Tag: high yield

Investing in Income: High-Yield BDC Stocks to Watch

by Fred Fuld III

Business Development Companies (BDCs) are unique investment vehicles designed to support small and mid-sized businesses by providing them with capital. These firms typically operate similarly to private equity funds, investing in a range of companies at various stages of development.

The primary aim of BDCs is to generate income for their shareholders, which they do primarily through dividend payouts. Given their structure and regulatory requirements, BDCs must distribute at least 90% of their taxable income to shareholders, making them attractive options for income-seeking investors. Here, we explore some of the top BDC stocks based on their dividend yields: TriplePoint Venture Growth BDC (TPVG), TCP Capital Corp. (TCPC), OFS Capital Corporation (OFS), and Runway Growth Finance Corp. (RWAY).

TriplePoint Venture Growth BDC (TPVG) has established itself as a prominent player in the BDC sector, focusing on providing financing solutions to venture capital-backed companies. As of recent financial reports, TPVG has demonstrated robust growth, driven by its strategic investments in high-growth sectors.

The company’s quarterly dividend is competitive, with a current yield hovering around 17%, including bonus dividends. Recent financial results indicate that TPVG’s net investment income has been on the rise, reflecting its effective portfolio management and the strong performance of its underlying investments. Earnings per share grew 57% year over year. The stock is trading at 78% of book value, however, it has a very low market capitalization of $274 million.

With its commitment to supporting innovative businesses, TPVG is well-positioned to continue generating substantial returns for its investors.

TCP Capital Corp. (TCPC), with a market cap of $695 million, is another noteworthy BDC, known for its focus on investing in middle-market companies. The firm has been successful in maintaining a consistent dividend payout, currently offering a trailing yield of approximately 16.75%%, which includes extra dividends. Recent earnings reports highlighted TCP’s solid credit quality and prudent investment strategy, which have contributed to a stable income stream. The stock is trading at 80% of book value.

Furthermore, the company has been actively managing its portfolio to mitigate risks associated with economic fluctuations. TCP’s commitment to its shareholders is evident through its history of regular dividend increases, making it an appealing choice for those looking for reliable income.

OFS Capital Corporation (OFS) specializes in providing debt and equity financing to small and mid-sized businesses, particularly in the United States. With a current dividend yield nearing 16.6%, OFS stands out for its consistent payout history and focus on credit quality. Recent financial disclosures revealed that OFS has maintained a healthy balance sheet, with a diversified investment portfolio that mitigates risk while capturing growth opportunities. The stock is selling for 71% of book value.

The company’s proactive approach to portfolio management and its emphasis on generating stable income make it an attractive option for dividend-focused investors. However, the company has a market cap of only $110 million, which is extremely low and should be considered very speculative.

Runway Growth Finance Corp. (RWAY) rounds out our list, catering to growth-stage companies in technology and other high-growth sectors. It has a fairly low market cap of $395 million.

RWAY offers an appealing dividend yield of around 15.6%, backed by its strategic investments in innovative firms poised for expansion. Recent financial performance shows that Runway has successfully navigated market challenges, maintaining a solid net investment income and a diverse portfolio. The price to book ratio is 0.78.

Runway’s focus on sustainable growth and consistent dividend payouts makes it a valuable addition to any income-seeking investor’s portfolio.

In conclusion, BDCs like TriplePoint Venture Growth BDC, TCP Capital Corp., OFS Capital Corporation, and Runway Growth Finance Corp. offer investors attractive dividend yields while supporting the growth of small and mid-sized businesses. As always, potential investors should conduct thorough research and consider market conditions before investing.

Disclosure: Author didn’t own any fo the above at the time the article was written.

Unlocking Income Potential: Top High Dividend Stocks in the Dow to Consider Now

by Fred Fuld III

Investing in high dividend stocks can be an attractive option for income-seeking investors, especially in uncertain economic times. Dividend-paying stocks offer the dual benefit of regular income and potential capital appreciation, providing a cushion during market volatility.

Given current economic uncertainties, such as inflation and interest rate fluctuations, high dividend stocks can act as a safer harbor for conservative investors looking to balance risk with reward. As companies with strong cash flow generation, they often maintain or grow dividends, offering a hedge against inflation. Among the 30 stocks that make up the Dow Jones Industrial Average, Chevron (CVX), Dow Inc. (DOW), and Verizon (VZ) stand out for their robust dividend yields, making them appealing choices for those seeking reliable income streams.

Chevron Corporation (CVX), one of the largest integrated energy companies in the world, currently offers a dividend yield of around 4.6%. As of the most recent financial data, Chevron has a market cap of approximately $257 billion and a trailing P/E ratio of around 14. Chevron’s strong dividend is backed by its solid cash flows, driven by its oil and gas production activities. Despite the energy sector’s volatility, Chevron’s disciplined capital spending and focus on shareholder returns have helped it weather periods of low oil prices. In 2023, Chevron’s earnings benefited from higher oil prices due to global supply constraints and growing demand, helping the company continue its record of paying dividends for over a century. Its forward-looking strategy of expanding into renewable energy while maintaining core oil and gas operations positions Chevron well for both stability and future growth.

Another top yielding Dow stock is Dow Inc. (DOW), a global leader in chemicals and materials, currently provides a dividend yield of around 5.6%. Dow’s market cap stands at roughly $35 billion, and it has a trailing P/E ratio of 35, but a very favorable forward P/E of 13.5. The company’s portfolio includes essential products in sectors ranging from packaging to construction, making it a critical player in various global supply chains. In recent quarters, Dow has seen some pressure due to softening demand in certain sectors, particularly housing and industrial production, leading to reduced earnings. However, the company remains committed to rewarding shareholders through dividends, supported by its ability to generate cash flow even in challenging environments. As the global economy stabilizes, Dow’s strong balance sheet and diversified product line should enable it to maintain its high dividend, while potential improvements in demand for its products could further support share price appreciation.

Verizon Communications (VZ), a giant in the telecommunications industry, is known for its reliable, income-generating potential, offering a dividend yield of about 6%. Verizon’s market cap hovers around $187 billion, and its trailing P/E of 17 and a forward P/E ratio of approximately 9. The company’s stock price has faced challenges in recent years due to stiff competition in the telecom space and increased capital expenditures related to 5G infrastructure rollout. However, Verizon’s stable, recurring revenue from its wireless and broadband services provides the financial flexibility needed to continue paying high dividends. With the ongoing expansion of its 5G network, Verizon aims to capitalize on new growth opportunities in areas like the Internet of Things (IoT) and edge computing. While growth may be moderate, Verizon’s consistent cash flow from its massive subscriber base should allow it to maintain its attractive dividend, making it an appealing choice for income-oriented investors.

In conclusion, investing in high dividend stocks like Chevron, Dow, and Verizon offers a compelling opportunity for income-focused investors. Each company has its own unique strengths and challenges, but their consistent cash flows, solid dividend yields, and market positions make them attractive options for those looking to balance income and growth potential in their portfolios. These stocks, while not without risks, provide a relatively stable investment in an increasingly uncertain market environment.

Disclosure: Author didn’t have any positions in any of the above at the time the article was written.

4 Stocks Paying Over 5% Selling Below Book Value

by Fred Fuld III

Yes, it’s possible to get a yield of over 5% from a money market fund, but maybe you want a high yield but you also want some capital appreciation potential.

Of course, if you are concerned about your principal, then you should probably stick with the money fund.

But if you want growth, there are four stocks worth looking at that yield in excess of 5%, are selling below book value, and have a market cap over $2 billion.

Book value, in simple terms, reflects what a company’s assets would be worth if it sold everything and paid off its debts today. It is similar to the net worth on a personal balance sheet, but for a business. It’s calculated by subtracting liabilities from total assets. While it offers a snapshot of financial health, it doesn’t capture intangible assets like brand value or future growth potential, which can often influence market value.

Kohl’s Corp. (KSS), the operator of family-oriented department stores, has a market cap of $3 billion.

The trailing yield is 7.42% and the estimated forward yield is 8.03%.

Kohl’s is an omnichannel retailer, operating over 1,100 physical stores and a robust online presence. They mainly focus on apparel, footwear, and home goods for families, offering both national brands and their own exclusive lines. Kohl’s is known for its frequent discounts and rewards programs, aiming to provide an affordable and convenient shopping experience.

The stock is trading at 80% of book value, and has a very favorable price to sales ratio of 0.17. (Remember, a P/S ratio of below 1 is great, and above 2 is not so good.)

The forward price to earnings ratio is 10.2.

Newell Brands, Inc. (NWL) makes, markets, and sells of consumer and commercial products. This $2.84 billion company has a 6.42 % trailing yield and a 5.27% forward yield. The drop is due to a large reduction in the dividend payout back in May of 2023.

Newell Brands is a leading consumer goods company that owns and operates a portfolio of iconic brands you likely recognize. Think everyday items like:

Writing instruments: Sharpie®, Paper Mate®, Parker®, etc.
Storage and organization: Rubbermaid®, Contigo®, Sistema®, etc.
Appliances and cookware: Oster®, Mr. Coffee®, Calphalon®, etc.
Outdoor gear: Coleman®, Campingaz®, Marmot®, etc.
Baby and parenting products: Graco®, NUK®, Baby Jogger®, etc.
Art supplies: Elmer’s®, Prismacolor®, EXPO®, etc.
Fragrances: Yankee Candle®, WoodWick®, Chesapeake Bay Candle®, etc.

They sell these products through various channels, including retail stores, distributors, and their own online platforms.

The stock sells at 91% of book value and has a favorable P/S ratio of 0.35. The forward P/E is 8.01.

Walgreens Boots Alliance, Inc. (WBA), the provider of healthcare and retail pharmacy services, has a market cap of over $19 billion.

After a dividend drop, the stock still has a forward dividend yield of 6.83%.

Walgreens Boots Alliance is a global leader in retail pharmacy and healthcare, serving millions daily with a 170-year heritage. Their business operates across two main segments:

  1. Retail Pharmacies:

Over 12,500 locations in the US, Europe, and Latin America under brands like Walgreens, Boots, Duane Reade, and Benavides.
Dispensing medications and offering a wide range of health services like vaccinations, immunizations, and health screenings.
Selling health and beauty products alongside other convenience items.

  1. Pharmaceutical Wholesale:

Alliance Healthcare distributes pharmaceuticals and medical supplies to hospitals, pharmacies, and other healthcare providers globally.

Key Points:

* Large footprint: Over 330,000 employees and presence in eight countries.
* Integrated healthcare: Combines pharmacy, retail, and wholesale operations for a comprehensive offering.
* Focus on convenience and innovation: Provides digital platforms and healthcare solutions for patients and consumers.

The stock sells at 98% of book value and has a superior price to sales ratio of 0.13.

The stock trades at 33 times trailing earnings and 6.3 times forward earnings.

Xerox Holdings Corp. (XRX) is a workplace technology company, which builds and integrates software and hardware for enterprises.

The company has a market cap of $2.27 billion and pays a yield of 5.41%.

While Xerox may first come to mind as a photocopier company, their business has actually evolved significantly in recent years. Here’s a short description:

Focus: Xerox is now a workplace technology company, offering both hardware and software solutions for document management and workflow automation.

Key Services:

Workplace Printing Solutions: Still relevant, offering printers, copiers, and related supplies for both office and production printing.
Digital Services: This has become a major focus, providing document workflow automation, digital document processing, personalized communications, and managed IT solutions.
Security Services: Emphasizing information security with services like managed security and robotic process automation.
Target Market: Businesses of all sizes, from small and medium-sized enterprises to large corporations.

Key Differentiators:

Legacy of innovation: A history of research and development, contributing to advancements like the graphical user interface.
Global reach: Serving customers in over 160 countries.
Client-centric approach: Tailoring solutions to individual needs and challenges.

The company is selling at 90% of book value and trades at a forward P/E of 7.6. The price sales ratio is an excellent 0.33.

Summary

A stock with a lot of great ratios can turn into excellent investments. However, when stocks sell far below the book value, it may be a bargain or it may be a harbinger of negative things to come, such as lower earnings or worse losses.

Disclosure: Author didn’t own any of the above at the time the article was written.

Closed End Bond Funds Selling at a Discount Yielding Over 10% Paying Monthly

by Fred Fuld III

Closed-end funds (CEFs) are investment vehicles that pool money from multiple investors to invest in various assets such as stocks, bonds, or other securities. Unlike mutual funds or exchange-traded funds (ETFs), CEFs have a fixed number of shares, which are traded on stock exchanges like individual stocks.

How CEFs Work

Here’s how closed-end funds work:

Initial Public Offering (IPO): When a closed-end fund is launched, it goes through an IPO where a fixed number of shares are issued and sold to investors.

Active Management: CEFs are typically actively managed by professional fund managers who make investment decisions on behalf of the fund. Their goal is to generate returns by investing in a diversified portfolio of assets.

Stock Exchange Trading: Once the IPO is complete, the shares of the CEF are listed on a stock exchange, allowing investors to buy or sell shares throughout the trading day. The price of CEF shares is determined by supply and demand dynamics in the market and may deviate from the fund’s net asset value (NAV).

Leverage: Some closed-end funds may use leverage by borrowing money to make additional investments. This can potentially enhance returns but also increases risk.

Advantages of CEFs

Now, let’s discuss why it may be advantageous to invest in CEFs selling at a discount:

Buying Below Net Asset Value (NAV): CEFs often trade at a price that is lower than their NAV per share. This discount can occur due to market sentiment, investor behavior, or perceived concerns about the fund. Investing in CEFs at a discount means you can acquire a dollar’s worth of assets for less than a dollar.

Potential for Capital Appreciation: If a CEF’s share price eventually converges with its NAV, investors who purchased shares at a discount can benefit from capital appreciation. As the discount narrows or disappears, the value of their investment increases.

Higher Income Yield: CEFs typically distribute income generated from their underlying assets to shareholders. Buying CEFs at a discount can result in a higher income yield since the distribution is calculated based on the NAV, while the purchase price is lower.

Diversification and Professional Management: CEFs offer diversification benefits by investing in a portfolio of different securities. Moreover, they are managed by professional fund managers who employ their expertise to select investments, potentially generating attractive returns.

Potential for Active Trading Strategies: The market price of CEF shares can deviate significantly from the underlying NAV, providing opportunities for active traders to capitalize on these price discrepancies through short-term trading strategies.

It’s important to note that investing in CEFs involves risks, such as market volatility, interest rate fluctuations, and the performance of the underlying assets. Additionally, the discount at which a CEF trades may persist or widen, resulting in potential losses for investors. Therefore, thorough research and consideration of individual CEFs and their investment strategies is crucial before making investment decisions.

Closed End Bond Funds

Closed-end bond funds are a type of closed-end fund that specifically invests in a portfolio of bonds or other fixed-income securities. These funds pool money from multiple investors to invest in a diversified range of bonds, including government bonds, corporate bonds, municipal bonds, or even international bonds.

Here are some key characteristics of closed-end bond funds:

Income Generation: The primary objective of closed-end bond funds is to generate income for investors. They typically invest in fixed-income securities that pay regular interest or coupon payments. The income earned from these bonds is then distributed to shareholders in the form of regular dividends.

Interest Rate Sensitivity: Closed-end bond funds are sensitive to changes in interest rates. When interest rates rise, bond prices tend to fall, which can negatively impact the net asset value (NAV) of the fund. On the other hand, when interest rates decline, bond prices tend to rise, potentially leading to an increase in the NAV.

Portfolio Diversification: Closed-end bond funds provide investors with a diversified portfolio of bonds. By investing in a variety of issuers, sectors, and maturities, these funds aim to mitigate risk and reduce the impact of any individual bond’s performance on the overall fund.

Credit Quality: Closed-end bond funds may invest in bonds with different credit ratings, ranging from high-quality investment-grade bonds to lower-rated or even non-investment-grade bonds (also known as junk bonds). The credit quality of the bonds held by the fund affects the overall risk profile and potential return of the fund.

Leverage: Some closed-end bond funds may use leverage to enhance returns. They borrow money to invest in additional bonds, aiming to generate a higher income for shareholders. However, leverage also amplifies risk, as it can magnify losses if the market moves against the fund’s positions.

Discount or Premium: Like other closed-end funds, closed-end bond funds can trade at a price that is either below (discount) or above (premium) their NAV per share. The discount or premium reflects market sentiment, supply and demand dynamics, and investor perception of the fund’s performance and prospects.

High Yield, Payable Monthly, Selling at a Discount to NAV

Here are some examples of bond CEFs that have a high yield in excess of 10%, pay dividends monthly, and are selling at a discount to Net Asset Value.

CompanySymbolYieldPeriodicDiscount to NAV
Highland Funds I – Highland Income FundHFRO10.36%Monthly-33.23%
FS Credit Opportunities Corp.FSCO13.55%Monthly-32.20%
High Income Securities FundPCF11.84%Monthly-16.69%
Legg Mason BW Global Income Opp Fund BWG12.80%Monthly-15.92%
Virtus Convertible & Income Fund IINCZ12.90%Monthly-15.71%
Virtus Convertible & Income FundNCV12.99%Monthly-15.59%
Western Asset Mortgage Opportunity FundDMO11.70%Monthly-15.07%

Investing in closed-end bond funds offers potential advantages such as regular income, diversification, and professional management. However, it’s crucial to carefully evaluate the specific fund’s investment strategy, credit quality, interest rate risk, leverage, and expense ratios. Additionally, investors should be mindful of the potential impact of changes in interest rates and market conditions on the performance of these funds.

Disclosure: Author didn’t own any of the above at the time the article was written.

10 BDC Stocks Paying Dividends Over 8%

by Fred Fuld III

If you have not heard of BDCs, they may6 be worth a look. BDC stands for Business Development Company.

BDCs are closed-end investment funds that invest in small and mid-sized businesses, either through equity investments, debt, or both.

They avoid double taxation, similar to REITs, as long as at least 90% of earnings are distributed to shareholders. There is no taxation at the corporate level.

Many income investors like to invest in BDCs for their income, with dividend yields as high as 11%.

One example of a high income BDC is Ares Capital  (ARCC), a Los Angeles based company that offers a yield of 8.8%. This BDC has a market cap of $10 billion and pays its dividend quarterly.

Another high yield BDC is Golub Capital BDC (GBDC), which pays a yield of 8.76%. It also has a quarterly dividend payment schedule. This New York City based company has a market cap of $2.4 billion.

There are actually ten BDCs that yield over 8%, with one yielding 11%. In addition, three of the stocks pay dividends monthly.

The entire list of 10 BDC stocks paying over 8% will be emailed to all subscribers this weekend, on Saturday, August 13, 2022. If you are not a subscriber, you can sign up at the signup box below. Don’t miss out. Remember, it’s free!

Of course, there is aways risk, especially since the BDCs invest in smaller companies.

Don’t forget to check out: 

Stocks going ex-dividend in August

REITs Paying over 10%

Disclosure: Author didn’t own any of the above at the time the article was written.

7 Stocks Paying over 10% Yields

by Fred Fuld III

Many investors have been looking for ways to generate higher yields. Unfortunately, other than Series I Bonds, there aren’t many alternatives.

Interest rates are going up for mortgages and credit cards, but as for bank accounts, you are lucky to get over 1% on a certificate of deposit.

However, there are seven profit-making stocks that are currently offering yields of more that 10%.

All of these companies have market caps over $2 billion, have a trailing price to earnings ratio below 14, and a forward P/E ratio less than 15.

AllianceBernstein Holding L.P.(AB) is an asset management company with a market cap of $4.03 billion. The trailing P/E ratio is 10.44, the yield is 11.68%.


Arbor Realty Trust, Inc. (ABR) is a Mortgage Real Estate Investment Trust, also referred to as a mortgage REIT. This $2.32 billion market cap company has a P/E of 7.59, and a yield of 10.74%.


Another mortgage REIT is Chimera Investment Corporation (CIM), with a market cap of $2.15 billion. It trades at 13.19 times earnings and has a generous yield of 13.86%.


FS KKR Capital Corp. (FSK) is a $5.93 billion market cap asset manager with a very low P/E of 2.41. It pays a high yield of 13.26%.


Annaly Capital Management, Inc. (NLY) is yet another mortgage REIT, and has a $9.70 billion market cap. The P/E is a low 3.64, and the yield is a very high 14.26%.


Southern Copper Corporation (SCCO) has a market cap of $37.12 billion. This copper producer trades at 11.1 times earnings and yields 10.65%.


Last but not least, UWM Holdings Corporation (UWMC) is a mortgage finance company with a market cap of $5.50 billion. The P/E is 6.38, and the yield is 11.46%.

Beware of High Yield Issues

A few thing to be aware of regarding these high yields:

• The dividends are subject to change and elimination
• Putting limited partnerships (such as AllianceBernstein) in a qualified plan, such as an IRA, may have adverse tax consequences. (Talk to your account about this issue)
• Often there is a negative reason for stocks to trade at very high yields
• Many mortgage REITs use leverage to boost their yields, which creates added risk

Before making a rash decision about investing in any of these companies, do some research on them and be aware of the risks.

Disclosure: Author didn’t own any of the above at the time the article was written.

What’s With These Super High Yields? 25% !!!

by Fred Fuld III

If you look through the high yield stocks that are extracted by stock screeners, you will notice that there are some outrageously high yields, some more than 25%; but are they genuine high yields? You will also find that different screeners come up with different results. So let’s look at some of the high yield dividend stocks.

Orchid Island Capital, Inc. (ORC) is a specialty finance company that invests in residential mortgage-backed securities in the United States. The stock pays monthly dividends and currently has a yield of 15.45%. It trades at 5.7 times trailing earnings and has a market capitalization of $505 million.

Frontline Ltd. (FRO) is a shipping company involved in the seaborne transportation of crude oil and oil products. The stock has a yield of 25.22% and has a price to earnings ratio of 5.67. The market cap is 1.57 billion.

Cornerstone Strategic Value Fund (CLM), Inc. is a closed-ended equity mutual fund that yields 16.6%, trades at 8.86 time trailing earnings, and has a market cap of $899 million. Dividends are paid monthly.

Rules for Investing in Very High Yield Stocks

1. Check the consistency in the number of payments per year.
2. Check the consistency in the amount of the dividend from quarter to quarter.
3. Check to make sure the dividend payment doesn’t include capital gains.
4. Check to make sure the yield isn’t generated by a special high year-end distribution.
5. Check to make sure that the dividends don’t exceed the stock’s earnings per share.
6. Check to make sure that your stock information provider is calculating the correct yield.

Disclosure: Author didn’t own any of the above at the time the article was written.

Top High Yield Stocks

by Fred Fuld III

If you are looking for income investments with growth potential, there is no better choice than stocks that pay a high dividend. However, you want to make sure that the stocks have good fundamentals.

Here are a few stocks yielding over 6%, with price to earnings ratios of less than 15, forward P/Es less than 15, a price to earnings growth ratio of less than one, and a price to sales ratio of less than one.

Ford Motor Company (F), the one of only two car companies that have never gone bankrupt (Tesla (TSLA) is the other one), trades at 6.3 times trailing earnings and 6.8 times forward earning. The stock has a dividend yield of 6.3%

Tupperware Brands (TUP), the kitchen products, storage, and beauty products company, trades at a forward P/E of 8.2% and pays a very generous yield of 7%.

Unique Fabricating (UFAB) is in the automotive parts manufacturing business. The forward P/E is 7.6% and the yield on the stock is a magnanimous 7.4%.

Hopefully, one of these stocks can boost your portfolio income.

 

Disclosure: Author didn’t own any of the above at the time the article was written.