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.
Dividends

Fake News Puts These Two Solid High-Yield Stocks on Sale

In my focus area of high yield stocks, I am regularly reminded how committed to losing money are many high-yield stock investors. Any whiff of bad news has them running for the exits, which drives down share price, which causes more fear based selling, which further drives down the share price. You get the picture. Investors who buy high yield stocks are often new to owning stocks, or less well informed on how stock prices fluctuate. To avoid being a money-losing, fear-based seller of dividend stocks, an investor needs to understand the difference between real and fake news that moves stock prices.

Real news about publicly traded companies is primarily quarterly earnings results and the associated management comments about business operations. Press releases directly from the individual companies count as real news. You may notice that these items come out just once to a few times per calendar quarter for most stocks. This is the information on which buy and sell decisions should be made.

Related: Separating Real News from Fake News in the Stock Market

However, the financial news media is hungry for items to fill websites and financial news networks’ broadcast time. The information from these news outlets come from Wall Street analysts and financial writers who share their opinions and try to predict the future. They have no deeper insight that what an investor can get from the information released directly by the companies.

Predicting future results are really just estimates or guesses. I refer to these forecasts as “fake news” because they do not add any real information to my knowledge about individual companies. When a “fake news” item results in a steep share price drop, I review the real news I know about a company and often recommend using the price decline as a buying opportunity. Here are two stocks that recently were affected this way.

Pattern Energy Group (Nasdaq: PEGI) recently experienced a 12.5% decline when the province of Ontario announced it was cancelling over 750 renewable energy contracts. While Pattern Energy was not singled out, the company has a significant presence with several projects under development in Ontario.

A few days after the big drop, a follow up report noted that none of Pattern Energy’s projects would be affected. However, even though the original cause of the decline has been proven to not affect the company, less than half of the steep drop has been recaptured.

This makes PEGI an attractive purchase now with its stable and growing dividend and 9.6% yield.

Over the course of just one week, the share price of Uniti Group (Nasdaq: UNIT) declined by 20%. The drop was almost entirely due to a Wall Street analyst putting a sell recommendation on the stock with a $15 price target.

The real facts are that UNIT at $17.40 per share is the same company with the same prospects as it was when the share price was $4 higher. The big dividend is not at risk, and this is a company that is growing and diversifying its business operations. UNIT now yields almost 14%. It is likely that the Q2 earnings release in early August will give a boost to the share price.

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.
Uncategorized

3 High-Yield Stocks Increasing Dividends in August

When interest rates start to go up, investors worry about the value of their higher yield dividend stocks. A defense against higher interest rates is to own dividend stocks that will grow the dividend payments. The challenge is to know in advance which stocks will make a higher dividend announcement before the rest of the market finds out.

Real estate investment trusts (REITs) pay attractive current yields and regularly increase their dividend rates. I maintain a database of about 140 REITs, out of which about 100 have histories of dividend growth. Most of these companies increase the quarterly dividend once a year, and then pay the new rate for the next four quarters.

Even though individual REITs increase their dividends just once a year, those announcements are spread across almost every month of the year. To capture those share price gains, you want to buy shares a few weeks to a month before the next dividend increase announcement is published. Now in mid-July, it is a great time to look at those REITs that should increase dividends in August.

Here are three REITs from my database that historically have boosted their payouts in August.

Federal Realty Investment Trust (NYSE: FRT) is a $9 billion market cap REIT that owns, operates, and redevelops high quality retail real estate in the country’s best markets. FRT has increased its dividend for 50 consecutive years, the longest growth streak of any REIT.

Over the last 5 years, the average annual dividend increase has been 6.55%. Last year the dividend was increased by 2.0%. Based on management guidance, an increase close to the 5% annual average is in the cards for this year. The company announces its new dividend rate in early August. The ex-dividend date will be in mid-September with payment about a week later.

The FRT share price is down by 4% over the last year. This is a very high-quality REIT currently on sale. The stock yields 3.25%.

Eastgroup Properties Inc (NYSE: EGP) is a $3.3 billion market value REIT that focuses on development, acquisition and operation of industrial properties in major Sunbelt markets throughout the United States with an emphasis on the states of Florida, Texas, Arizona, California and North Carolina. Industrial properties is currently one of the best performing real estate sectors.

The company has increased its dividend for 22 of the last 25 years, including the last six in a row. Last year the payout was increased by 3.3%. This year my forecast is for a 5% to 7% increase. The new dividend rate should be announced in late August or early September, with a mid-September ex-dividend date and end of the month payment date.

EGP yields 2.7%.

Healthcare Trust of America, Inc. (NYSE: HTA) is a $5.4 billion REIT that acquires, owns and operates medical office buildings. The company reduced its dividend in 2012 and 2013, which was followed by small increases in each of the next four years. Last year the dividend was bumped up by 1.7% which is comparable to the increase of the previous year.

In 2017, the funds available for distribution per share increased by 1.2%, and for the 2016 first quarter, FAD per share was flat compared to a year earlier. Management has been very conservative with the dividend growth and I expect a small increase comparable to the last couple of years.

Last year the new dividend rate was announced in early August, with an end of September ex-dividend date and early October payment date.

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, ETF

3 High-Yield Dividend Funds Taking Advantage of Market Volatility

Outside of the FAANG bubble, to date in 2018 the U.S. stock market has trended sideways. As you may be aware, that sideways direction has been punctuated by large daily moves in both directions – up and down. Increased market volatility can produce more attractive return opportunities for covered call option traders. However, you don’t have to be an options trader to get a boost from your income stock portfolio based on the covered call strategy.

When you see the financial news media talking about market volatility or the VIX, those metrics are derived from options pricing on the S&P 500. When the market is volatile, option buyers will pay more, and option sellers ask for more to cover the risks of quickly changing share prices. The covered call strategy involves buying shares of a stock and then selling call options backed by the shares. The strategy produces cash income from the call options sales. A cap is put on the upside of potential share price gains, and the options provide a small cushion against a price drop. The covered call strategy is primarily an income producing strategy.

You don’t have to become an options trader to benefit from covered call selling. There are about two dozen closed-end funds that employ the strategy. When you invest in one of these CEFs, you will get exposure to the stock portfolio of the fund, plus an attractive dividend yield from the call selling employed by the fund managers. Here are three funds to consider.

Columbia Seligman Premium Technology Growth Fund (NYSE: STK) seeks capital appreciation through investments in a portfolio of technology related equity securities and current income by employing an option writing strategy.

The fund’s investment program will consist primarily of investing in a portfolio of equity securities of technology and technology-related companies as well as writing call options on the NASDAQ 100 Index or its exchange-traded (ETF) fund equivalent on a month-to-month basis.

The aggregate notional amount of the call options will typically range from 25% to 90% of the underlying value of the fund’s holdings of common stock. Results have been excellent, with annualized returns of 18.4% and 20.9%, for the last three and five years, respectively.

STK currently yields 8.4%.

Eaton Vance Tax-Managed Buy-Write Opportunities Fund (NYSE: ETV) invests in a diversified portfolio of common stocks and writes call options on one or more U.S. indices on a substantial portion of the value of its common stock portfolio to generate current earnings from the option premium. Buy-Write is another name for covered call writing. Also, as the fund name states, the managers strive to generate the best after tax returns. The fund uses the S&P 500 stock index as its benchmark evaluate returns.

Three and five year average annual returns have been 11.0% and 13.25 percent respectively. To show that different managers will have their day, ETV is up 6.9% year to date, while STK has gained just 3.2%.

ETV pays monthly dividends and currently yields 8.5%.

BlackRock Enhanced Capital & Income Fund (NYSE: CII) seeks to achieve its investment objective by investing in a portfolio of equity securities of U.S. and foreign issuers. The fund also employs a strategy of selling call and put options.

While the other two funds use index or ETF options for income, the BlackRock managers employ the writing of single stock options. Selling puts is a comparable strategy that can at times produce better returns compared to selling calls.

Three and five year annual returns for CII were 11.9% and 13.8%, respectively. The fund is up 5.25% year to date.

CII pays monthly dividends and yields 6.0%.

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, MLP's

Buy These 3 High-Yield Stocks Up Over 20% YTD

The signs are that the energy infrastructure/midstream sector have set up for a multi-year bull market recovery from the declines of the previous two years. A handful of energy midstream companies have gotten a jump on their peers and have already put up nice gains to date in 2018. Even with the 20% to 30% gains over the last few months, these energy sector leaders still have plenty of upside runway. It is not time to sell and it is not to late to join the ride with these stocks.

Prior to 2015, the majority of energy midstream service companies were organized as master limited partnerships –MLPs. These companies provide the assets and services needed to move energy commodities such as crude oil and natural gas from the well to the end user. The companies provide gathering and processing services in the energy plays, pipeline and other transport services, and own storage and terminal facilities. The energy sector crash that started in 2015 and lasted well into 2017 forced a lot of the infrastructure companies to restructure their balance sheets and business models. Now you will find a larger number of companies organized as corporations. However, about two-thirds of the publicly traded infrastructure/midstream companies are still organized as MLPs.

The steady growth in North American production of crude oil and natural gas is increasing the need for midstream services. The energy infrastructure companies are filling their pipelines, processing plants and storage terminals. They are launching new projects to handle the forecast growth. Revenues, free cash flow, and dividends paid to investors are on the upswing. Most of the companies have not seen the rising values reflected in their share prices. In contrast to the herd, a small number of the best run midstream companies working in the most prolific energy plays are up 20% to 30% (plus distributions) already this year. You can expect these companies to lead the pack for the rest of the year.

Related: 10 Highest Yield Dividend Stocks Going Ex-Div This Week

CNX Midstream Partners LP (NYSE: CNXM) is up 23.7% so far this year. CNXM is an MLP that owns, operates, develops and acquires gathering and other midstream energy assets to service natural gas production in the Appalachian Basin in Pennsylvania and West Virginia. The company operates in the Marcellus and Utica shales, the most prolific natural gas play in the U.S., if not the world. This MLP primarily provides services to CNX Resources Corporation (NYSE: CNX), which has a significant portfolio of midstream assets to be transferred to the MLP. CNXM has provided distribution growth guidance of 15% per year through at least 2022. The CNXM units currently yield 6.7.

Plains All American Pipeline LP (NYSE: PAA) is up 20.5% year to date. Plains owns and operates the largest independent network of crude oil gather systems, crude oil long distance pipelines, and crude oil storage facilities. The company has the largest gathering presence in the rich Permian energy play. It has one of the best pipeline takeaway capacities and is leading the charge to build new pipelines out of the Permian. This region is the growth engine of U.S. oil production and Plains All American Pipelines is best positioned to benefit from the production growth. The company offers alternative shares in Plains GP Holdings LP (NYSE: PAGP). Both securities pay the same distribution rates (each PAGP share is backed by a PAA unit. The difference is that PAGP is a 1099 reporting company for taxes. Plains should resume distribution growth in 2019. The shares currently yield 5.0%.

ONEOK, Inc. (NYSE: OKE) is up 29.8% so far in 2018. ONEOK (pronounced one-oak) is one of the largest energy midstream service providers in the U.S., connecting prolific supply basins with key market centers. It owns and operates one of the nation’s premier natural gas liquids (NGL) systems and is a leader in the gathering, processing, storage and transportation of natural gas. ONEOK’s operations include a 38,000-mile integrated network of NGL and natural gas pipelines, processing plants, fractionators and storage facilities in the Mid-Continent, Williston, Permian and Rocky Mountain regions. In mid-2017 the company merged its controlled MLP into the corporate parent. The share price gains show that the market likes this energy midstream company as a corporation. The OKE dividends increase every quarter and are forecast to grow by 10% per year. The shares currently yield 4.6%.

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.
Dividends

10 Highest Yield Dividend Stocks Going Ex-Div This Week

Ticker Ex-Div Date Pay Date Div Amt Yield
TEI 6/27/2018 7/10/2018 $0.21 24.28%
NDRO 6/28/2018 7/16/2018 $0.06 20.24%
ORC 6/28/2018 7/10/2018 $0.09 13.90%
AI 6/28/2018 7/31/2018 $0.38 13.71%
CBL 6/29/2018 7/16/2018 $0.20 12.92%
NYMT 6/27/2018 7/26/2018 $0.20 12.86%
EARN 6/28/2018 7/25/2018 $0.37 12.79%
DRW 6/25/2018 6/28/2018 $0.92 11.65%
TWO 6/28/2018 7/27/2018 $0.47 11.62%
WMC 6/29/2018 7/26/2018 $0.31 11.51%

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 3 High-Yield Stocks Thriving With Higher Fed Rates

Last week the Federal Reserve Board increased its Fed Funds Target rate for the second time this year, to 1.75%. The Fed Funds rate controls yields on the short end of the yield curve. Rate increases typically push fear-driven investors to sell the income stock categories like REITs and Utilities. Informed investors use these sell-offs as opportunities to buy dividend paying stocks for what will likely be market beating total returns.

I grabbed this important piece of data from a recent article from investment management company Neuberger Berman:

“Our research indicates that while, in the short term, REIT share prices have been influenced by the direction of interest rates, when measured over longer time periods, REIT total returns historically have not tended to be correlated to interest rates. In the current period, REITs’ underlying fundamentals and access to capital have not declined. Furthermore, many REITs have used low borrowing costs and the capital markets to strengthen their balance sheets… during periods when 10-year Treasury yields rose sharply, REIT total returns generally underperformed broader equity market returns in the short term, but generally outperformed after the initial period of weakness.”

I have seen other research that confirms in periods of rising interest rates REITs have, on average, outperformed the broader stock market. The reason is that rising rates indicate a strong economy and it is likely that commercial property values and rental rates are also increasing. If you are looking for individual REITs that specifically will do well in a rising rate environment, think about those commercial property sectors that have the shortest contract periods. With short term leases, these REITs will be able to more quickly increase the prices they charge to renters.

Hotels have the shortest lease periods – one night. Hotels operators change their rates daily based on demand and occupancy levels. Historically, hotel results mirror economic growth. A strong economy will lead to growing profits and share prices for the hotel REITs.

Chatham Lodging Trust (NYSE: CLDT) is a lodging/hotel REIT which owns 40 hotels in 15 states. The portfolio consists of premium branded upscale extended stay and select service hotels. The hotel REIT sector peaked in January 2015 and then went into a steep bear market which bottomed one year later. Over the last two and a half years, share prices have been volatile without a definite up or down trend.

Since its 2010 IPO, Chatham Lodging has steadily increased its dividend rate, with the last increase in March 2016. Chatham pays monthly dividends and is currently paying out just 62% of funds from operations (FFO) per share. This is a conservatively managed, attractive income yield stock that gives exposure to the lodging sector.

CLDT currently yields 6.4%.

Self-storage companies have rental rates that renew each year. There is a lot of turnover in a self-storage facility, which allows the operator to quickly adjust rates to changing economic conditions. Over the last 15 years, self-storage has been one of the best performing commercial property sectors.

Extra Space Storage (NYSE: EXR) is a large-cap, self-storage REIT with a best in class track record. The company owns 851 storage facilities. It has interests in another 216 through joint ventures and provides the management services for an additional 456 properties. The self-storage business provides strong same store revenue growth with low expenses and capital spending requirements.

Of the four major self-storage REITs, Extra Space is the historic leader for revenue, net operating income, and FFO growth. The company’s dividend has increased by 244% since 2012, including a 10.3% boost this year. This company is the class of the self-storage sector.

EXR currently yields 3.5%.

Rental rates paid for living quarters are usually reset annually. There are several economic factors that continue to push apartment and single family home rental rates higher. The REITs in this sector will be able to increase rental rates faster than the rate of increase in the Fed Funds rate.

Invitation Homes (NYSE: INVH) is one of the small number of REITs focused on owning single-family rental homes as opposed to apartment complexes. These REITs are the result of the institutional buying of distressed homes during the housing make crash of 2009-2011.Thousands of homes were bought at low prices, rehabilitated and turned into rental properties.

In the current economy the number of families that prefer renting to owning remains high. At the same time, millennials are forming families and want to get away from the apartment life into single family homes.

Invitation Homes owns 82,500 homes, with an average of 4,800 in each of the metropolitan areas where it has ownership. This large scale operation provides economy of ownership similar to apartments. The company forecasts to generate 5% to 6% same store net operating income growth. This is the highest growth rate among the different REIT sectors.

INVH is generating FFO of $1.15 per share against a current annual dividend of $0.44. When the company starts to grow the dividend the share price will take off.

Current yield is 2.0%.

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 

MLP's

These 3 High-Yield Stocks Are All Now “Buys” With Oil Up Nearly 50%

Recently there have been two big, interrelated news stories coming out of the U.S. energy sector. The first is that the U.S. crude oil production continues to grow, and the U.S. has become the world’s largest producer of energy liquids. This growth has been led by the Permian Basin play in West Texas. The parallel story is that the Permian production is growing so fast, there is not enough pipeline capacity to get the crude oil and related energy commodities out of West Texas to refineries and export facilities. These energy transportation needs are permanent and energy infrastructure companies are racing to provide additional capacity.

Along with crude oil, the Permian wells produce natural gas and natural gas liquids (NGLs). In its annual Investor Day presentation Plains All American Pipeline LP (NYSE: PAA) stated that energy liquids production in the Permian has grown from less than two million barrels per day to a forecast average of 4.8 million barrels per day in 2018. That production level would make the Permian tied with China as the sixth largest producer in the world if it was a stand alone country. Crude oil production in the Permian is up 24% so far in 2018.

The problem now in the Permian is that all the take away pipelines are full, production continues to grow, and producers are scrambling to get their crude oil, NGLs, and natural gas out of the Basin. The ready solution is to truck the oil, which costs $10 to $20 per barrel, which is much higher than the $1 to $3 per barrel pipeline fees. That is why Permian crude oil is trading for up to $20 per barrel less than the West Texas Intermediate (WTI)_benchmark crude oil price. It is easy to see why the Permian energy producers are desperate for new pipelines to be built to transport oil and other energy commodities out of the Permian.

The energy midstream companies are moving in to build new pipelines and natural gas processing facilities. Natural gas from the wells must be processed into the natural gas used to heat homes and generate electricity, and into NGLs, which are used for a range of industrial purposes. It can take months to years for energy infrastructure assets to be built. Here are three companies with a head start on their peers and when new Permian assets come on line with increase the dividends paid to investors.

Plains All American Pipeline LP (NYSE: PAA) is a $30 billion enterprise value MLP focused on crude oil pipelines and terminals. Plains has focused on the Permian and is investing $1.6 billion in growth capital to expand its crude oil gathering and pipeline takeaway capacity in the Basin.

The company is expanding capacity on its Sunrise pipeline, which goes from the Basin to Cushing, OK. Also, the Cactus Pipeline from West Texas to Corpus Christi is being doubled with a second parallel pipeline. In total, Plains will increase its tariff volume from 3.24 million barrels per day at the start of 2018 to 3.8 million barrels in early 2018.

Plains provides gathering, intra-basin pipelines, and long haul pipelines, which allows the company to often collect several fees on a single barrel of oil. This MLP restructured its finances in 2017, including a 45% distribution reduction.

The company is now funding growth out of free cash flow and is expected to resume distribution growth in 2019. PAA yields 4.9%.

Targa Resources Corp (NYSE: TRGP) is an $11 billion market cap energy midstream company focused on the gathering, processing, transport and export of natural gas liquids (NGLs). These energy liquids are a big part of the value process of energy production in the Permian, North Texas and Oklahoma.

Targa is a major NGL player in all three regions. Management states that 75% of the company’s announced growth capital spending is going to Permian related projects. These include nine NGL processing plants and a new pipeline to move NGLs from West Texas to the Gulf Coast. New facilities will start coming on line this quarter and continue to start operations facility by facility through early 2020. The company forecasts 40% EBITDA growth between now and 2021.

The TRGP dividend has been level since late 2015. I expect dividend increases to start in 2019. The shares yield 7.4%.

NuStar Energy LP (NYSE: NS) is an MLP whose business operations are a balance of pipelines and storage facilities for both crude oil and refined energy projects. In May 2017 the company acquired an integrated crude oil and transport system in the heart of the Permian Basin.

Throughput in the NuStar Permian system has increased by over 100% since the acquisition. EBITDA on the system is forecast to double from here to 2020. The company has initiated a joint venture new crude oil pipeline to transport oil out of the Basin.

Currently the NuStar general partner interests are held by a publicly traded company, NuStar GP Holdings, LLC (NYSE: NSH). The companies have announced that NSH will be merged into NS, eliminating the general partner interests and added expense for the MLP. This should allow the company to increase distributions to investors at a faster pace. NS currently yields 9.5%.

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.
Dividends

3 Stocks Raising Dividends in July

There is a general misconception that rising interest rates are always bad for real estate investment trust (REIT) values. However, history shows that REITs have outperformed 75% of the time during the last 16 periods of rising interest rates. One reason is that quality REITs will grow their dividends, and if the dividend increases keep up or exceed the interest rate increases, you are better off owning the REIT shares.

Buying shares in the month before a dividend announcement is one strategy that can produce a quick start to a new for you REIT investment. Most REITs increase their dividend rate once a year, and then pay that new rate for the next four quarters. From the way share prices change, it is apparent the investing world is not aware of the timing of dividend boosts in the REIT world. I maintain a database of about 130 REITs and include which month each usually announces its dividend hikes.

Summer is one season with the fewest number of increase announcements. However, it can also be an opportunity because the market is not looking for higher dividend rate announcements. There are three REITs that should announce higher payouts in July. You can pick up shares now, and when a new higher dividend is announced you get the double bonus of a possible share price increase on the news and the guaranteed benefit of a higher yield than the current quoted rate. Here are three stocks to consider buying in June for a July dividend increase.

Select Income REIT (Nasdaq: SIR) owns 100 buildings, containing 17 million square feet that are 88.7% leased. In January the company spun off its 266 industrial properties into a new REIT, Industrial Logistics Properties Trust (NYSE: ILPT). SIR retained 69% ownership in the new REIT and consolidates the industrial company results to its income statement. Revenue growth is generated by built in rent escalators and the development of raw land industrial properties at ILPT.

Select Income has steadily increased its dividend since the company’s IPO in early 2012. However, last year, there was not an increase. FFO per share has continued to grow and it is probable that SIR will get back on the dividend growth track this year. The next dividend announcement will be in mid-July, with a record date a week later and payment in mid-August. SIR currently yields 9.5%.

National Retail Properties, Inc. (NYSE: NNN) is a traditional triple-net lease REIT. The company owns over 2,800 (up by 300 in the last year) free-standing, single tenant retail properties. most of the REIT’s tenants are in business that cannot be hurt or replaced by online sellers. The top types of businesses are convenience stores, casual and fast food restaurants, auto service shops, fitness outlets, movie theaters and auto parts stores. When acquiring new properties NNN focuses on buying stores with great locations over high quality tenants. The good locations mean that the tenants will be successful and be able to pay the rents. Also, if a tenant does leave, it will be easier to re-lease a property in a great location.

NNN is a Dividend Aristocrat and has increased its dividend for 28 consecutive years. The current dividend is 71% of FFO. NNN will announce its next dividend boost in mid-July with record date at the end of the month and payment in mid-August.

Dividend growth has been about 4% per year and the current yield is 4.5%.

EdR, Inc. (NYSE: EDR) develops, acquires, owns and manages collegiate housing communities located near university campuses. Currently the company owns 79 (up 13 in the last year) communities in 50 different university communities. These communities are located 1/10th to 1/3rd of a mile from the campuses. The college housing business model has produced stable revenue growth, averaging 3.7% per year same store gains. Development and acquisitions boost that core growth rate.

Last year, EDR increased its dividend by 2.6%. Recently, the company sold a handful of older properties and will invest the proceeds into new development. FFO for 2018 will be flat compared to last year. I expect a dividend increase in the 2.0% to 2.5% range. EDR will announce its next dividend boost in mid-July with record date at the end of the month and payment in mid-August. The stock currently yields 4.1%.

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.
Uncategorized

How to Know If You Should Sell or Buy More When a High-Yield Stock’s Share Price Drops

Last week a popular high yield stock was hammered after the release of the company’s first quarter earnings report. The background facts for this stock are very similar to another widely held high yield stock that crashed in July 2017. The lessons of a year ago provide good insight on whether the price decline is a sign to buy or sell this currently troubled stock.

On May 31, Golar LNG Partners LP (Nasdaq: GMLP) reported the company’s 2018 first quarter results. Cash flow for the quarter was just 32% of the dividend rate. Management noted that the Board of Directors would review future dividend payments. The GMLP share price dropped by 29% over the next two trading days. Many investors who contacted me were convinced that a dividend cut was imminent. After reviewing the earnings report, management comments and any other facts I could find, my analysis is that the current GMLP situation is similar to what occurred with Uniti Group (Nasdaq: UNIT) in July and August 2017.

Last year the UNIT share price crashed from over $26 to a low of $13.81. The near 50% decline was due to the belief that UNIT’s primary customer Windstream Holdings (Nasdaq: WIN), which provides 70% of revenue, was soon to declare bankruptcy. A review of the financial situation and prospects for both companies revealed that possibility a bankruptcy by Windstream was unlikely, and even if, the UNIT cash flow was very well protected. This did not stop the financial press from continuing to predict the worst case.

It took six months for the market to figure out that the fear mongering was unjustified, and the UNIT share price started to recover. It is now back up to $21.80 and climbing. Investors who understood the fundamentals and bought shares at $15, $16, $17 and $18 are now very pleased with their investment decisions. Through this rough patch UNIT has continued to pay its $0.60 per share quarterly dividend.

The GMLP situation is similar.

Read More: The 10 Highest Yield Dividend Stocks Going Ex-Div This Week

Golar LNG Partners owns a fleet of LNG carrier ships and Floating Storage Regasification Unit (FSRUs). The company has a contract with its sponsor Golar LNG Limited (Nasdaq: GLNG) to purchase 50% of the initial production of a Floating Liquefied Natural Gas (FLNG) vessel. For the first quarter, distributable cash flow came up short because several vessels in the fleet have come off lease and the company is working to get them re-contracted. Management has been forthright in telling investors that this would be the case for the first half of 2018. That did not stock the GMLP share price from cratering on last week’s news.

A look at the fundamentals show that there is no reason to panic. The company has started the drop down process for its interest in FLNG Hilli Episeyo. The company has signed a 15-year Atlantic FSRU contract that will put an idle vessel back to work in the second half of 2018. These two contracts will provide enough cash flow to more than cover the current dividend rate. When other uncontracted vessels get signed with customers, GMLP will again be generating excess cash flow, and likely to raise the dividend, not cut it.

I expect that GMLP will do what management has stated and continue to the current dividend while we wait for the new contracts to bring on cash flow to make that payout secure. Even if the company does reduce the dividend it would be just for a few quarters, and then the company would be able to reinstate the payout at the current, or even a higher level.

GMLP is a stock on sale like where UNIT was in the Fall of 2017.

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Dividends

5 Low Risk Income Stocks Profiting from Stock Market Volatility

After a long period of low volatility, the measurement of stock price movement has moved much higher in 2018. Higher volatility is usually accompanied by big down days in the stock market. Over the last five months, the U.S. market has turned from a place of easy profits to one that has been tough on investor portfolio values. To make lemonade from lemons, consider those investments products that can pay you more based on increased volatility.

Measured volatility increases when the stock market goes down. The reason the metric was so low in 2017 is because down days were few and of limited magnitude. A recent article from Bloomberg highlighted the fact that in 2018 the average down day move of the S&P 500 this year has been 24% greater than the average up day gain. This is the largest gap since 1948. As I noted, down days result in increased volatility, so it’s understandable that even though the current S&P 500 is close to where it started the year, volatility has made stock investing more nerve racking. This year-to-date chart of the SPDR S&P 500 ETF (NYSE: SPY) graphically illustrates the volatility.

The widely quoted volatility index or VIX is derived from the prices of options contracts trading against the S&P 500. Many investors do not know that VIX is just a measure of options prices. This means that when volatility or VIX is elevated, traders who sell options are making more money. While options trading can be complicated and risky, there are income focused investment products that use option selling to enhance cash flow and support dividend payments from a portfolio that without options would not carry as attractive a yield.

You can find these buy-write or covered call products in the form or ETFs or closed-end funds. When you invest in one of these funds, you should look for recent dividend increases due to higher volatility, or if you buy shares in funds that haven’t yet increased payouts, sell the shares if you don’t get a dividend boost in the next quarter or two.

Here are five funds to consider:

PowerShares S&P 500 BuyWrite ETF (NYSE: PBP) is the largest buy-write ETF by assets under management. As an ETF, the fund tracks a specific index, in this case the CBOE S&P 500 BuyWrite Index.

This strategy consists of holding a long position indexed to the S&P 500 Index and selling a succession of covered call options, each with an exercise price at or above the prevailing price level of the S&P 500 Index.

The fund’s one, three and five year annualized returns have been 6.59%, 6.36%, and 6.57%, respectively. These returns reflect the ETF’s 5.0% yield plus most share price gains. Dividends vary significantly from quarter to quarter.

Nuveen S&P 500 Buy-Write Income Fund (NYSE: BXMX) is a closed-end fund that seeks to substantially replicate the price movements of the S&P 500 Index and by selling index call options covering approximately 100% of the Fund’s equity portfolio value with a goal of enhancing the portfolio’s risk-adjusted returns.

This fund has picked up more return from share price gains, averaging 10.7% over the last three years, against a 7% dividend yield.

Pricing is reasonable, with BXMX shares trading at a 1.3% premium to NAV.

Horizons NASDAQ 100 Covered Call ETF (Nasdaq: QYLD) is an ETF that tracks the CBOE NASDAQ-100® BuyWrite Index. As a result, this ETF will be more focused on the large technology stocks that make up a large part of the Nasdaq 100 stock index.

QYLD pays monthly dividends that have been quite consistent.

One-year and three-year average returns have been 12.3% and 10.3%, respectively.

The ETF carries a 10% yield, so most of your return will be the dividend payments.

Nuveen Nasdaq 100 Dynamic Overwrite Fund (Nasdaq: QQQX) is a closed-end fund using the Nasdaq 100 Stock Index as its basis for covered call writing.

Nuveen puts the “Dynamic” in this fund by selling call options on 35% to 75% of the value of the Fund’s equity portfolio –with a 55% long-term target– in an effort to enhance the Fund’s risk-adjusted returns. QQQX has put up an impressive 18.66% average return for the last three years while paying an approximate 6% dividend.

This is a buy-write fund that will give you a greater portion of the changes in the underlying stock index – either up or down.

QQQX is trading at a very stiff 15.6% premium to NAV.

First Trust Enhanced Equity Income Fund (NYSE: FFA) is a closed-end fund where the managers actively manage the stock portfolio and enhance income by selling call options.

The fund has produced a 6.8% average return for the last three years, and 9.5% per year over the last five years. Currently call options are out on 55% of the portfolio.

The dividend yield is a handsome 7.4% and the dividend rate has been increasing since 2013.

The shares are trading at a 6.1% discount to NAV.

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.