trust, Inc. (NYSE: STWD) is a finance REIT, originates and holds a portfolio of commercial mortgage loans.

This is a stock you buy for the high dividend yield, but do not look for a lot of dividend growth.

STWD is one of the largest finance REITs, and from my research, the most conservatively managed, especially regarding protecting the quarterly dividend. This stock currently yields 9.1%.

Digital Realty Trust, Inc. (NYSE: DLR) develops owns and operates data center properties. Data storage and management is a huge growth business and many companies prefer to lease space from a data center developer like Digital Realty to house their services and provide the necessary Internet and direct communication links.

Investors in DLR can look forward to double digit annual dividend growth for years, if not decades to come. Thus, unlike with STWD above where you’re holding it of the high yield with DLR you’re holding it for the high dividend growth. The shares currently yield 3.5%.

Related: 3 High Growth REITs for Profits in an Amazon World

Gramercy Property Trust (NYSE: GPT) is in the process of shifting from a mix of office and industrial properties to focus on the industrial side of their portfolio. Good move! The industrial REIT sector provides necessary support to e-commerce sales, with warehouses and fulfillment centers… sector that grow even if the rest of the country is getting “Amazoned.” For the same amount of sales, the warehouse needs of online retailing are triple the amount of space required by traditional brick and mortar retailers. Industrial real estate profits will grow right along with the growth in e-commerce retail sales. GPT current yields 5.6%.

Get up to 14 dividend paychecks per month from safe, reliable stocks with The Monthly Dividend Paycheck Calendar, an easy-to-use system that shows you which dividend stocks to pick, when to buy them, when you get paid your dividends, and how much.  All you have to do is buy the stocks you like and tell them where to send your dividend payments. For more information Click Here.


Source: Investors Alley 

REITS

5 REITs Increasing Dividends in February

With the start of a new year, it is natural to look for ideas to help your stock portfolio grow during the year. One bit of assistance I like to provide is to list those real estate investment trusts (REITs) that should announce higher dividend rates in the upcoming months. This knowledge can give you a jump on the rest of investing public, which will be surprised when the positive news is announced.

I maintain a database of about 130 REITs. With it I track current yields, dividend growth rates and when these companies have usually announced new dividend rates. Most REITs announce a new dividend rate once a year, and then pay that rate for the next four quarters. Currently about 90 REITs in my database have recent and ongoing histories of dividend growth. Out of that group, higher dividend announcements will happen during almost every month of the year. In 2017, the overall REIT sector ended flat for share values, with a total return consisting of the dividend yields. Through the same period, many REITs increased their quarterly or monthly dividend rates. As a result, current yields are comparatively higher than a year ago for many stocks in the sector. Higher dividend announcements can be the catalyst that starts the price recoveries for individual REIT shares.

February is an active month for REITs to announce dividend increases. Many companies use their announcement of the previous year’s financial results as a good time to declare the dividend rate for the upcoming year. Here are five REITs that I expect to announce significant dividend increases next month.

First Industrial Realty Trust, Inc. (NYSE: FR) acquires, owns and leases out industrial properties used by light industrial, warehouse and R&D companies. The company has grown its dividend by over 100% over the last two years, including a 10.5% increase last year. For the first nine months of 2017, FFO per share was up 7.5%. First Industrial pays out about 50% of FFO as dividends. Net income per share growth – which drives the minimum dividend paid – indicates another 10% dividend increase is probable.

The new dividend rate is announced with the fourth quarter earnings report that comes out in the second half of February. Record date will be the end of March with a late April payment date. FR yields 2.8%.

QTS Realty Trust Inc (NYSE: QTS) is a mid-cap – $2.5 billion value – data center REIT that came to market with an October 2013 IPO. The company is growing rapidly, but FFO per share growth is lagging revenue growth. Reported 2017 adjusted FFO per share was up 5% for the first nine months of last year.  In February 2017, the company announced an 8.3% dividend boost.

This year I forecast a 5% to 7% increase. The new dividend rate should be declared in late February with an early April payment and around March 20 record date. QTS yields 2.9%.

National Health Investors Inc. (NYSE: NHI) is engaged in the business of owning and financing healthcare properties. Its portfolio consists of real estate investments in independent living facilities, assisted living facilities, entrance-fee communities, senior living campuses, skilled nursing facilities, specialty hospitals and medical office buildings. Last year the company increased its dividend by 5.6%. Through the 2017 third quarter AFFO per share was up 9.3% compared to the same period in 2016.

The company should announce an 8% to 9% dividend increase this year, compared to 5.5% for the last couple of years. The next dividend will be announced in mid-February with an end of March record date and payment in early May. NHI currently yields 5.1%.

Weingarten Realty Investors (NYSE: WRI) is engaged in the business of owning, managing and developing retail shopping centers. Its 230 plus properties consist primarily of neighborhood and community shopping centers. This REIT has increased its dividend every year since 2010. Last year the company increased its quarterly dividend by 5.5% and paid a special $0.75 per share dividend in December. For the first three quarters of 2017, core FFO per share was 5.8% higher than over the same period in 2016. Another 6% dividend increase in 2016 seems probable. The next dividend will be announced in mid-February. Ex-dividend will occur in early March, with a mid-March payment date. WRI currently yields 4.8%.

Digital Realty Trust, Inc. (NYSE: DLR) is a large-cap data center REIT with an 11-year history of above average dividend growth. Last year, the dividend was increased by 5.7%, compared to the 10-year average annual double-digit percentage bump. Growth in 2017 has improved and I expect a 7% to 9% dividend increase for 2018.

The next dividend will be announced in mid-February, with a mid-March record date. Payment of the new dividend rate will start at the end of March. DLR currently yields 3.3%.

BONUS RECOMMENDATION:

AvalonBay Communities Inc (NYSE: AVB) business is the development, redevelopment, acquisition, ownership and operation of multifamily (apartment) communities primarily in New England, the New York/New Jersey metro area, the Mid-Atlantic, the Pacific Northwest, and Northern and Southern California. The company is focused on the high-end of the apartment spectrum. AVB stopped growing dividends, but did not cut them, from 2008 through 2011. In recent years, the payout has grown by mid-single digits, including a 5.2% increase in 2017. FFO growth in 2017 points to another 5% to 6% increase this year. AvalonBay announces a new dividend rate in early February, with an end of March record date and payment in April. The stock yields 3.3%.

Get up to 14 dividend paychecks per month from safe, reliable stocks with The Monthly Dividend Paycheck Calendar, an easy-to-use system that shows you which dividend stocks to pick, when to buy them, when you get paid your dividends, and how much.  All you have to do is buy the stocks you like and tell them where to send your dividend payments. For more information Click Here.


Source: Investors Alley 

Dividends

3 Closed End Funds to Greatly Benefit from Lower Corporate Taxes

t will take some time for investors to figure out all the investment related ramifications of the new income tax rules. Master limited partnership (MLP) focused funds are one asset class that will see a major benefit from the tax overhaul. Because they are forced into a different business structure, a fund with MLP assets of more than 25% will get the benefit of the corporate income tax reduction from 35% down to 21%. It’s a big deal.

The typical stock funds, including mutual funds, exchange traded funds (ETFs), and closed-end funds (CEFs), are formed and operated as Registered Investment Companies. The Investment Company Act of 1940 allows a fund to operate as a pass-through entity. This means the fund must pay out all portfolio income and realized capital gains as distributions to the fund investors. The fund does on pay income tax on the portfolio earnings. The tax characteristics of the income and capital gains are passed through to the fund investors.

The exception against a fund being able to operate as a registered investment company is if the fund’s portfolio holds more than 25% of its assets in MLPs. If that is the case, the fund will instead be organized as a C corporation and be liable to pay corporate income tax on the portfolio’s income and capital gains. Most of the MLP focused mutual funds, ETFs and CEFs have more than 25% MLP holdings and are organized as corporations.

In practice, here is how the corporate income taxes affect the returns of an MLP fund. Individual MLP distributions are classified as return of capital, so the dividends earned by MLP fund investors are typically mostly ROC. Profits and losses at the MLP level are reported to the fund on a Schedule K-1, and the fund will pay corporate income tax on profits or accumulate credit for the K-1 losses. If the portfolio’s MLPs go up in value, a fund will also occur an income tax liability on the capital gains. MLP funds account for the income taxes on gains in the fund net asset values (NAVs). The NAV is what each share is worth. Actual paid income taxes show up in a fund’s expense ratio. Which is why you sometimes see very high expenses reported by the MLP funds.

The corporate tax rate reduction will result in lower tax expense, and higher net returns for MLP fund investors. Consider this example. The MLPs in a fund’s portfolio go up by 10%. With a 35% corporate tax rate, the fund will have to account for the tax liability in the fund’s NAV, which means the share value will only go up by 6.5%. With the new 21% corporate tax rate, the hit to NAV will be lower, and the share value will go up by 7.9%. The new, lower corporate tax rate means that MLP fund investors will see over 20% higher gains when MLPs are rising compared to the 35% tax bite. The lower tax rate has already started to help MLP fund values. On December 26, the First Trust MLP and Energy Income Fund (NYSE: FEI) announced a NAV adjustment due to the fact it could lower the accrued tax obligation in the fund’s portfolio. The FEI share price was instantly increased by $2.016 or 8.75%. A good deal for investors. The adjustments for taxes on past gains will be one-time benefits for shareholders. However, the new corporate tax rate will provide ongoing increased profits as MLP values rise in the future. After a 2 ½ bear market, the MLP sector fundamentals are solid and with rising crude oil price, I expect the sector to do well in 2018.

Here are the three largest MLP closed-end funds. They all provide professionally managed exposure to the MLP sector.

Kayne Anderson MLP Investment Company (NYSE: KYN) has $3.25 billion in assets. The fund currently trades at a 1.5% premium to NAV and yields 9.5%.

Tortoise Energy Infrastructure Corp. (NYSE: TYG) has $2.1 billion in assets. The TYG share price is at a 3.4% premium to NAV. The fund yields 9.1%.

ClearBridge Energy MLP Fund Inc (NYSE: CEM) is a $1.6 billion assets fund. The CEM shares are currently at a 3.5% discount to NAV. This fund yields 9.5%.

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Get up to 14 dividend paychecks per month from safe, reliable stocks with The Monthly Dividend Paycheck Calendar, an easy-to-use system that shows you which dividend stocks to pick, when to buy them, when you get paid your dividends, and how much.  All you have to do is buy the stocks you like and tell them where to send your dividend payments. For more information Click Here.


Source: Investors Alley

REITS

Buy These 3 High Yield REITs Increasing Dividends in January

To build momentum from your income stocks going into the new year, consider buying into those REITs that should announce higher dividend rates in the first month of 2018. Each month I like to list those real estate investment trusts (REITs) that should announce higher dividend rates in the upcoming months. This knowledge can give you a jump on the rest of investing public, which will be surprised when the positive news is announced.

I maintain a database of about 130 REITs. With it I track current yields, dividend growth rates and when these companies usually announce new dividend rates. Most REITs announce a new dividend rate once a year, and then pay that rate for the next four quarters. Currently about 90 REITs in my database have recent and ongoing histories of dividend growth. Out of that group, higher dividend announcements will come from different REIT companies during almost every month of the year. With the potential of a Fed interest rate hike, the prospects of higher dividend payments coming in January will help to offset any share price disruptions resulting from announcements out of the Federal Reserve Board.

Related: Add This Unique REIT to Your Portfolio for Dividend Safety

My list shows three companies that historically announce higher dividends in January and should do so again this year. Investors will start earning the higher payouts in the new year. But remember, you want to buy shares before the dividend announcement to get the benefit of a share price bump caused by the positive news event. Here is the list of REITs to consider:

Apartment Investment and Management (NYSE: AIV) is a mid-cap sized REIT that owns and operates about 140 apartment communities. About 40% of the company’s properties are in coastal California, with the balance spread across major U.S. metropolitan areas. Last year, AIV increased its dividend by 9.0%. Cash flow growth has been comparable in 2017, and I forecast an 8% to 10% dividend increase in January. The new dividend rate announcement will come out in late January with a mid-February ex-dividend date and payment at the end of February. AIV yields 3.3%.

EPR Properties (NYSE: EPR) focuses its real estate investments in three different business sectors. Primary is the ownership and triple-net leasing of entertainment complexes and multiplex theaters. The second sector is the ownership of golf and ski recreation centers, also triple-net leased. The third sector is the construction, ownership and leasing of private and charter schools. EPR pays monthly dividends, and has grown the dividend rate by an average of 7% per year for the last six years. In 2017 the company was active in both acquisitions and new developments. The new dividend rate is announced in mid-January, with an end of January record date and mid-February payment. EPR currently yields 6.0%.

Welltower Inc (NYSE: HCN) is a large cap healthcare sector REIT. The company owns interests in properties concentrated in markets in the United States, Canada and the United Kingdom. The portfolio is divided into three segments consisting of: Seniors housing and post-acute communities, and outpatient medical properties. Triple-net properties include independent living facilities, independent supportive living facilities, continuing care retirement communities, assisted living facilities, care homes with and without nursing, Alzheimer’s/dementia care facilities, long-term/post-acute care facilities and hospitals. Outpatient medical properties include outpatient medical buildings. Welltower has increased its dividend every year since 2009, with a modest 1.2% increase to start 2017. I expect a 2.0% to 2.5% increase to be announced in January. The announcement will come out at the end of the month, with an early February record date and payment around February 20. The stock yields 5.1%.

Any one of these three stocks would be a great addition to your dividend growth portfolio. You see, it’s not just important to include high-yield stocks that give you income now, but to hold stocks with a strong history of growing their dividend year after year. It’s like getting a raise every… that you didn’t have to ask the boss for.

These are the same kinds of stocks that I recommend as a core part of my high-yield income system called the Monthly Dividend Paycheck Calendar. It’s a system used by over 6,000 income investors right now to produce average monthly paydays upwards of $4,000 in extra income. And it’s helped to solve a lot of income problems and retirement worries.

Quality REITs need to be a core component to your income portfolio. Not only do you get the high yields but you also enjoy rising dividends and as we’ve seen from historical examples, share price gains as an added bonus. There are several best in class REITs in the portfolio of my Dividend Hunter service which features the Monthly Dividend Paycheck Calendar.

Get up to 14 dividend paychecks per month from safe, reliable stocks with The Monthly Dividend Paycheck Calendar, an easy-to-use system that shows you which dividend stocks to pick, when to buy them, when you get paid your dividends, and how much.  All you have to do is buy the stocks you like and tell them where to send your dividend payments. For more information Click Here.
REITS

Buy These 3 High Yield REITs Increasing Dividends in January

To build momentum from your income stocks going into the new year, consider buying into those REITs that should announce higher dividend rates in the first month of 2018. Each month I like to list those real estate investment trusts (REITs) that should announce higher dividend rates in the upcoming months. This knowledge can give you a jump on the rest of investing public, which will be surprised when the positive news is announced.

I maintain a database of about 130 REITs. With it I track current yields, dividend growth rates and when these companies usually announce new dividend rates. Most REITs announce a new dividend rate once a year, and then pay that rate for the next four quarters. Currently about 90 REITs in my database have recent and ongoing histories of dividend growth. Out of that group, higher dividend announcements will come from different REIT companies during almost every month of the year. With the potential of a Fed interest rate hike, the prospects of higher dividend payments coming in January will help to offset any share price disruptions resulting from announcements out of the Federal Reserve Board.

Related: Add This Unique REIT to Your Portfolio for Dividend Safety

My list shows three companies that historically announce higher dividends in January and should do so again this year. Investors will start earning the higher payouts in the new year. But remember, you want to buy shares before the dividend announcement to get the benefit of a share price bump caused by the positive news event. Here is the list of REITs to consider:

Apartment Investment and Management (NYSE: AIV) is a mid-cap sized REIT that owns and operates about 140 apartment communities. About 40% of the company’s properties are in coastal California, with the balance spread across major U.S. metropolitan areas. Last year, AIV increased its dividend by 9.0%. Cash flow growth has been comparable in 2017, and I forecast an 8% to 10% dividend increase in January. The new dividend rate announcement will come out in late January with a mid-February ex-dividend date and payment at the end of February. AIV yields 3.3%.

EPR Properties (NYSE: EPR) focuses its real estate investments in three different business sectors. Primary is the ownership and triple-net leasing of entertainment complexes and multiplex theaters. The second sector is the ownership of golf and ski recreation centers, also triple-net leased. The third sector is the construction, ownership and leasing of private and charter schools. EPR pays monthly dividends, and has grown the dividend rate by an average of 7% per year for the last six years. In 2017 the company was active in both acquisitions and new developments. The new dividend rate is announced in mid-January, with an end of January record date and mid-February payment. EPR currently yields 6.0%.

Welltower Inc (NYSE: HCN) is a large cap healthcare sector REIT. The company owns interests in properties concentrated in markets in the United States, Canada and the United Kingdom. The portfolio is divided into three segments consisting of: Seniors housing and post-acute communities, and outpatient medical properties. Triple-net properties include independent living facilities, independent supportive living facilities, continuing care retirement communities, assisted living facilities, care homes with and without nursing, Alzheimer’s/dementia care facilities, long-term/post-acute care facilities and hospitals. Outpatient medical properties include outpatient medical buildings. Welltower has increased its dividend every year since 2009, with a modest 1.2% increase to start 2017. I expect a 2.0% to 2.5% increase to be announced in January. The announcement will come out at the end of the month, with an early February record date and payment around February 20. The stock yields 5.1%.

Any one of these three stocks would be a great addition to your dividend growth portfolio. You see, it’s not just important to include high-yield stocks that give you income now, but to hold stocks with a strong history of growing their dividend year after year. It’s like getting a raise every… that you didn’t have to ask the boss for.

These are the same kinds of stocks that I recommend as a core part of my high-yield income system called the Monthly Dividend Paycheck Calendar. It’s a system used by over 6,000 income investors right now to produce average monthly paydays upwards of $4,000 in extra income. And it’s helped to solve a lot of income problems and retirement worries.

Quality REITs need to be a core component to your income portfolio. Not only do you get the high yields but you also enjoy rising dividends and as we’ve seen from historical examples, share price gains as an added bonus. There are several best in class REITs in the portfolio of my Dividend Hunter service which features the Monthly Dividend Paycheck Calendar.

Get up to 14 dividend paychecks per month from safe, reliable stocks with The Monthly Dividend Paycheck Calendar, an easy-to-use system that shows you which dividend stocks to pick, when to buy them, when you get paid your dividends, and how much.  All you have to do is buy the stocks you like and tell them where to send your dividend payments. For more information Click Here.


Source: Investors Alley

REITS

3 High Growth REITs For Profits in an Amazon World

The Thanksgiving weekend marks the official start to the Christmas buying season. There is Black Friday on the day after and now Cyber Monday on the following Monday. The Black Friday to Cyber Monday weekend is one of the biggest shopping events of the year and each year online sales take a larger portion of the take. According to Forbes in 2016, online sales for the weekend increased by 16.4%. Also, according to a Forbes article, this year total retail Thanksgiving weekend sales are forecast to increase by 47% with online sales grabbing a 40% share.

The point to remember is that when a shopper buys something online, the Internet does not magically delivery it to the buyer’s home. There is an extensive infrastructure network that makes sure an online sale is filled and delivered. There is a chain of types of commercial real estate involved from the time an online order to buy is placed until that item is delivered to the buyer.

If you are like me, you might have trouble with buying shares of Amazon.com, Inc. (Nasdaq: AMZN), which trades at a P/E of near 300 and the company’s business model seems focused on how low they can cut profit margins to steal no-profit sales from other retailers.

An alternative way to invest and profit from Amazon and the growth in online sales is to own shares of the real estate investment trusts (REITs) that provide the warehouse space needed to fill and deliver online orders. These REITs can grow right along with the growth in online sales regardless of who is doing the selling. The difference is they can do it profitably, pay attractive dividends to investors and grow those dividends over time. Here are three REITs that directly benefit from the growth in online retail sales.

Equinix, Inc. (Nasdaq: EQIX) owns and leases spaces in the datacenter properties it owns. The company has a global footprint with 180 data centers located on every populated continent. Equinix converted to REIT status in late 2014 and started paying dividends for the first quarter of 2015.

Growth is derived from the need for more Internet communications and data computing power. This is directly tied to the growth in online retail sales. Free cash flow reported as funds from operations (FFO) and the dividend are expected to grow at a low teens rate.

Data center and growth focused REIT expert Bill Stoller rates EQIX as his highest conviction REIT for 2018. The stock currently yields 1.7%.

Related: 5 REITs Raising Dividends in December

Monmouth Real Estate Investment Corp (NYSE: MNR) is an industrial property REIT that owns 108 warehouse and logistics properties. Monmouth is unique in that 54.5% of its revenue comes from lease contracts with leases from FedEx Ground, FedEx Express, and FedEx Supply Chain Services. To be blunter, Monmouth Real Estate is a significant landlord for FedEx. FedEx has evolved into a dominant logistics company including delivery of online sales purchases. Monmouth’s industrial properties are “mission critical” for the processing and delivery of online retail sales. The company recently boosted its quarterly dividend by 6.25%. The stock yields 3.9%.

With a $35 billion market cap, Prologis Inc (NYSE: PLD) is the largest industrial REIT. The company is the world’s leading owner, operator and developer of logistics real estate. It is likely that almost every product sold by online retailers passes once or more through a Prologis owned property.

The company forecasts a 162% projected growth of e-commerce sales from 2015-2020. Company presentations point out that e-commerce business requires approximately three times the warehouse floor space compared to brick and mortar retailers. Online sales do not have stores, but they still require a lot of commercial real estate space to operate their businesses. The difference is that space is in industrial warehouses instead of stores.

For Prologis, the growth in e-commerce and the other logistics businesses it supports with allow the company to growth profits, FFO and dividends at a low mid-teens growth rate. The stock yields 2.6%.

Get up to 14 dividend paychecks per month from safe, reliable stocks with The Monthly Dividend Paycheck Calendar, an easy-to-use system that shows you which dividend stocks to pick, when to buy them, when you get paid your dividends, and how much.  All you have to do is buy the stocks you like and tell them where to send your dividend payments. For more information Click Here.


Source: Investors Alley 

Dividends

The 15% Yield Dividend Stock Set to Double

For the last three months, the value of Uniti Group Inc. (Nasdaq: UNIT) has been a real turkey for high yield stock investors. Since late July share owners have experienced a decline of the UNIT share price from the mid $20’s to a recent low under $14. With the recent earnings report out of Uniti, the stock now looks like a Thanksgiving dinner, offer a great yield and significant share price upside.

The suspension of dividend payments by Windstream Holdings, Inc. (Nasdaq: WIN) was the trigger event for the decline of the UNIT share price.

Uniti was spun-off by Windstream with an April 2015 IPO. Uniti is structure as a real estate investment trust (REIT), and in the spin-off received most of Windstream’s fiber and copper wirelines network. Windstream signed a 15-year (with options for extension out to 35 years) master lease with Uniti.

When Windstream announced that it would no longer pay common stock dividends, the immediate fear was that Windstream was in immediate danger of bankruptcy and that Uniti would stop receiving lease payments from its largest by far customer. The fate of Windstream and dangers to Uniti have both been overblown by online financial pundits and fear driven investors. Here are the pertinent fundamentals for each company.

Windstream made the decision to stop paying dividends for a couple of reasons. First, the market kept the stock’s yield in the high teens, not putting much value on the dividend amount. More importantly, the Windstream board decided that the cash being used to pay dividends would be better utilized to pay down the company’s debt load. Soon after the announcement of the dividend suspension, Windstream was sued by a vulture fund, claiming the company had broken its debt covenants with the Uniti spin-off. This claim was two years late and widely analyzed as blackmail to get a payoff out of Windstream. The company has fought back hard and has made strategic moves that will significantly improve the overall debt situation. Here is the financial situation for Windstream.

The company will generate $2.0 to $2.2 billion per year of operational income before depreciation, amortization and rent (OIBDAR). The rent is the $653.6 million annual lease payment to Uniti. The company spends about $800 million per year on capital expenditures. A little math shows the company has a $650 million cash cushion above the Uniti lease payments and capital spending required to keep the business functioning. While Windstream is a company that faces the financial challenge of developing new revenue to replace the declines in its traditional landline service, it is not a company on the brink of financial disaster. The company has put in place growth initiatives that will result in a reversal of recent revenue declines. The lease payments to Uniti can be viewed as a contract that must be paid if Windstream is to stay in business. The master lease cannot be changed in bankruptcy, should that highly unlikely event occur.

At the IPO, the Windstream lease accounted for 100% of Uniti’s revenue and earnings. Over the last 2 ½ years, the company has been making acquisitions that have driven the Windstream lease share of revenues down to 65%. The acquisitions have been fiber and small cell service providers. The number of Uniti customers has increased from one to over 16,000. Of greater importance, the purchased companies are growth businesses. During the third quarter, Uniti closed on the two acquisitions of Southern Light and Hunt Telecom. The company now has one of the largest pure-play fiber operating platforms in the country with the ability to deploy small cells, fiber-to-the-macro tower, dark fiber, enterprise services and E-Rate services. These lines of business are growing and will lead to growing free cash flow per share to protect the current dividend and provide for possible future dividend increases.

The current UNIT dividend is $0.60 per quarter, or $2.40 annually. The company will generate AFFO per share of $2.51 in 2017 and is forecast to produce AFFO of $2.67 per share in 2018. With the stability of its revenues, this is strong dividend coverage for Uniti. The company has already declared another $0.60 dividend to be paid in January.

See also: 5 REITs Raising Dividends in December

At $16 per share, UNIT yields a very high 15%. As the market sees continued stability of the cash to pay the dividend, the stock will climb to at least $24, which would give a 10% yield. If there is cash flow growth, the stock will again approach $30 in 2018.

UNIT and stocks like it would be a great addition to your dividend growth portfolio. You see, it’s not just important to include high-yield stocks that give you income now, but to hold stocks that can give you a high return from a blend of high yield and rapid share price appreciation.

That’s the kind of stock that I recommend as a core part of my high-yield income system called the Monthly Dividend Paycheck Calendar. It’s a system used by thousands of investors right now to produce average paychecks of nearly $4,000 in extra income every month. And it’s helped to solve a lot of income problems and retirement worries.

Quality high-yield stocks need to be a core component to your income portfolio. Not only do you get the high yields but you also enjoy share price gains as an added bonus. There are several best in class REITs just like UNIT in the portfolio of my Dividend Hunter service which features the Monthly Dividend Paycheck Calendar.

One simple plan takes minutes to set up, yet could pay all your bills for life. No longer will your mailbox be stuffed with ‘payment due’ envelopes.

This is our most powerful plan we’ve ever put together…and over 6,042 people have already used its recommendations.

There is still time to start generating $4,084 per month for life…but the window is closing…

Get up to 14 dividend paychecks per month from safe, reliable stocks with The Monthly Dividend Paycheck Calendar, an easy-to-use system that shows you which dividend stocks to pick, when to buy them, when you get paid your dividends, and how much.  All you have to do is buy the stocks you like and tell them where to send your dividend payments. For more information Click Here.


Source: Investors Alley

Dividends

3 High-Yield Stocks in Danger of Cutting Dividends

On Monday, General Electric Company (NYSE: GE) answered the “will it, or won’t it” question and reduced its dividend by 50%. Even though the date of the announcement was known, and a cut was widely anticipated, the GE share price dropped by 8%. This drop comes after the 15% share price decline since 2017 third quarter earnings were released on October 20.

For dividend focused stock investors, the risk of a dividend cut is in most cases the biggest danger. A dividend reduction results in the double-whammy of a lower future income stream combined with what is often a sharp drop in the stock’s share price. At that point an investor will be forced to sell at a loss and reinvest into different stocks that likely pay a lower yield. It is common knowledge that a high stock yield indicates the market is pricing the stock for a dividend cut. The market may be mistaken, or it may be right. The challenge is to find those high yield stocks where the current dividend rate is secure and to avoid or dump the high yield stocks where a dividend reduction is likely or probable.

Here are three high yield stocks that could be dangerous to your portfolio value. Consider selling if you own and definitely do not buy to chase the current high yields.

Frontier Communications Corp (Nasdaq: FTR) currently yields over 30%! It is less than a year since the company reduced its dividend by 50%. Frontier Communications is one of the handful of regional telecom companies that have struggled to sustain revenues through the shift from landline telephone service to everyone using wireless phones.

These companies face the triple challenge of servicing large debt loads, capital spending requirements to bring their networks into the modern age where they can sell other services to offset falling landline revenues and supporting large dividend payments.

These companies have historically been viewed as income stocks, and management teams have tried without success to balance the three spending channels. Frontier Communications is a company that likely must follow Windstream Holdings, Inc. (Nasdaq: WIN) and completely suspend its dividend.

New Senior Investment Group (NYSE: SNR) is a healthcare sector REIT that currently yields 12.75%. This is one of the highest yields across the entire REIT sector. The company operates through two segments: Managed Properties and Triple Net Lease Properties. Under its managed properties segment, New Senior Investment invests in senior housing properties throughout the United States and engages property managers to manage those senior housing properties.

With its triple net lease segment, the company invests in senior housing and healthcare properties throughout the United States, and leases those properties to healthcare operating companies under triple net leases. New Senior Investment faces the challenge of a very high debt load and declining free cash flow. The senior housing segment also faces the potential of reduced reimbursements from government programs. The high SNR yield is not worth the risk.

NuStar Energy LP (NYSE: NS) is an energy midstream master limited partnership (MLP) that currently yields 14%. Since NuStar has been paying the same quarterly distribution for over six consecutive years, an investor might view the large payout as relatively secure.

This company’s problem stems from a $1.5 billion acquisition made earlier this year. (NS has a $2.9 billion market cap.) With the purchase, the company’s debt has ballooned to $3.7 billion and the new assets are not forecast to generate significant cash flow until sometime in late 2018.

Currently, due to the larger debt loan, NuStar’s distributable cash flow (DCF) covers just 70% of the distributions paid to limited partner unit holders. With the current DCF forecasts and distribution rate, NuStar will be borrowing up to $100 million per year for a couple of years to keep paying the distribution. Investors should steer clear of any company that must borrow a lot money for an extended period to keep paying the current dividend.

Sometimes high yields serve as a strong warning to investors that a company is in trouble. But not always. Sometimes a company can be run well enough that it can afford to be generous to income investors. Sometimes a company is required by law to pay out huge dividends to investors.

Get up to 14 dividend paychecks per month from safe, reliable stocks with The Monthly Dividend Paycheck Calendar, an easy-to-use system that shows you which dividend stocks to pick, when to buy them, when you get paid your dividends, and how much.  All you have to do is buy the stocks you like and tell them where to send your dividend payments. For more information Click Here.


Source: Investors Alley

Energy

Buy These 3 High-Yield Stocks for the Coming Rebound in Energy

The energy infrastructure sector has continued to decline, even as the price of crude oil has climbed and stabilized. This sector is populated by the publicly traded master limited partnerships (MLPs) and corporations that for the most part function like their MLP brethren. Over the last three months, crude oil is up about 5%, yield the Alerian MLP Infrastructure Index (AMZI) has dropped by over 10%. If you like to invest in turn around candidates, there are strong signs that MLPs and related companies will start to turn higher in November.

Underlying energy infrastructure fundamentals look stable and expectations are that most MLPs have businesses continue to grow. In the second quarter, two-thirds of the AMZI component companies increased distributions, with the remainder keeping payouts level. For the third quarter, a pair of distribution cuts have been announced. These reductions are strategic versus signs of desperation. My forecast is that the majority of MLPs will announce distribution increases.

A further sign that fortunes in the MLP space are improving is that bond prices have risen even as equity values declined. This interesting piece of analysis comes from Yorkville Capital:

“Year-to-date, the Alerian MLP Index has declined by 5.6%, including distributions this year. Meanwhile, Yorkville’s index of MLP and midstream debt has produced a positive total return of 5.8%. This means that either the equity markets are getting it wrong and the bond markets are getting it right – or the other way around.

Bond investors primary concern is that the underlying business is healthy and stable enough to ensure that they will continue to receive their semi-annual, or quarterly, coupon payments (and principal upon maturity). Therefore, the increasing prices of MLP bonds suggest that MLP businesses are getting less risky and more stable – not the other way around.

On September 27, 2017, Moody’s upgraded their global midstream outlook to “positive” from “neutral” reversing the downgrade they appropriately made in late 2015. Their report highlighted expectations for business fundamentals to improve over the coming 12-18 months and noted that upstream activity out of the E&P industry has ramped with rig counts having doubled off the 2016 lows. Moody’s’ expects midstream EBITDA growth of 8-10% in 2018.”

The final puzzle piece of the puzzle for an MLP sector recovery is the possibility that the most recent value drop was due to tax selling. An MLP focused mutual fund, ETF or closed-end fund operates as a taxable corporation, so taking tax losses now can be used to offset future gains and lower future corporate income tax payments. The fiscal year for these funds ends on October 31. If tax selling is part of the cause of the recent down turn in MLP values, we can expect some price support in November.

Earnings season has just started for the energy infrastructure sector and results so far have been positive. If more MLPs and infrastructure corporations report strong third quarter results, the sector could really take off starting in November. Here are three companies with currently attractive dividend yields and the potential for much higher share or unit values.

Targa Resources Corp (NYSE: TRGP) engages in the following energy midstream services:

  • Gathering, compressing, treating, processing, and selling natural gas.
  • Storing, fractionating, treating, transporting, and selling NGLs and NGL products, including services to LPG exporters.
  • Gathering, storing, and terminalling crude oil.
  • Storing, terminalling, and selling refined petroleum products.

In February 2016, to simplify the business structure Targa Resources Corp. acquired all the outstanding common units of Targa Resources Partners LP (NYSE: NGLS) that it did not already own. The company continues to operate using the MLP model, but is a corporation. At the current $41 per share TRGP yields 9.0%. This stock could easily go over $50 in an MLP rally.

Enterprise Products Partners LP (NYSE: EPD) has a market cap more than $50 billion and is the largest MLP by enterprise value. The company’s business segments include:

  • NGL pipelines and services
  • Crude oil pipelines and services
  • Natural gas pipelines and services
  • Petrochemical and refined products services.

EPD has increased its distribution for 62 straight quarters. Unlike most MLPs, Enterprise Products Partners can fund most of its growth projects without issuing additional equity. This $24 MLP could quickly move to over $30. EPD yields 6.9%.

Valero Energy Partners LP (NYSE: VLP) is controlled by and provides pipeline, storage and terminal services to its sponsor, Valero Energy Corporation (NYSE: VLO). Through asset drops from Valero, the cash flow and distribution growth at VLP is very predictable. The VLP payments to investors will grow 25% in 2017 and at least by 20% in 2018, with high probability for 20% growth in future years. Now at $41, VLP could easily surpass its 52-week high of $51. The units currently yield 4.7%.

Owning a bit of the MLP sector should constitute a core part of any serious high-yield investor’s portfolio. And with the way trends appear for MLPs investors in those stocks will not only continue earning a steady stream of income but could very well enjoy considerable share price appreciation. It’s this type of strategy that I use with my new income system called The Monthly Dividend Paycheck Calendar.

Get up to 14 dividend paychecks per month from safe, reliable stocks with The Monthly Dividend Paycheck Calendar, an easy-to-use system that shows you which dividend stocks to pick, when to buy them, when you get paid your dividends, and how much.  All you have to do is buy the stocks you like and tell them where to send your dividend payments. For more information Click Here.


Source: Investors Alley

Dividends

Buy These 5 High Yield Stocks to Replace Income ETFs

If you’re an investor whose goals include earning a decent income from the money you have accumulated, following the Wall Street herd will cost you money: possibly a lot of money.

The investing advice you see, read or are told may not be well aligned with your long-term goals and success. Individual investors who are counting on their portfolios for long term income needs will be best served by learning how to pick a path away from the herd.

There are two themes in play that make it difficult for investors to realize success. The first is the short term focus of the financial news industry. That group focuses on providing entertaining news bites based on data points that change every day. It is a good idea to remember that what you see or read in the financial news is much more about the entertainment part of infotainment than it is about useful information.

The second factor that effects investors are the challenges faced by financial advisors. The typical financial advisor (I know there are exceptions) has a lot on his or her plate besides researching individual investments to discover the very best investments for each individual client. A common practice for full service investment firms is to put client money into portfolios made up of a selection of ETFs that are expected to meet a client’s stated investment goals.

Consider the case of investors who want to draw an income from their portfolio. With this goal, an investor would likely see several popular dividend income ETFs in a portfolio put together by a financial advice firm. Here is a list of those popular income ETFs and their current yields:

  • Vanguard REIT Index Fund (NYSE: VNQ) with $35 billion in assets. Current effective yield: 3.86%.
  • Utilities SPDR ETF (NYSE: XLU) is the largest utilities ETF with $8 billion in assets. Current yield: 3.07%.
  • iShares Select Dividend ETF (NYSE: DVY) is a common stock ETF which as $17 billion in assets. DVY yields 3.1%.
  • Vanguard High Dividend Yield ETF (NYSE: VYM) is another stock ETF focused on high-yield common stock shares. VYM has $29 billion in assets. The fund has a current SEC yield of 3.06%.

As you can see, a strategy of using popular income stock ETFs to build a portfolio with produce an average dividend income yield of 3.3%. That means an investor would get just $33,000 per year in income off a $1 million portfolio. I am pretty sure someone living off a million-dollar portfolio would like to receive quite a bit more than $2,750 per month.

The alternate solution for more income is to own a portfolio of individual stocks. There are hundreds of stocks with yields of 6%, 8%, and up into the teens. For my Dividend Hunter service, the primary focus is on the safety of the dividend payments. Yet the current recommended stocks list has an average yield of 8.0%. To illustrate, here is a list of five stocks that are diversified across different financial sectors with very attractive yields:

  • Reaves Utility Income Fund (NYSE: UTG) is a utilities sector closed end fund that currently yields 6.1%.
  • Hercules Capital Inc (NYSE: HTGC) is a business development company providing capital to growing technology companies. HTGC yields 9.7%.
  • Macquarie Infrastructure Corp (NYSE: MIC) owns energy product terminals, power generation facilities and private aviation fixed base operations. This stock yields 7.8%.
  • Starwood Property Trust (NYSE: STWD) is a mortgage lender for commercial properties and yields 8.8%.
  • InfraCap REIT Preferred ETF (NYSE: PFFR) is a new to the market ETF that only owns preferred shares of equity (property owning) REITs. The preferred shares have a higher safety level when compared to the bulk of the preferred shares market which are issued by lending institutions. PFFR yields 5.6%.

With just five stocks, you have a decently diversified portfolio and an average yield of 7.5%. That is double the average yield of the income focused ETF list above. I do recommend that investors own about 20 stocks for adequate diversification, but the list above gives you a graphic example of how if you learn about income stocks on your own, you can literally double the dividend income you earn off your investment portfolio.

Individual high yield stocks should be the cornerstone of your income portfolio. And these are the kinds of stocks my Dividend Hunter readers are using to build their own income streams… some of them quite massive.  These stocks are part of my new income system called the Monthly Dividend Paycheck Calendar. It’s set up so that by following along you could see extra income of as much as $40,000 or more every year… for the rest of your life.

Get up to 14 dividend paychecks per month from safe, reliable stocks with The Monthly Dividend Paycheck Calendar, an easy-to-use system that shows you which dividend stocks to pick, when to buy them, when you get paid your dividends, and how much.  All you have to do is buy the stocks you like and tell them where to send your dividend payments. For more information Click Here.


Source: Investors Alley