Income Stock Investing/Suggestions/Opinions

[yclept]

My quick opinion and analysis is that you can find better prospects than ED. P/E is reported 14.6; d/e is 1.06; PEG is 6.8 -- none of which I find very compelling. I think there are fatter fish in the sea.

Relatively Low Future Earnings Growth Detected in Shares of DTE Energy in the Multi-Utilities Industry (DTE, OGE, ED, NST, LNT)
9 hours 40 minutes ago - PSM
Comtex SmarTrend(R)
Below are the five companies in the Multi-Utilities industry with the lowest future earnings growth. The growth of earnings per share (next fiscal year estimated vs. current fiscal year estimated) is important to gauge future profitability and relative value. Higher EPS growth generally justifies higher earnings multiples.
DTE Energy (NYSE:DTE) has the lowest future earnings growth of 0.94%; OGE Energy (NYSE:OGE) is next with future earnings growth of 2.16%; and Consolidated Edison (NYSE:ED) has the next lowest with future earnings growth of 3.17%.
NSTAR (NYSE:NST) follows with future earnings growth of 3.72% and Alliant Energy (NYSE:LNT) rounds out the group with future earnings growth of 4.38%.
SmarTrend currently has shares of OGE Energy in an Uptrend and issued the Uptrend alert on June 18, 2010 at $37.73. The stock has risen 21.4% since the Uptrend alert was issued.
Write to Chip Brian at [e-mail]
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[ModE98]

I wonder if LTC may ve a good income investment?
LTC Properties, Inc. operates as a health care real estate investment trust (REIT) in the United States. The company primarily invests in long-term care and other health care related properties through mortgage loans, property lease transactions, and other investments. As of December 31, 2007, it owned 61 skilled nursing properties with 7,179 beds; 84 assisted living properties with 3,744 units; and 1 school. As a REIT, the company is not subject to federal income tax to the extent it distributes 90% of taxable income to its shareholders. LTC Properties was founded in 1992 and is based in Westlake Village, California.
It currently pays a monthly common stock dividend, yielding 6%, with latest price of 27.96 at today's close.
It seems to me, with our aging population and people living years longer due to modern medical practice and medicines, that long term care would be likely "winner". Would prefer to see the price drop about 10% before ordering a buy.

[soycapital]

I bought some ABT today, like the price and the company, expanding overseas, 3.4 divi project 11% growth but I think that may be on the low side.

[ModE98]

Thanks Soy, will take a look at it . Always like to see what others are doing. May be better that something I have on alert. If one can get a good divident + growth, that's good. I use ABT products too, Glucerna... one bottle a day.

[danshirley]

This is a list of 'Income Stocks' that I use to look at covered call and spread possibilities:

ABC, ADP, ADM, ATO, BCR, BDX, BMY, CB, CHD, CL, CLX, CNL, CWT, DPL, ED, FDO, GIS, HD, HNZ, HRL, HSY, JNJ, KMB, KO, LQD, MCD, NJR, NS, NST, NU, NWN, OCR, PCG, PGN, PAYX, SCG, TEVA, TLT, UGI, UNH, WGL, WMT, WR, WTR, XEL

These don't necessarily have great dividends but the combination of dividends, covered call income, balance sheet characteristics and stability make them candidates I look at every month. I currently have positions in about half of these.

[ModE98]

Nice list, Dan. At my age, approaching 88, my personal orientation is now turning to stocks paying at least 5%+ return. My China ADR's are being cashed out as profits may appear and reinvested in those U.S. dividend payers. Should have been doing this 2-3 years ago, but was always a high risk taker, experience now shows it was not a good idea. Leave that to the Hedge Fund pro's..

[soycapital]

Mod, a newsletter I get recommends PSEC under 12,
You a current yield of over 10%. Prospect should grow and raise its dividends and you'll be earning 12% or more over today's cost in a year or two. In fact, I wouldn't be surprised if you were making 20% over original cost five years from now.

Prospect Capital Corporation (Prospect Capital) is a financial services company that lends to and invests in middle market privately-held companies. The Company is a closed-end
investment company. The Company invests primarily in senior and subordinated debt and equity of companies in need of capital for acquisitions, divestitures, growth, development, project financing and recapitalization. The Company’s investment objective is to generate both current income and long-term capital appreciation through debt and equity investments. It focuses on making investments in private companies, and many of its investments are in energy companies.
This caught my attention: Net Profit Margin 39.93%
Note: I didn't dig deep on this company but I'm going to wait for a dip and take a bite (not a mouthful).

[soycapital]

By the way Mod, if you see promising equities at 5% post them up would you? I'll have to check LTC.

[danshirley]

PSEC has a payout ratio of 327% to support its dividend.
www.dividendinvestor.com/?chk=1617f1294883597&symbol=PSEC&submit=GO

I wouldn't touch it with a 900 foot pole.

[ModE98]

Dan ... Wow, that is a huge payout ratio. That is a warning flag. They surely could not keep that up too long. The outflow well exceeds inflow. Thanks for the heads up.
Soy ... Some serious DD required on what is going on there. Be careful.
I will post what I see as good prospects paying 5% or more. We do not want to be stuck with excessive payouts that cannot be sustained.
Here are two which quickly came to mind.... more later.
Cramer has pumped NLY with 14.39% at current close $17.79 p/s.
Annaly Capital Management, Inc. (Annaly) owns, manages and finances a portfolio of real estate related investment securities, including mortgage pass-through certificates, collateralized mortgage obligations (CMOs), agency callable debentures, and other securities representing interests in the obligations backed by pools of mortgage loans.

LINE (Oil & Gas) closed $38.83 and paying 6.8% (May be too high in price, unless the price of petroleum continues to climb.)

[soycapital]

Mod, I should have pointed out on PSEC that those are quotes from the newsletter.

"You a current yield of over 10%. Prospect should grow and raise its dividends and you'll be earning 12% or more over today's cost in a year or two. In fact, I wouldn't be surprised if you were making 20% over original cost five years from now."

Good site Don for finding payout ratio. A little surprising that the payout is that high. For sure that is out of range.

Mod, I do own some CIM which is similar to NLY it is hard for me to commit much $$$ to high yielders because they really take a hit in a downturn. I can personally testify to that. That's one of the reasons I put that PSEC up on the board to get feedback.
I think you are right for the most part most of the oil and gas trusts etc. have climbed out of reach, I will wait on those.

[yclept]

Low Beta Dividend search -- high yield
01/13/11
Ticker	Name	Last	Rank	MktCap	Yield5YAvg	Div3YCGr%	ROE%TTM	PayRatioA	Beta	Yield
FDI	Fort Dearborn Income Securiti	15.29	94.18	134.18	6.35	14.15	12.08	58.39	0.22	9.21
VKQ	Invesco Van Kampen Municipal	11.97	93.75	466.72	6.4	6.71	13.36	53.45	0.25	8.02
NLY	Annaly Capital Management, In	17.79	92.13	11063.21	9.53	64.56	8.2	71.8	0.33	14.39
MFA	MFA Financial, Inc.	8	91.08	2242.68	7.89	67.68	12.36	96.36	0.38	11.75
PTNR	Partner Communications Compan	20.16	80.68	3118.3	6.91	37.65	96.48	92.81	0.69	10.45
TNE	Tele Norte Leste Participacoe	15.55	74.56	5949.95	9.33	6.26	12.13	24.66	0.84	21.23
CLCT	Collectors Universe, Inc.	13.9	71.62	109.11	4.54	30.06	73.11	35.36	0.92	9.35

I would be wary of NLY -- payout ratio is getting a bit high. I would avoid PTNR and MFA -- payout ratio is definitely too high. As mentioned above I would avoid TNE -- dividend payout is sporadic and timing unpredictable -- I'll leave it to the Brazilians to sort that one out!

[yclept]

Soy,
I sold CIM awhile ago -- payout ratio is over 100%. The dividend was certainly nice, but I just figure it can't go on and whenever they announce a cut in dividend the stock is likely to drop like a rock.

[soycapital]

yclept, what ratio is "safe"? I suppose this varies with your risk tolerance. But generally? When I see something over 10% I'm wary but I'm not all that knowledgeable about it either.

[soycapital]

by 10% I meant yield not payout ratio.

[yclept]

As far as I'm concerned, the higher the yield, the better. I don't have an upper limit on yield. I worry when the payout ratio indicates the yield is not sustainable. I cast a jaundiced eye towards anything with a payout ratio over 70%. High yielding stocks are owned by people who want that dividend over all other considerations. When there is an announcement that the dividend is going to be cut (which seems inevitable when a company is taking in less than it's paying in dividend) those stocks tend to react vehemently (down). As I recall, CIM did not have a lot of cash on hand to keep paying dividends higher than earnings, so I exited it in mid December at 4.21. I picked up a couple of dividends prior to that and made a capital gain of 9% -- more than satisfactory for the six months or so that I owned it (IMHO). I just saw the risk/reward getting too high for my taste.

[ModE98]

Yclept, thanks for the list in #51. Agree with your caution on CIM, great dividend (for now), but how long can it be relied upon is the main question. I will be looking for an exit point and move down a notch or two for reliability.
Appreciate your comments and red flags. Will check out FDI and CLCT with my Scottrade utilities (S&P, Second Opinion, Reuters, charts, etc.)

[ModE98]

Yclept... checked out that list and found FDI of most interest because it appears it would be the most reliable payout stream. Added to my wish list.

Also, ran across HQL an 8% yield. This may have more growth potential as well.
H&Q Life Science Investors (the Fund) is a diversified closed-end management investment company. The Fund's investment objective is long-term capital appreciation through investment in the life sciences industry (including biotechnology, pharmaceutical, diagnostics, managed healthcare and medical equipment, hospitals, healthcare information technology and services, devices and supplies), agriculture and environmental management. The Fund invests primarily in securities of public and private companies. The Fund may invest in private companies and other restricted securities if these securities would comprise 40% or less of net assets. The Fund's investment advisor is Hambrecht & Quist Capital Management LLC.

[soycapital]

Dividend info on CIM;
Dividend Declaration Date: Dec-20-2010
Dividend Ex Date: Dec-29-2010
Dividend Record Date: Dec-31-2010
Dividend Pay Date: Jan-27-2011
So if you held the stock on Dec-31-2010 you will be due a dividend payment on Jan-27-2011, even if you sell the stock before Jan 27th? I assume but checking.
By the way, this is an interesting statistic about CIM;
% Shares Held by Institutions: 87.53 %
That seems to me a very high percantage held by the big boys. Makes me wonder, why aren't they selling if divy payout ratio is 111%?

[yclept]

So if you held the stock on Dec-31-2010 you will be due a dividend payment on Jan-27-2011, even if you sell the stock before Jan 27th? I assume but checking.

Yes.

By the way, this is an interesting statistic about CIM;
% Shares Held by Institutions: 87.53 %
That seems to me a very high percantage held by the big boys. Makes me wonder, why aren't they selling if divy payout ratio is 111%"

Another way I look at this is that when they all hit the exit, it'll drop like a rock and the little guy will never know what hit him nor be able to keep up.

[tyfighter3]

Another way I look at this is that when they all hit the exit, it'll drop like a rock and the little guy will never know what hit him nor be able to keep up

Read more: notmsnmoney.proboards.com/index.cgi?board=startinvesting&action=display&thread=350&page=3#ixzz1Ayt3BffZ
When that is all done it would be time to buy and get that 15 to 20% appreciation in the stock plus the next dividend and do it again.

[soycapital]

Another way I look at this is that when they all hit the exit, it'll drop like a rock and the little guy will never know what hit him nor be able to keep up.

Yclept and tyfighter, I was thinking about that too, I sold it today, I only had 500 shares, the same newsletter that recommended PSEC also recommends to keep buying CIM up to 4.10, like you guys, I'll buy back in maybe after a dip.
I've got considerable SO up 25%. I really like SO cause I'm in the dividend market but I'm uncomfortable holding after such a quick run up. Tell me how I can evaluate this stock to see if my gut is right to sell and buy it back after it normalizes?

[tyfighter3]

Soy, look at the 3 year chart. I only see 4 times that it sold off enough to sell it then buy it back. SO is a Utility that is setting on a 3 year high, PE at 15x. You have been following this stock, so do you think it is getting over priced at this level where 3 years ago it was around 36 a share. Looks to me as a good long term hold if you got the stock bought right from the start. JMO

[soycapital]

UHT; a heath care REIT with stock price slightly above 200 day ave. Yield over 6%.
I offer it up for consideration, I think I'll put it on my watch list. A little gun shy of market levels at present.
Value Pro only values it at 18.15, I don't know how accurate their valuations are. Over 50% owned by institutions.

Universal Health Realty Income Trust (the Trust) is a real estate investment trust (REIT). The Trust invests in health care and human service-related facilities, including acute care hospitals, behavioral health care facilities, rehabilitation hospitals, sub-acute facilities, surgery centers, childcare centers and medical office buildings (MOBs).

Sales 30.4 Mil 0.1%
Income 16.7 Mil -3.1%
fyi Dividend Rate 2.42 3.54%
Dividend Yield 6.64% 6.70%

More financials
Fundamental Data
Debt/Equity Ratio 0.56
Gross Margin NA
Net Profit Margin 55.13%
Total Shares Outstanding 12.5 Mil
Market Capitalization 456.11 Mil
Earnings/Share 1.38

[clarkrl2]

I entered into two credit put spreads this week. The first for F is outlined in rovo's journal. The other was for TER. On the F spread I will collect for .77 on a 4 spread for 23.5% and the TER spread is a 13/10 Apr. where I collect .8 on a $3 spread for 36%. If put the TER shares I will be getting shares back at 12.2/share. My Jan. 11 exp covered call was called at 12.5 so it will be a discount to my previous position.

[clarkrl2]

I picked up some shares of MRK after a 35/30 credit put spread expired in the money last Friday. The dividend today is at 4.48% and I believe that with their positive cash flow it is easily sustainable.

[clarkrl2]

At the MSN board I ran a thread on a variation of Dogs of the Dow but rather than the top 10 yielding Dow Industrial Stocks I used 5 Industrials, 3 Transports, and 2 Utilities. There are 65 stocks in the combined indexes so I merged the indexes for a new screen. Also I rank by PE - Yield. If anyone is interested here are the current top 12 on the list. I have positions in INTC and MRK and am looking at others.

Stock	Dog Score	Yield	PE
T	1.98	6.04	8.02
D	5.21	4.52	9.73
TRV	5.27	2.59	7.86
PEG	5.98	4.19	10.17
EXC	6.14	4.84	10.98
EIX	6.16	3.39	9.55
INTC	6.97	3.39	10.36
NEE	7.22	3.69	10.92
MRK	7.6	4.5	12.1
CVX	8.17	3.06	11.23
FE	8.81	5.58	14.39
AEP	8.83	5.01	13.84

[soycapital]

clark, thanks for the chart, would be good to look into these type of stocks for a volitile market. I'm sorry, what is "dog score". thanks........... I have 4 of them, have owned them a while, when the stock prices were lower.

[clarkrl2]

Instead of using the dogs of the dow strategy which are the 10 highest yielding stocks, I prefer to use the PE - Yield which is what I called the dog score. It is a phrase of my own creation to refer to the value that is used to rank these stocks.

[ModE98]

Was able to get out of my CIM today with modest profit on share price after raking in a very nice dividend last week. Will miss that high dividend rate, but seems appropriate to begin preparing for the rise in rates as the year progresses. Will drop ANH if it moves about 10 cents p/s.
Will hold RIT as this one is in a little different type of REIT ball game and pays a nice monthly yield. Looks good to me for the long term. Hope this is a good decision.