TRTX

3 High Dividend Yielders for Consideration

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Image: Energy Transfer, Philip Morris, and Altria have outperformed the SPDR S&P 500 Dividend ETF (SDY) since the beginning of 2024. By Brian Nelson, CFA The market remains laser-focused on inflation readings and employment trends – two of the main dynamics that influence policy at the Federal Reserve. Since the beginning of 2024, the market has ratcheted down expectations of rate cuts from as many as 5 or 6 to just 1 or 2 in 2024. With yields on risk-free instruments poised to go lower soon, a focus on high yielding equities may be appropriate for the income investor. Here are three high dividend yielders that we like for consideration. Energy Transfer (ET) Midstream pipeline operator Energy Transfer has come … Read more

How Some Members Use Valuentum’s Investment Services

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By Brian Nelson, CFA Thank you for your membership to Valuentum. We serve a wide variety of investors, including dividend growth investors, value investors, and pure Valuentum investors, among others. Many different types of investors and professionals use our research and financial analysis in a whole host of applications from individual stock-selection to the evaluation of closed-end funds to an overlay in a money-management setting and beyond. We wanted to make sure that you know that, if you’re a dividend growth or income investor, that there are others that use our website to utilize the Valuentum process, fair value estimates and other metrics. Similarly, if you’re a practitioner of the Valuentum system, I wanted to make sure that you are … Read more

14%+ Yielding AGNC Investment May Be Worth a Trade

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Image: Mortgage REITs have performed horribly since we warned about them back in May 2013. By Brian Nelson, CFA Mortgage REITs (REM) are popular vehicles because of their deceptively enticing dividend yields, but we’ve never been bullish on the group. We’re reiterating our take today that these instruments are not for the individual investor or even prudent financial advisor and are more complicated vehicles than many investors believe. In May 2013, we first starting warning about the group, and the performance, as shown in the image above, hasn’t been pretty. On a price-only basis, the iShares Mortgage Real Estate ETF is trailing the simpleton S&P 500 index by 250+ percentage points since we first laid out our thesis on the … Read more

ICYMI: Let’s Play Devil’s Advocate: What’s the Bear Case for Realty Income?

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By Brian Nelson, CFA We like Realty Income Corp. (O) a lot, but it’s not hard to see that the REIT could potentially have all the makings of a black swan. For one, the stock is loved by almost everyone–REIT investors, income investors, and dividend growth investors alike. Many are simply enamored by its monthly dividend, which it has raised nearly 120 times since it was listed on the NYSE in 1994. Over its 54-year history, the REIT has paid 632 consecutive monthly dividends, too. There’s a ton of things to like about Realty Income, but for this note, let’s build and examine the bear case, one that can be broken into three pillars: 1) its retail exposure, 2) its … Read more

There Are No Free ‘Income’ Lunches

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Image Source: Jeffrey Beall By Brian Nelson, CFA We often talk about certain areas of the market such as large cap growth and small cap value. One of the big takeaways of the book Value Trap is that it explains that there are not really growth or value stocks, but rather there are only undervalued, fairly valued, and overvalued stocks determined on the basis of a price-versus-fair value consideration. This will always be true. Each company is different, and no company can be distilled into a simple price-to-earnings (P/E) or price-to-book (P/B) metric to determine the attractiveness of its valuation. For example, a company with a low P/E can be overvalued because the market is missing its huge net debt … Read more

Why Are the Dividends of REITs So Risky?

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By Brian Nelson, CFA Not all REIT dividends are safe. Many REITs remain capital-market dependent, and some office REITs, retail REITs, and healthcare REITs may be difficult places to generate dependable long-term income in the coming decades, in our view. Office REIT SL Green (SLG) recently cut its payout 13% on December 5, 2022, while another office REIT Vornado Realty Trust (VNO) cut its dividend 29% on January 18, 2023. These are just two of the latest high-profile REIT dividend cuts, and there may be more to come. Contrary to popular opinion, the REIT sector has not been a great source of dependable, reliable income, particularly during the COVID-19 crisis. Five REITs cut their dividends in 2019: Medalist Diversified REIT … Read more

REITs May Continue to Face Pressure

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Image: The Dividend Cushion ratio is one of the most powerful financial tools an income or dividend growth investor can use in conjunction with qualitative dividend analysis. The ratio is one-of-a-kind in that it is both free-cash-flow based and forward looking. Since its creation in 2012, the Dividend Cushion ratio has forewarned readers of approximately 50 dividend cuts. We estimate its efficacy at ~90%. By Brian Nelson, CFA Times are tough for equity REITs (VNQ) and mortgage REITs (REM), with the VNQ and REM down 25% and 30%, respectively, so far in 2022. This is against a backdrop of Valuentum’s simulated Dividend Growth Newsletter portfolio and High Yield Dividend Newsletter portfolio that are doing far better. The lesson in 2022, … Read more

Must Watch: MPT Failures and High Yield Dividend Breakdown Spiral!

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Did you know that Valuentum’s income ideas are holding up great this year, far better than the traditional 60/40 stock/bond portfolio and what some call “sucker” yields, those companies with 8% dividend yields or higher? — The 60/40 stock/bond portfolio is down ~20% so far in 2022 and some high-yield stocks like mortgage REITs are down nearly 40%, but Valuentum’s income-oriented simulated newsletter portfolios, the Dividend Growth Newsletter portfolio and High Yield Dividend Newsletter portfolio, are estimated to be down just 8.4% and just 10.1%, respectively, in 2022. — Preventing huge drawdowns in retirement is the name of the game, and those pursuing modern portfolio theory (MPT) have been caught by surprise, while income investors reaching for 8%+ yields may have just experienced permanent … Read more

High Yield Dividend Newsletter Portfolio Continues to Deliver!

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Image: The year-to-date simulated performance of the High Yield Dividend Newsletter portfolio, which continues to hold up well during 2022, while offering an attractive forward estimated dividend yield. Data retrieved interim session October 19.   By Brian Nelson, CFA  Valuentum’s newsletter product suite continues to deliver in good times and bad. For those of you interested in high dividend paying stocks, we offer a High Yield Dividend Newsletter and a simulated High Yield Dividend Newsletter portfolio, which has been holding up well amid the weakness across both the stock and bond markets this year.   Based on our calculations, the simulated High Yield Dividend Newsletter portfolio now boasts an estimated forward dividend yield of ~5.44% and is down only approximately 10% on … Read more

Mortgage REITs Have Underperformed Significantly the Past Several Years

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Image: An ETF that tracks the mortgage REIT industry has fallen more than 31% on a price-only basis, while an ETF that tracks the S&P 500 has advanced more than 160% on a price-only basis, as measured from May 2013. By Brian Nelson, CFA Mortgage REITs (REM) are popular vehicles because of their deceptively enticing dividend yields, but we’ve never been bullish on the group. We’re reiterating our take today that these instruments are not for the individual investor or even prudent financial advisor and are more complicated vehicles than many investors believe. In May 2013, we first starting warning about the group, and the performance, as shown in the image above, hasn’t been pretty. On a price-only basis, the … Read more