TAL International: Another Cheap And Unusual High Yield Pick

| About: Triton International (TRTN)

Income investors are challenged by a low yield environment that is likely to last for the foreseeable future. I believe one has to be creative in this type of environment to develop a well-diversified income portfolio. In previous articles I have profiled unusual yield picks such as an aircraft leasing company (FLY), a commodity producer with a 5% yield (CLF) and a business development company with a 7% distribution (NGPC). Today's high yield idea concerns a container leasing company, TAL International (TAL).

8 reasons TAL is a nice addition to an income portfolio at $33 a share:

  1. TAL yields 6.7% and the company has doubled its distribution rate over the last two years.
  2. Insiders made their first purchases of the year in late May.
  3. Consensus earnings estimates for both FY2012 and FY2013 have risen nicely over the past three months.
  4. The company grew earnings at a 13% annual clip over the past five years and has a forward PE of 8, a discount to its five year average (10.8).
  5. Analysts expect revenue growth of 7% to 11% for both FY2012 and FY2013 and TAL has a five year projected PEG of under 1 (.85), unusual for such a high yielder.
  6. The median analysts' price target for the 8 analysts that cover the stock is $42.50 a share.
  7. The company has increased operating cash flow by 70% over the last three completed fiscal years (FY2009 through FY2011) and sells at four times OCF.
  8. The stock looks like it is trading in a medium term technical support range (see chart).

(Click to enlarge)

Disclosure: I am long CLF.