*** Official High Yield Investing Thread *** (1 Viewer)

[Short Corner]

Safe and high return are kind of contradictory.  Higher dividend implies higher risk.

 

[Sand]

Safe and high return are kind of contradictory.  Higher dividend implies higher risk.

Why I wrote this up above:

So this is important to note given what we're talking about here.  In the last recession I read an article (which I've not been able to find) where a guy did a study and found that all but one company in the S&P with a yield of 6+% cut the dividend before the market turned in 2009.  Investing in high yield issues, particularly REITs and C-Corps, is dependent on overall economic conditions.  I really like this guy's articles as a basic look into when economic conditions start to change.  If macro conditions change this whole area sees pressure.  In 2008 some of these areas got absolutely smoked.

We can go through each class case by case and each have a different risk factor set, but there is no doubt that this group can get pressured first.

 

[Rattle and Hum]

Here is a one-year old but informative article about an investment option that gives significant access to the market but caps its return by selling "insurance" on the portfolio. This insurance generates an additional 3.5-4% yield over holding the SP500 (2% yield). This fund(s) is probably not for a long-term, growth investor but may be appropriate for those who still want stock exposure with only a 5-10 year horizon. Over a long-term the SP500 should perform better than this fund(s).

SPXX sells for a premium to its NAV (value of portfolio) while BXMX sells for a discount to its NAV. These are closed-end funds that trade like a stock. HSPX is an ETF with a similar strategy.

TLDR: If you seek to remain invested in market, have a shorter time-frame than 10 years, and/or are worried about the market slowing for a while, consider giving up a bit of upside for a 6% yield. Because of their design, SPXX & BXMX should outperform the SP500 in declining, neutral, or slightly bullish markets.

 

[Bob Sacamano]

:sehorn:

 

[audiophile]

I would say PSEC, VTR, and O all held up pretty well Friday. 

Thanks for the feedback, R&H.  I made some moves yesterday...

I already own some VTR and added to my position.  

O was not on my radar, so I researched and liked what I saw (5% yield with strong history of increasing div) so I initiated a position there - thank you!

Had never heard of PSEC and info was tougher to come by on this one during my research.  While the yield is certainly eye-popping at 11%-ish, I saw that they have actually been decreasing their div payouts over the last several years.  So that, combined with the general lack of data, led to me decide not to start a position.  It's on my watchlist though.....

During my research, a new one popped up - WPC.  Currently ~ 6% yield and a solid history of increasing dividends, so I also initiated a position there.

Lastly, I also added to my HCN position, which is currently yielding right around 6% also.  

 

[Tiger Fan]

Interesting read

https://seekingalpha.com/article/4143893-market-correction-perfect-time-buy-2-high-yield-low-risk-etfs#alt1

 

[Rattle and Hum]

O was not on my radar, so I researched and liked what I saw (5% yield with strong history of increasing div) so I initiated a position there - thank you!

Had never heard of PSEC and info was tougher to come by on this one during my research.  While the yield is certainly eye-popping at 11%-ish, I saw that they have actually been decreasing their div payouts over the last several years.  So that, combined with the general lack of data, led to me decide not to start a position.  It's on my watchlist though.....

During my research, a new one popped up - WPC.  Currently ~ 6% yield and a solid history of increasing dividends, so I also initiated a position there.

Lastly, I also added to my HCN position, which is currently yielding right around 6% also.  

Full disclosure: @Sand mentioned O.

I don't own PSEC but the insider buying has intrigued me. I guess time will tell whether the dev cuts are due to performance or them getting ahead of the interest rate hikes since money will undoubtedly be more expensive for them to borrow in the future.

 

[gianmarco]

 

[Sand]

Full disclosure: @Sand mentioned O.

I don't own PSEC but the insider buying has intrigued me. I guess time will tell whether the dev cuts are due to performance or them getting ahead of the interest rate hikes since money will undoubtedly be more expensive for them to borrow in the future.

As noted in the stock thread, yesterday I bottom picked a bit of KIM.  Almost 8% well covered yield.  The street hates REITs right now, particularly in the retail area.  

At least I think I bottom picked. 

 

[Rattle and Hum]

Original post has been edited to include mentioned investments, their symbols, and their yield.

 

[Phil Elliott]

DSL - Doubleline Income Solutions CEF 9% at $20. Monthly div. Global income, including emerging markets. Jeffrey Gundlach

 

[pack100]

.

 

[Rattle and Hum]

TRTN has an interesting Five-Year Chart and yields almost 6%. I learned about this stock through This Post which now seems to have gone premium.

What is everyone doing with the rise in volatility?

 

[Sand]

To at least try and start something here, I picked one of the easier ones here to look at - MLPs.  Ok, maybe not so easy.  

As a start, most of these are in the pipeline or fuel storage industries.  There may be some outliers that do other business - I don't follow those. 

These entities, like REITs, are mandated to distribute the majority of their income to unit holders (note - not shareholders).  These are partnerships, of which you are a part.  The structure of these can be complex, with most times there being a limited partner and a general partner.  The relationship is set by the structure and can vary.  Many times the GP can be the one that sees leveraged increases in distributions when things are going well.  Just depends on the relationship.

You'll also see comments about how the tax structure of MLPs makes life complicated.  It can (though Turbotax handles it fine).  These generally issue K-1s instead of 1099s.  Often there are tax breaks associated with these in taxable accounts.  There is also the issue of holding these in tax deferred vehicles - they can shed UBTI (unrelated business taxable income), which, if over $1000, can trigger an IRA to have to file it's own tax forms.  Yuck.  Luckily you have to own a ####load, generally, to hit that threshold.  To be safe, though, own these in taxable.

Also, a bit on how to evaluate these.  They do tend to be looked at somewhat as a bond-like entity, so are sensitive to interest rate swings.  

In short, though, these can be quite safe, high dividend vehicles.  I personally own EPD and MMP and have for quite a while.  These two are some of the blue chips of the space.  As with all these spaces there can also be some small, high risk companies.  If I were constructing a high yield income portfolio some of these would definitely be a part of it.

 

[Phil Elliott]

For taxable accounts you may want to look at NVG Nuveen AMT free muni income fund

6% monthly at $14.40 (fed tax free)

Your effective yield will be higher depending on your marginal tax bracket, although they have been modified in the recent tax bill. If you have state income tax, nuveen may have similar state muni funds that are state tax free also.

 

[GoBirds]

To at least try and start something here, I picked one of the easier ones here to look at - MLPs.  Ok, maybe not so easy.  

As a start, most of these are in the pipeline or fuel storage industries.  There may be some outliers that do other business - I don't follow those. 

These entities, like REITs, are mandated to distribute the majority of their income to unit holders (note - not shareholders).  These are partnerships, of which you are a part.  The structure of these can be complex, with most times there being a limited partner and a general partner.  The relationship is set by the structure and can vary.  Many times the GP can be the one that sees leveraged increases in distributions when things are going well.  Just depends on the relationship.

You'll also see comments about how the tax structure of MLPs makes life complicated.  It can (though Turbotax handles it fine).  These generally issue K-1s instead of 1099s.  Often there are tax breaks associated with these in taxable accounts.  There is also the issue of holding these in tax deferred vehicles - they can shed UBTI (unrelated business taxable income), which, if over $1000, can trigger an IRA to have to file it's own tax forms.  Yuck.  Luckily you have to own a ####load, generally, to hit that threshold.  To be safe, though, own these in taxable.

Also, a bit on how to evaluate these.  They do tend to be looked at somewhat as a bond-like entity, so are sensitive to interest rate swings.  

In short, though, these can be quite safe, high dividend vehicles.  I personally own EPD and MMP and have for quite a while.  These two are some of the blue chips of the space.  As with all these spaces there can also be some small, high risk companies.  If I were constructing a high yield income portfolio some of these would definitely be a part of it.

I have limited knowledge on these and dipped my toe in with Kinder Morgan a few years back and got crushed. Where did I go wrong with them, were the considered safe or high risk? Was going to steer clear going forward but maybe need to keep an open mind. 

 

[Rattle and Hum]

I have limited knowledge on these and dipped my toe in with Kinder Morgan a few years back and got crushed. Where did I go wrong with them, were the considered safe or high risk? Was going to steer clear going forward but maybe need to keep an open mind. 

I would guess the excessive debt and subsequent 2015, 73% reduction in dividend is what did KMI in. I don't know what their dividend history was before that but I think you want to look for high yielders that have reasonable debt & payout ratios compared to their industry., A history of raising dividends also seems to be a huge plus. I guess the trick would be to figure out when a a dividend cut is coming and then gtho before it does.

 

[Rattle and Hum]

I keep thinking that there must be a tool out there that would be able to help one narrow down a few trees from the forest. Anyone have experience with Ken Faulkenberry's site or others? For me, it's still a bunch of symbols with big yields and falling prices. I don't know a SKT  from a WPG other than the surface stuff (PE, Div, etc).

 

[dal_boys_phan]

 

[culdeus]

Not sure if this is high volume enough but cap one has a bonus on. Sweet spot is at 10k earning a 7.3% bonus.  Maybe a way to find a quick buck if between options. 

https://www.reddit.com/r/churning/comments/84zu8h/capital_one_money_market_200600_bonus_15_apy/

 

[Rattle and Hum]

Folks, I've added a Spreadsheets with MLPs to the OP.

Does anyone know how to import current yields so I can add to those symbols mentioned to this thread to the same spreadsheet? Since Google Finance and Yahoo! Finance no longer offer this I'm hoping that some one knows a good alternative.   Thx

 

[Rattle and Hum]

Buffett about bonds, stock value, & potential risk (neato chart) that i thought was interesting. Easy, quick read.

 

[Phil Elliott]

For thise considering WPG, it is a REIT that operates lower tier shopping malls like strip malls. While it currently has a 14% distribution rate, “most people” consider it very speculative. Mall reits have been declning for over a year, although a little spike lately. If you invest in it, realize you may lose the investment or it may merge with another reit or cut the dividend. 

If you are interested in REITS, you may want to read some articles by Brad Thomas on Seeking Alpha. Brad covers the REIT industry and will provide his opinion on which REITS he considers quality long term investments.

 

[Rattle and Hum]

Thought This was a great write-up of PBFX which has a 9% yield and a strong Chart with a ton of support.

 

[Rattle and Hum]

CTL looks interesting at a 10% yield.   Here is the Chart...plz make sure you: right-click > Events & Adjustments > select Dividend Back Adjust

 

[Rattle and Hum]

Any tips for new money?