Our Top High-Yield Ideas For 2019

Jan. 11, 2019 9:15 AM ETDLNG.PB, MFCSF, COLB, DR:CA45 Comments


  • These three picks are all up more than 10% so far in 2019.
  • The three themes are LNG, specialized healthcare, and small banks.
  • The yields range from ~5% to 10%, all with strong coverage.
  • They all issue 1099s - no K-1s.
  • This idea was discussed in more depth with members of my private investing community, Hidden Dividend Stocks Plus. Start your free trial today »

At Hidden Dividend Stocks Plus, we aim to seek out undervalued income vehicles which have been overlooked or undervalued by the market. Sometimes that type of situation can come from a broad market selloff, such as the one we experienced in the fourth quarter of 2018.

Even preferred stocks got discounted in the general downturn, sending them far below their $25.00 call values.

An LNG Shipping Pick:

Such was the case with the Dynagas LNG Partners LP, 8.75% Series B Fixed To Floating Rate Cumulative Redeemable Preferred Units, (DLNG.PB), which we added to the HDS+ portfolio on 12/31/18, at a deeply discounted price of $17.99.

These units have bounced back big time in 2019, rising over 20% year to date, vs. a ~3% rise for the S&P 500:

The thing is, though, that they're still more than 13% below their $25.00 call value, which gives them a ~10% yield, with their first distribution coming soon in early February.


These are cumulative units, meaning that DLNG must pay you for any skipped distributions before paying common distributions. In addition, they rank senior to the common units in a liquidation scenario and they have much better distribution coverage.

The coupon rate is 8.75%, but at $21.67, they yield over 10%. They don't go ex-dividend until 2/1/19, with a 2/22/19 pay date:

Another interesting feature is that they have a floating rate, of 5.593% above the three-month LIBOR rate, after their 11/22/2023 Call Date. Here are two looks at how this might play out in the future:

With the three-month LIBOR rate at ~2.81%, the total payout would be $2.10, for an 8.40% rate, but, since these units are only $21.67, the equivalent yield would be 9.69%, which is slightly lower than their current yield of 10.09%.

However, if the 3-month LIBOR rate

Our Marketplace service, Hidden Dividend Stocks Plus, focuses on undercovered, undervalued income vehicles, and special high yield situations.

We scour the US and world markets to find solid income opportunities with dividend yields ranging from 5% to 10%-plus, backed by strong earnings.

We publish exclusive articles each week with investing ideas for the HDS+ site that you won't see anywhere else.

This article was written by

Double Dividend Stocks profile picture
Target 5-10% yields backed by solid earnings for better portfolio income.

Robert Hauver, MBA, was VP of Finance for an industry-leading corporation for 18 years, and publishes SA articles under the name DoubleDividendStocks. TipRanks rates DoubleDividendStocks in the Top 25 of all financial bloggers, and Seeking Alpha rates us in the Top 5 of several categories, including Dividend Ideas, Basic Materials, and Utilities. 

"Hidden Dividend Stocks Plus", a Seeking Alpha Marketplace service, which focuses on undercovered and undervalued income vehicles. HDS+ scours the world's markets to find solid income opportunities with dividend yields ranging from 5% to 10%-plus, backed by strong earnings.

Disclosure: I am/we are long DLNG.PB, MFCSF, UMPQ. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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