I rely on dividends from reits, oil income trusts, closed end funds, etc. for income (HRP, ERF, COSWF, AGD). Dividend cuts, takeovers, and bankruptcies have cost me about 50% of my income and I need to rebuild (possibly I am not alone?)
My goals are at least 8% yield + strong company financials and management.
These preferreds got beaten down and if bought now at present prices offer divs of up to 17%. They were issued at $25/share.
There are many others similar.
The institutions are huge.
We think there is very little chance of dividend deferral, and the div can not be adjusted.
Another one that may seem too risky for you is SFI. The preferred cumulative shares, D, E, F, G and I, are yielding about 63%. I think they are safe, but you may not. You can learn a lot by reading the SFI message board.
It is so DAMN REFRESHING to come across a MBrd thread that is actually CONSTRUCTIVE,devoid of wise guys, has folks that keep their political views to themselves, don't hv to use foul language or play silly ego games, and actually exhibits what a MB is supposed to b all about !!!!!!! That alone gives me reason to b a lot more interested in ERF, and step in at the right price. As for me; I currently hv 13 sec in my portfolio, ALL high divi...canroys, shipping, reits, cef's of diff stripes and hv gotten wacked like everyone else. But I keep turning over stones, looking for better opportunities, wh/is what landed me here. The members of this Board shd b commended ! Thanks for the info.
Citigroup Capital XVI
6.45% Enhanced Trust Preferred Securities (Enhanced TRUPS»)
Recently I have made a lot of money off the above stock, C-PW (C-W at the broker). It has steadily declined over time, and really took a big drop when speculation started that Citigroup might go bankrupt. (It wouldn't meet your desire for strong company financials) It started when Citigroup set up a Trust, which sold preferred shares at $25 each and loaned the money to Citigroup. The payments on the loan, which is junior debt, finance the Trust and pay the dividends on the stock. Those dividends, which started out at 6.45%, are now about 19 or 20% because of the low share price. TDAmeritrade talked me into buying some of the initial issue shares at $25, and they steadily went down. I'll never do that again....those guys just want to get the fees from selling those initial shares. Just before Citigroup stopped paying dividends, I sold my C-PW from my taxable account, for the tax loss, and bought more in my IRA. After the dividend announcement I made sure that C-W is not affected, because it isn't Citigroup stock, and so I bought even more. I'm way ahead on it now, and I'm looking forward to many years of juicy dividends. The stock is callable at $25 in 2011, but that won't happen unless the stock price rises to $25 again. The loan is not scheduled to be paid off until 2066, at which time the trust will pay off the shares at $25. The share price is low because most people don't understand the stock, and don't have confidence in Citigroup's future. It seems to me that the government has shown it will not allow Citigroup to go bankrupt, and that's why I've been buying the stock. By the way, if Citigroup were to go bankrupt, money from liquidation would go to senior debt, junior debt, preferred stock, and common stock, in that order.
I share your concern; two years ago I went from HTE to ERF . As you mentioned the divies were attractive. During this time my investment of $65,000 has dwindled to a mere $20,000. a loss of 70% began with a .47 cent dividend. Because of the divie I would not sell. My savings are under my IRA umbrella and because I'm still working (not drawing from my IRA) I cannot file the loss or the 15% foriegn tax on my 1040. Right now I am not focused on the divies. I am convinced that if I "dig out" I must time the market. "Buy low and sell high!"... at present I have ERF & United States Steel (X) on my radar...watch this stock very close..... a buck is to be made here....Good Luck!
There are many well financed companies with preferred stocks that have secure 8% plus dividends and considerable upside potential when this economic repression ever ends. If things work out you could sustain your standard of living and rebuilt your portfolio with the same investment.
Then, bank the dividend in cash; sit on your holdings and the price recovery in months to come will recover your paper losses so far. At that point, you'll be ahead by the cash dividends (plus any interest earned) you banked.
take a look at the utility CNP. i own and have continued to buy as it has dropped to below $9. pays $0.76 per share div. do your own due diligence. they have a heavy debt load like most utilities but are into ng, electric & gas transmission. if we go into depression, no companies will be immune from lowering payouts. i also have erf & hrp. it is just about time to start buying erf-assuming no depression.
I am no expert and dont have any but looked at Te for the same reason. lots of other energy trusts and pipeline trusts in Canada, but i dont know if they can be held by US residents. You might look at ipl-un, or key-un, ep-un (down a lot lately), aet-un, vet-un, cpg-un. ala-un, all the canroys have some issues around 2011 and i dont know what % if any can be held by US citizens. best of luck.
I am trying corporate bonds maturing in 2 to 3 years. Some are quite cheap and can meet your goals.
The short maturity is to protect if, by then, rampant inflation is on.
You will not suffer the decline in value so long as you keep to maturity.
When the 2-3 year period is over one of two things happens;-
a) Rampant inflation - put the proceeds in a 14% CD.
b) No change. Roll them over.
If interested in corporate bonds, try the DWS Multi-Mkt Income Trust (ticker KMM) which invests in corporate bonds, trades like a stock (daily liquidity), but has the portfolio of a mutual fund (i.e., hundreds of corporate bonds) that reduces risk. It also has an international flavor. For the past 5 years, it has paid a steady $0.065 per share MONTHLY dividend, each and every month. Latest price is around $6 per share, yielding an ROI of 13%. Not too shabby.
Capital gains growth potential is to $10-$11 area (where it was before the economic roof caved in on the world). Morningstar rates KMM as 4*'s (out of a maximum of 5).
I guess I would qualify as a yield chaser, thought I was conservative, but evidence from this brutal market would suggest otherwise. Heavily in cash at the start of the general stock market debacle (sold my Canroys 2 weeks after the Halloween massacre) and never reinvested it to any extent---this put me in cash to the tune of 35%---now, with some of my other mutual funds and some closed end funds that mostly relieved me of large $$$, I am around 50% in cash at 1.2%. I don't need the income right now, but have always gravitated towards companies that pay high dividends, worked for awhile, now seems to be one disaster after another. I currently own the remnants of several closed end funds, PHK, RNP, NRO, AWP. I bought 5 MLPs in Oct 08 at what I thought were bargain prices---now underwater somewhat on those. KMP, ETE, TPP, MWE, OKS. I too was shooting for around 8%+, but boy has that not worked out lately. I made serious money on ERF, and some REITs early in the decade, but it seems I am giving it back now. My crystal ball is very hazy, after only having one down year in about 20 years---I got slaughtered this last calendar year and this one is not starting out too peachy either. Hard to predict the economic mayhem that seems to continue----thought I was pretty smart until about 14-16 months ago---. I like KMP----and other MLPs as a substitute for Canroys---but, the economic situation makes me wonder how much their profits will be affected if we can't slow down this freight train of layoffs and decreased business activity---never in my wildest dreams did I think this would turn out to be so severe and so worldwide, great to have such a global economy, ehh? Well, good luck to all, most of us could probably use some.