Seeking Alpha
  • FirstEnergy Corporation: Recovering Utility
    Editors' Pick FE Yesterday, 7:39 AM James Bjorkman 5 Comments

    Summary

    • FirstEnergy is a utility in transition and recently had to cut its dividend to finance the closure of inefficient power plants.
    • The company is retreating from deregulation to shield itself from the vicissitudes of the market and has submitted a rate plan to regulators to accomplish this goal.
    • FirstEnergy stock pays a good dividend that, after the cut, should be sustainable and pays patient investors to wait for the company's rebuilding plans to come to fruition.
  • How Can You Invest In An Irreplaceable Island That Pays A 4.44% Dividend Yield?
    Editors' Pick NYRT Yesterday, 7:15 AM Brad Thomas 23 Comments

    Summary

    • Like most non-traded REITs, equity is generated in a blind pool format, so investors really don't know what they're buying.
    • NYRT and ARC New York REIT have the same external manager, and they also have many of the same officers and board members.
    • Knowing that ARC New York REIT is well on its way to becoming a replica of NYRT, is it possible that the NYRT mergers with the twin?
    • "It's hard to go wrong owning real estate on this island" - Mike Happel of NYRT.
  • Prospect Capital: What Comes Next? Part 5
    Editors' Pick PSEC Fri, Sep. 12, 4:07 AM BDC Buzz 145 Comments

    Summary

    • This article discusses dividend coverage for Prospect Capital.
    • The company has a few initiatives to increase returns and improve dividend coverage over the coming quarters.
    • Most likely Prospect Capital will cut dividends by 10% to 20% once its spillover is used up.
  • Hercules Technology: BDC Risk Profiles
    Editors' Pick HTGC Thu, Sep. 11, 10:11 AM BDC Buzz 28 Comments

    Summary

    • This article discusses risk indicators for investing in Hercules Technology Growth Capital.
    • I consider Hercules Technology Growth Capital to have a much safer profile than other BDCs due to having 100% of debt investments in ‘true’ first lien senior loans.
    • Kroll has reaffirmed its corporate rating of HTGC as a BBB+ with a stable outlook.
    • Many BDCs do not disclose relevant metrics for indicating portfolio credit quality and this series will attempt to provide investors with this information.
  • Look At These Juicy Yields - Are They Really Appropriate For Your Retirement Portfolios?
    Editors' Pick AINV, HGT, KMP Wed, Sep. 10, 3:48 PM Chuck Carnevale 260 Comments

    Summary

    • Are high-yield stocks appropriate for retirement portfolios?
    • It’s imperative to analyze the entire spectrum of the plus and minuses that a given class of security possesses and offers.
    • Deciding whether a given equity class is appropriate for your retirement portfolio is a complex issue.
    • This important decision is best made by the individual retired investor according to their unique needs and psychological makeup.
  • 'High Cotton' For Highwoods Properties
    Editors' Pick HIW Wed, Sep. 10, 7:00 AM Brad Thomas 29 Comments

    Summary

    • One of the key differentiators separating the “wheat from the chaff” with Highwoods has been the very consistent revenue stream.
    • Highwoods has demonstrated that prudent capital management and disciplined risk control deliver durable earnings results.
    • I’m recommending Highwoods (at the current price of $42.55) as I believe the margin of safety (as defined by dividend coverage) is exceptionally strong.
  • Pacific Coast Oil Trust And Measure P
    Editors' Pick ROYT Tue, Sep. 9, 6:58 PM Casey Hoerth 47 Comments

    Summary

    • Measure P should not have significant impact on the trust's current operations.
    • Future impact could be substantial.
    • Despite the risk, the trust is very reasonably priced here.
  • Thanks Burger King For The Whopping Profits: Here's Where The Money Went
    Editors' Pick BKW, BRK.B, SPY Tue, Sep. 9, 7:32 AM Dale Roberts 41 Comments

    Summary

    • I only hold 4 individual stocks, well now that's 3 thanks to Burger King purchasing my favourite known as Tim Hortons.
    • I sold 2/3 on the day that it was announced with a 22% spike, and then 1/3 the following day with another 10% increase in profits. Tim Hortons delivered 250%.
    • Tim Hortons delivered a 250% return from March of 2006 to September 2014, a wonderful and rare gift for an investor.
    • Cash is king, but we need to be in the markets as well. Perhaps I can have my cake and eat it too.
  • Will This Mortgage REIT Become A Dividend Raising Machine?
    Editors' Pick BXMT Tue, Sep. 9, 7:00 AM Brad Thomas 29 Comments

    Summary

    • Given the continued economic recovery that we’re seeing today, I have been seriously considering another investment in the mREIT sector.
    • Economic conditions are sustaining a favorable commercial real estate market as liquidity and fundamentals in the commercial real estate sector are generally in balance.
    • I’m initiating a BUY rating on Blackstone Mortgage and I plan to begin a position within the next 30 days.
  • Why I Consider Extra Space The 'Mac-Daddy' Of Self-Storage
    Editors' Pick EXR Mon, Sep. 8, 7:15 AM Brad Thomas 29 Comments

    Summary

    • I liken Extra Space to the growth engine of McDonald's back when the chain had just a few stores in the 1950's.
    • The favorable industry fundamentals make Extra Space a more attractive investment thesis.
    • I like a company that owns real estate and turns its most valuable asset (data) into dividends. That's also why I own the Mac-Daddy of Self Storage, because everyone needs EXTRA SPACE.
  • You're Not A Sucker, But We All Should Be Better Second-Level Thinkers
    Editors' Pick SIR Mon, Sep. 8, 7:00 AM Brad Thomas 75 Comments

    Summary

    • My intent was to provide investors with a harbinger – or warning – that chasing yield – for the sake of yield – can be dangerous.
    • For the record, consider yourself warned, not insulted, and if anyone was offended by my use of the word “sucker,” I was not aiming the message at YOU.
    • It’s just a matter of keeping risk under control and making sure that the returns you realistically expect are worth the risk you are taking.
  • DGI For Dummies: Managing Your Dividend Growth Portfolio
    Editors' Pick AAPL, BRK.B, CL Fri, Sep. 5, 3:36 PM Nicholas Ward 242 Comments

    Summary

    • I explain why I've chosen to become a dividend growth investor.
    • Key thinking points of DGI explained.
    • Results analyzed to confirm my DGI decision.
  • Analyzing Prospect Capital Corp.'s Recently Restructured Control Investments And Its Impact On NII
    Editors' Pick PSEC Fri, Sep. 5, 7:52 AM Scott Kennedy 90 Comments

    Summary

    • PSEC reported disappointing NII of $0.25 per share for the fiscal fourth quarter of 2014 which led me to question what occurred within the company’s investment portfolio.
    • Within PSEC’s 10-K for the fiscal year-ended 6/30/2014, management disclosed the company had restructured most of its control investment portfolio during the fiscal fourth quarter of 2014.
    • This restructuring was in anticipation of the adoption of an update to ASC 946 where PSEC will consolidate certain wholly-owned and substantially wholly-owned holding companies to be GAAP compliant.
    • Debt investments at the holding company level would need to be consolidated per the update to ASC 946 whereas debt investments at the operating company level do not.
    • This analysis will show the impacts of several debt/equity conversions in association with the restructured control investment portfolio and explain how this event directly affects NII.
  • Pinnacle West Capital: Do You Like Green?
    Editors' Pick PNW Fri, Sep. 5, 6:00 AM James Bjorkman 5 Comments

    Summary

    • Pinnacle West Capital shareholders endured years of no dividend increases and weak financial performance by the company.
    • More recently, Pinnacle West has recovered from its past problems and is leading the nation in turning the rise of solar power to its benefit.
    • Pinnacle West pays an enticing rising dividend that appears secure and stands a good chance of being raised further.
  • Yield On Cost: A Vitally Important Consideration For Retired Investors
    Editors' Pick SWK, JNJ Thu, Sep. 4, 7:19 AM Chuck Carnevale 467 Comments

    Summary

    • With their future financial security at stake, business perspective investing is the most prudent philosophy for retired investors.
    • A focus on dividend income and growth of income can carry retired investors through troubled waters.
    • Understanding Yield on Cost facilitates the implementation of a sound and potentially growing income producing investment plan.
    • The term Growth Yield better accentuates the importance and value of Yield on Cost.
  • Why Will This New Net Lease REIT Be A Game Changer?
    Editors' Pick STRE Wed, Sep. 3, 7:01 AM Brad Thomas 62 Comments

    Summary

    • Most of the Triple Net REITs are focused on credit underwriting and few of them are in the trenches looking at unit-level economics.
    • While the Triple Net industry has enormous size, STORE focuses on the highly fragmented sub-sector with few participants addressing the long-term capital needs of middle-market and larger unrated companies.
    • STORE is more of bank than a REIT. The company underwrites its investments based more on contract risk than credit risk.
  • Has Campus Crest Hit Bottom?
    Editors' Pick CCG Tue, Sep. 2, 7:15 AM Brad Thomas 53 Comments

    Summary

    • Campus Crest appears to be floating at the bottom of the ocean floor.
    • The catalysts offer good upside although the dividend payout ratio is tight.
    • I’m going to start to nibble on a few shares later in the week.
  • AT&T And Consolidated Edison A 'Tell' Of 2 Champions: Part 3
    Editors' Pick ED, T Fri, Aug. 29, 11:49 AM Chuck Carnevale 201 Comments

    Summary

    • Once an investor enters retirement it is not uncommon that their investment objective turns from total return to a safe income stream.
    • With interest rates continuing at historic low levels, the typical advantages to fixed income have been greatly reduced.
    • The highest quality bonds available today offer little in the form of yield consequently their typical safety attributes have also been reduced.
    • AT&T and Consolidated Edison are most appropriate for investors requiring the highest current yield possible within the strictest constraints of safety.
    • And the clear winner is revealed.
  • The Pathway To Creating Wealth With REIT Diversification
    Editors' Pick EXR, GGP, OHI Fri, Aug. 29, 8:45 AM Brad Thomas 88 Comments

    Summary

    • One key part of the diversification benefits of owning REITs has to do with the longer-term market cycles.
    • Why go home early when you can take advantage of the diversification benefits and contrasting market cycles?
    • Real estate has an average 18-year cycle so the bull markets for the real estate sector is much longer than the stock market business cycle.
  • If STAG Industrial Was A Car It Would Be A Mustang
    Editors' Pick STAG Thu, Aug. 28, 7:00 AM Brad Thomas 50 Comments

    Summary

    • Triple Net REITs hold their value extremely well and because of the long-term nature of the leases, there is considerably less volatility in cash flows.
    • Although the Triple Net REITs do pay the highest dividends in the equity REIT sector, I own shares in these REITs because of the dependability of the dividend income.
    • STAG Industrial is the All-American muscle car in my REIT portfolio.
    • I’m very confident with the management team and the disciplined risk management practices that make-up the “muscle-like” investment thesis.
  • 3 Utility Stocks To Consider Now
    Editors' Pick AEP, HE, SAN Wed, Aug. 27, 6:43 PM James Bjorkman 40 Comments

    Summary

    • Utilities have been out of favor since the beginning of the current bull market several years ago, but utilities are good values and deserve a place in balanced portfolios.
    • Consolidated Edison had a weak 2013 financially due to Hurricane Sandy, but it is recovering nicely and sports an attractive yield.
    • American Electric Power has been a steady performer and stands to benefit down the road from continuing development of shale oil.
    • Telefonica, S.A. is a good utility to diversify your portfolio internationally, and is a good play on the recovering Spanish economy.
  • Don't Layer Currency Risk On Top Of Equity Exposure
    Editors' Pick DXJ, HEDJ, DXPS Wed, Aug. 27, 2:34 PM WisdomTree 5 Comments
  • Apollo Investment: BDC Risk Profiles
    Editors' Pick AINV Wed, Aug. 27, 8:51 AM BDC Buzz 20 Comments

    Summary

    • This article discusses items related to risks for investing in Apollo Investment.
    • Apollo Investment has been consistently improving its quality of portfolio investments since 2012.
    • BDCs invest in smaller private companies with minimal reporting requirements, making risk assessment difficult.
    • Many BDCs do not disclose relevant metrics for indicating portfolio credit quality, and this series will attempt to provide investors with this information.
  • I'm Waiting Patiently For This Blue Chip REIT To Go On Sale
    Editors' Pick NNN Wed, Aug. 27, 7:00 AM Brad Thomas 50 Comments

    Summary

    • It’s pain to see that Mr. Market isn’t cooperating with me – since January 1st (2014) NNN has been the best performing Triple Net REIT.
    • NNN is better positioned to successfully execute its strategy than many other Triple Net peers in a rising interest rate environment.
    • NNN is executing at ALL CYLINDERS and there are few REITs that I covet and this is one of them.
    • Finding attractive dividend-paying stocks is only one piece of the puzzle. Buying them is another piece.
  • Safe Large-Cap Blue-Chip Dividend Champions For Your Retirement Portfolios: Part 2
    Editors' Pick AFL, MCD, PH Tue, Aug. 26, 9:54 PM Chuck Carnevale 166 Comments

    Summary

    • Retired investors should appropriately be more concerned about safety and growth of income than about earning high returns.
    • Retired investors no longer have the opportunity for pay raises associated with working.
    • Most recognized blue-chip dividend paying stocks have been in business for many decades, and in some cases for a century or more.
    • Many Dividend Champions have increased their dividends for 40, 50 or more years in a row.
    • The notion that blue-chip Dividend Champions are too risky for retired investors is greatly exaggerated.
  • Monte Carlo Simulation Techniques Show 9% Total Return For Donaldson Company Inc. During The Next 5 Years
    Editors' Pick DCI Tue, Aug. 26, 2:48 PM Robin Nieland 14 Comments

    Summary

    • Donaldson Company Inc. is a great and stable company based on different financial metrics in the last decade.
    • The company is diversified in their markets and products. They have stated ambitious goals to increase sales to $3 billion in FY 2016 and $5 billion in FY 2021.
    • Monte Carlo simulations have shown that on average 9% annual return can be expected at current prices.
    • Dividend growth of 10% seems sustainable, even with lower than expected sales. Free cash flow payout ratio increases slightly from 35% to 41%.
    • Investing in Donaldson at a P/E-ratio of 20 instead of 23 improves your expected annual return by 3.2 percentage points to 12.3%.
  • International Flavors & Fragrances Inc.: Does It Still Smell As Sweet?
    Editors' Pick IFF Tue, Aug. 26, 11:49 AM James Bjorkman Comment!

    Summary

    • IFF recently reported solid second-quarter earnings that gave the stock a boost, after it had sold off prior to the report.
    • The company has been raising the dividend at a rapid pace, and has shown good execution in its financials over the past few years.
    • IFF is executing well and represents a solid holding in a diversified income-oriented portfolio.
  • Is The Middle Class On A Sinking Ship? No Economic Good Times For Them Or Their Retirement
    Editors' Pick BBEP, CLMT, MAIN Tue, Aug. 26, 9:43 AM George Schneider 333 Comments

    Summary

    • For five years, the U.S. economy has been expanding steadily, yet polling shows most Americans still think the economy is pretty miserable.
    • The stock market soared from the March 9, 2009 low of 666 on the S&P 500 index to over 2000 today. Most families didn't participate.
    • Families' income is lower now, when adjusted for inflation, than when the recovery began five years ago.
    • Buying supplemental income through dividend growth investing can close the gap.
    • Many workers have no, or inferior retirement plans at work.
  • Exxon Mobil: Why I Believe The Shares Are Modestly Undervalued
    Editors' Pick XOM Tue, Aug. 26, 9:25 AM Stock Gamer 3 Comments

    Summary

    • My projections for future free cash flow and earnings payout level suggests that XOM can comfortably drive a 9%-10% annual growth in dividend per share.
    • However, current share price implies a growth rate of about 7%.
    • A 2-stage dividend discount model suggests the shares are 7% undervalued.
  • Prospect Capital: What Comes Next? Part 4
    Editors' Pick PSEC Tue, Aug. 26, 9:05 AM BDC Buzz 148 Comments

    Summary

    • Prospect Capital has become heavily reliant on fee income to cover dividends due to its declining portfolio yield.
    • Prospect Capital was 25% short of covering dividends for FQ4 2014.
    • The lower than projected NII was mostly due to lower amounts of dividend and fee income.
  • Sucker Yield REITs: Does Whitestone Qualify?
    Editors' Pick WSR Tue, Aug. 26, 8:08 AM Brad Thomas 34 Comments

    Summary

    • “A ridiculous yield combined with an inherently vulnerable business model that sends ominous signals of doom.” Josh Peters, author of The Ultimate Dividend Playbook.
    • As a true measure of protection, it’s critical that investors don’t look at the yield until analyzing the safety of the dividend.
    • This article is my first in a series called “Sucker Yield REITs” and I intend to provide a meaningful and quantitative analysis on REITs that appear to be “sucker yields”.
    • I’m not tempted by the “sucker yield”; just show me a REIT with a dividend payment that lasts like an everlasting gobstopper!
  • Retirement Strategy: Avoiding Uncertainty Makes More Sense Than Dealing With It
    Editors' Pick TAXI Mon, Aug. 25, 5:59 PM Regarded Solutions 177 Comments

    Summary

    • Individuals who seek a less risky approach towards retirement investing should sidestep uncertainty when selecting dividend stocks.
    • There are too many other options to invest in to have to needlessly worry about any single one.
    • A real life example occurring right now to avoid.
  • This REIT CEO Is The 'Real Deal' With Durable Dividend Appeal
    Editors' Pick VTR Mon, Aug. 25, 7:00 AM Brad Thomas 18 Comments

    Summary

    • Within my short-list of best CEOs there is one that stands out above the rest.
    • What’s important to recognize is that Debra Cafaro was not a typical CEO when she was hired in 1999, she was somewhat of an underdog.
    • I’m not pulling any punches, Debra Cafaro is the “real deal” and she can trade jabs better than anyone else in REIT-dom.
  • Pacific Coast Oil Trust: Regulatory Fears Unfounded, While Units Yield 15% And Sell At A Discount
    Editors' Pick ROYT Fri, Aug. 22, 6:24 PM Reactive Event Driven Investors 115 Comments

    Summary

    • Anti-fracking ballot measure in Santa Barbara creates confusion.
    • As is sometimes the case, confusion has created a buying opportunity.
    • We project that monthly dividends will remain unchanged and units will appreciate over time.
  • Diversify Your Income Portfolio With Allianz
    Editors' Pick AZSEY Fri, Aug. 22, 3:39 PM The Outsider 22 Comments

    Summary

    • The insurance sector is usually overlooked by income investors, but it can add diversification and stability.
    • Allianz may be a good opportunity, being one of the world's largest insurance companies with a large exposure to asset management through PIMCO.
    • It currently offers an interesting yield above 4%, that has good growth prospects over the next three years.
  • American Realty Capital Properties: A Good Value That Is Gaining Strength
    Editors' Pick ARCP Thu, Aug. 21, 11:27 PM James Bjorkman 48 Comments

    Summary

    • ARCP's stock price has struggled since announcing its deal to purchase real estate leased by Red Lobster restaurants due at least in part to concerns about Red Lobster's viability.
    • A newly disclosed document issued by the former owner of Red Lobster, however, suggests that Red Lobster's problems are fixable.
    • Combined with ARCP's strong financials, ARCP is a good value for income investors.
  • 25 Dividend Champion Investment Opportunities: Something For Every Retired Investor, Part 1
    Editors' Pick SPY, AFL, CB Thu, Aug. 21, 6:27 PM Chuck Carnevale 295 Comments

    Summary

    • The stock market as measured by the S&P 500 continues to hover near an all-time high.
    • It is getting harder to find reasonably valued dividend growth stocks to invest in today.
    • There are still high-quality attractive blue-chip dividend growth stocks available for current investment.
    • 25 Dividend Champion research candidates at or near fair value currently.
  • I'm Glad I Have This West Coast Gem In My REIT Portfolio
    Editors' Pick ROIC Wed, Aug. 20, 4:39 AM Brad Thomas 25 Comments

    Summary

    • I remember building a shopping center in a rural market around twenty years ago and I had steel in the air before signing the first lease.
    • So now you have it, I’m extraordinarily critical when it comes to Shopping Center REITs.
    • One of my biggest lessons as a real estate developer was to only invest in high-quality markets; that’s where property fundamentals are the strongest.
    • With an expanded institutional base, ROIC shares are becoming harder to pick up “on the cheap” and the high-quality asset mix is highly correlated to the current valuation premium.
  • Should An Intelligent Investor Buy This Cyber-Focused Office REIT?
    Editors' Pick OFC Tue, Aug. 19, 7:20 AM Brad Thomas 10 Comments

    Summary

    • COPT does not focus on leasing to tenants engaged in weapon system production.
    • COPT has a strategic tenant niche that provides real estate solutions serving a specialized cyber-based platform.
    • The dividend cut in 2012 was substantial, and since that time, the company has generated reduced earnings (FFO per share).
    • I can't justify an investment in this REIT without adequate protection of principal.
  • Fifth Street Senior Floating Rate's Recent Material Equity Offering And Its Impact On NAV
    Editors' Pick FSFR Mon, Aug. 18, 1:47 PM Scott Kennedy 35 Comments

    Summary

    • On 8/13/2014, after FSFR reported results for the fiscal third quarter of 2014, the company announced the anticipated equity offering that was discussed in my prior article.
    • However, what surprised markets and myself was the size of the announced equity offering (22.8 million shares of common stock; over three times the size of FSFR’s initial public offering).
    • This article incorporates FSFR’s recently announced material equity offering into the financials and shows why this event will materially decrease the company’s current NAV.
    • The net issuance price of FSFR’s recently announced equity offering is $12.14 per share which is materially below the company’s NAV as of 6/30/2014 thus materially diluting existing shareholders.
    • My buy, sell, or hold recommendation for FSFR is stated in the “Conclusions Drawn” section of the article.
  • Target Poised To See Higher Prices On Improved Sentiment
    Editors' Pick TGT Mon, Aug. 18, 7:38 AM Josh Arnold 7 Comments

    Summary

    • Target has had a rough go of it over the past year, and shares have languished.
    • A recent guidance cut underlies operational issues.
    • Target's yield and value should serve to buoy shares on pullbacks.
  • Dividends Matter If They Matter To You
    Editors' Pick VIG, SDY, NOBL Thu, Aug. 14, 4:48 PM David Van Knapp 645 Comments

    Summary

    • Recent articles have debated whether dividends matter during accumulation or retirement.
    • Some articles state that dividends don't matter, while others state that they do.
    • "Do dividends matter" is the wrong question. The correct question is "Do dividends matter to you?"
  • 2 Key Tests For The True Dividend Growth Investor
    Editors' Pick BCR, BKLN, HYG Thu, Aug. 14, 2:44 PM Eric Parnell, CFA 232 Comments

    Summary

    • Dividend growth investing is one of the most popular and time-tested stock market investment strategies.
    • Who among us are truly dividend growth investors? Do you pass the two key tests?
    • Will you be ready to not only withstand, but capitalize on the potential risks that lie ahead?
  • American Capital Agency Corp.'s Dividend Sustainability Analysis (Post Q2 2014 Earnings) - Part 1
    Editors' Pick AGNC Thu, Aug. 14, 11:34 AM Scott Kennedy 49 Comments

    Summary

    • AGNC reported estimated REIT taxable income ("ERTI") available to common shareholders of $100 million (or $0.28 per common share) for the second quarter of 2014.
    • However, AGNC reported ERTI and net dollar roll income available to common shareholders of $238 million (or $0.67 per common share) for the second quarter of 2014.
    • AGNC had a quarterly ERTI underpayment (overpayment) of ($130) million and a quarterly payout ratio of 230%.
    • However, AGNC had a quarterly ERTI and net dollar roll underpayment (overpayment) of $8 million and a quarterly payout ratio of 96%.
    • Part 2 will discuss some additional topics/trends to consider in a general net rising (and falling) interest rate environment regarding AGNC’s, MTGE’s, and NLY’s dividend sustainability.
  • I'm Staying On The Gramercy Property Trust Train
    Editors' Pick GPT Thu, Aug. 14, 7:00 AM Brad Thomas 9 Comments

    Summary

    • Since my initial investment my total return in Gramercy is over 55% (since September 3, 2013).
    • In order for Gramercy to “move the needle” it must continue to feed the engine with accretive high-quality net lease investments.
    • So unlike the majority of Gramercy’s peer group, the majority of total return for this security is derived from capital appreciation.
    • It’s clear that Gramercy has had a nice run but based upon the trends unfolding I see more potential.
  • High-Yield Bonds: Call Waiting
    Editors' Pick HYG, JNK, HYLD Wed, Aug. 13, 2:45 PM AllianceBernstein 7 Comments
  • 5 Of 7 Regional Banks Trade At Credit Spreads Better Than Too-Big-To-Fail Banks
    Editors' Pick ALLY, AXP, C Wed, Aug. 13, 1:17 PM Donald van Deventer 2 Comments

    Summary

    • The debate about the effective funding subsidy for the too-big-to-fail banks and their implicit government guarantee is an important one.
    • We present bond market pricing that shows 5 of 7 regional banks traded at better credit spreads than the U.S. Cost of Funds Index, the proxy for TBTF funding costs.
    • High secondary trading volume in the TBTF bank bonds is not necessarily a plus. Exxon Mobil, with $220,000 of trade volume on August 11, is in stronger financial condition.
  • A Few Net Lease REITs To Avoid
    Editors' Pick GPT, SIR, OLP Wed, Aug. 13, 7:00 AM Brad Thomas 48 Comments

    Summary

    • It’s important however that investors shouldn’t paint all Net Lease REITs by the same brush, that is, be careful not to purchase a Net Lease REIT without ample due diligence.
    • While I consider the O, NNN, and WPC to be high-quality REITs worthy for most any investor portfolio, the best time to purchase these stocks is when on sale.
    • Most other investors are preoccupied with how much money they can make and not at all with how much they may lose.
  • Western Asset Mortgage Capital Nails The Quarter - Cautious On 18%
    Editors' Pick WMC Tue, Aug. 12, 11:12 AM Rubicon Associates 27 Comments

    Summary

    • Western Asset Mortgage nailed the quarter, turning in impressive results.
    • At 18%, WMC is one of the - if not the - highest-yield mREITs in the sector.
    • I am holding at current position levels until I have more faith in the quality of dividends.
  • Here's A Cool Way To Soak Up The Dividends With This Net Lease REIT
    Editors' Pick EPR Tue, Aug. 12, 7:00 AM Brad Thomas 33 Comments

    Summary

    • Unlike Windstream who has proposed to convert to a REIT by entering into long-term telephone line leases, EPR Properties has a uniquely-positioned business model that requires knowledge.
    • EPR does not contend directly with most Triple Net REITs and as a result, the company has been able to source new investments with less competition.
    • The 6.29% dividend yield represents an extremely attractive opportunity for yield-hungry investors in today's low interest rate environment.
    • I like EPR’s uniquely-positioned net lease platform and it’s clear that the management team has done an outstanding job recovering from the dividend cut a few years ago.