I like MMP but it doesn't have the highest distribution growth rate. Try WGP and TRGP. The stocks of both have increased considerably in the past couple of months.
Bayman, I have commented before on STON. Some like it and know the business better than me. I owned it before but sold it years ago after a negative article raised the issue of their debt. The pros are: it is a consolidator in the industry, buying out mom and pop shops and other inefficient operators and squeezing out costs, the need for their product and service will continue and maybe increase with the baby boomers aging. The cons are the accounting is difficult to understand, the business is somewhat dependent on acquisitions and financing those acquisitions, while there is a steady need for their product and service, margins could contract if people economize their spending in this area, there could be risk in the valuation of their merchandise trusts if interest rates rise, the stock is somewhat controversial and has been the subject of negative attacks, the stock is not very liquid.
At the end of the day, you have to be comfortable knowing what their business is and the risks to changes to that business. Sometimes money can be made on obscure stocks in obscure sectors, but STON is not unknown and sometimes chasing high yield can lead to disaster (look at the royalty trusts like SDT, PER and CHKR). good luck
Bayman, I don't know why you need 10% as outside of mREITs and MLPs, that can be a difficult number to hit, especially after the market has increased so much. Many MLPs pay in the Feb May Aug Nov cycle, but you would have to buy the e&p MLPs to get close to 10%. Many of them are now going to monthly dividends. ARP pays over 10%, but it has gone nowhere in price. BBEP and VNR pay slightly less but have been steady.
Depending on your tax bracket, you could decide to buy muni closed-end funds, some of which yield between 6-7%, but most pay monthly. They have had a good run recently and with interest rates rising I would maybe wait until rates peak over 3% (10 year Treasury). Reaching for yield is never a good idea so be careful.
And to rap Stagg again on the knuckles for slightly misleading info, HIX has fluctuated from a high of $9.40 to a low of $8 at least a couple of times in the last 2 years. That fluctuation amount is about 2 years' worth of dividends. It is now nearing its high. I wouldn't call that very stable, even if the general trend has been up, with these violent periodic pullbacks. We will see Friday if the jobs report causes rates to continue upward or if the jobs number disappoints again and rates fall. Today the 10 year crossed 2.8% but the question is can it take out resistance near 2.85%.
In case you didn't see, NYMT priced their offering at $7.59 and opened around $7.50, dipped briefly below. I bought some.
NRZ was up yesterday on heavy volume. I'm wondering if they are next for an spo. Because they have to do an S-11 instead of a shelf offering, will check the SEC site to see if there are any hints that the offering is near. Sometimes the hedge funds like to push the stock price up, then short it and use the lower offering price to cover their short. Yes, that is how the sausage is made.
And just to close the loop on the NYMT spo, one of the lead bookrunners is UBS. Who upgraded NYMT about 2 weeks ago? UBS. Irony or coincidence?
Dominion filed their initial S-1 registration statement for their Cove Point LNG midstream unit. There was an item mentioned about it on the i.v. board. The IPO probably doesn't come until Aug/Sept. I'm waiting for Antero's midstream IPO which may still be a couple of months off. They amended the s-1 last week and added some numbers, but still no info on the projected distribution yield. Huge growth numbers. That fracking sand MLP, EMES, popped yesterday. They are presenting today at a conference. Despite what Stagg says, there are still many growth opportunities in oil and gas.
Keebon, I think you may have sold TRGP a little too early. Their partnership, NGLS, just raised guidance another 10% over what they had previously given. No guidance on the distribution that will result from this latest increase, but it has to be good news. TRGP was up today and is probably going over $100. I think Citi had a $118 target. It was such a quick gain, that I know you thought you had to take your profit. Later in the year, I will have to decide whether it's worth booking a short-term gain or trying to hold on until 1 year of ownership.
Note that Line has said that they are going to try to sell some of their assets in the Permian Basin. Pioneer Natural Resources has a huge field there and some say it is the size of the largest fields in Saudi Arabia. If Line could sell some assets there and get a good price, that will alleviate some of the near term pressures.
Rogere, looks like CHKR is going into its dividend run. There are many limitations to the PV-10 value as it is an estimate AT the time it is taken. Prices could increase or production could stabilize or increase. One never knows how the market will react, but it appears that it is ignoring the recent figure for now. Who knows what will happen later, but chances are there will be another negative article to point out that CHKR is selling at a higher multiple to its PV-10 than some of the other trusts. The analogy would be a closed end fund that sometimes sells for a premium to net asset value but can sink to selling at a discount Eventually CHKR should follow the pattern of SDT. SDT's subordination period comes to an end in August and its distribution should decline. Then again, there have been several trusts, like WHX (I think this symbol is correct) and the Mesabi Trust iron ore trust that have sold above the price of their remaining distributions for many years and then all of a sudden there is a huge adjustment down. WHX recently added some new disclosure that said that the stock price was much higher than the remaining distributions. It was unusual to see this type of disclosure and that only resulted in many investors asking why it took so long for this disclosure to appear.
Stagg, HTGC looks to have formed a downward channel and is now hitting the bottom line. Probably bounces up to the top of the channel, and then down again. No high dividend stock goes up forever because they pay out all of their earnings and can't reinvest except through stock and debt offerings. Most high yielding dividend stocks have lots of competitors so their margins can't get too fat. Doesn't mean that we should avoid them, but it just means that you get most of your profits from the divy. When the stock goes up, you always should consider taking the profit because they usually come back. There are always other high yield stocks to replace it. It's usually easier to stay with something that has been good to you and not to pay taxes on the gains, but then the gains evaporate.
I think the better analogy is to 2002. People were talking about investing in new fad stocks, many under $1. The economy seemed fine. The NASDAQ hit 5000. But the fact that we are talking about a bubble probably means that we still have a way's to go up, maybe after a 10-15% correction first.
Be careful trying to compare tax info from the K-1 with GAAP info from the 10-K. GAAP and tax computations are different. For example, interest income would typically refer to amounts generated from amounts invested in bonds or similar instruments. The payments PER receives on some of its wells,however, are treated for tax purposes as bond interest. There is disclosure about this in the tax section of the prospectus.
Gambler, the first line of support on ARR is around $3.95. I don't think anyone cares about their fundamentals -- it is all about the direction of the 10 year. The 10 year hit resistance at 2.8% and has now retraced back to 2.6%. Seems trapped in this range.
WMC got a little ahead of itself and combined with the cut in the dividend, the premium to book value and the risk of an spo, it was normal to sell off. Let's see if they do an offering.
Could also have been the 15% Canadian withholding tax. Way back when I owned several Canadian royalty trusts, the dividends were always minus that tax. You can get a tax credit on your return for these taxes.
Bayman, zerohedge has been highlighting this trading action which is apparently connected with currency trading. It seems whatever the current currency cross rates are the lowest-cost create a situation for traders to lever up going into the opening of trading and then those same traders use the opening ramp to take profits. Another example of the inside-game that most retail investors have no clue about.
Clark spoke the truth -- no SPO had been announced at the time you spoke with him. But would you expect him to risk violating insider trading laws and Reg FD and tip you off that they were going to do an offering? I'm sure if you asked him if WMC ever planned to do another spo, he would not have answered no. If and when they announce an spo, are you going to call him up and complain that he lied to you? You really don't seem to know what the job of the IR chief is. Hint, it's not to give you insider trading tips or help you trade the stock.
Bud, we always welcome new suggestions. I took a quick look at NSLP and noted that their coverage ratio was under 1 (many of the upstream MLPs are having this issue). They also seem limited in the geography to Oklahoma. The stock certainly had a nice run up from their IPO.
As for other MLPs, I'm waiting for Antero Resources' (AR) midstream unit to come public. They filed an S-1 earlier in the year and recently added an amendment, but still no info on the projected distribution. They recently issued some news about being the sole source for some chemical firm in the Marcellus.
While many stocks have had nice runs, this market has been led by the glamour momo stocks like FB, Twitter and Tesla. Twitter has given back 30 points and is almost back to its IPO pop. TSLA has given back almost 50 points. I think the end of last year saw a rotation out of mREITs and into the BDCs and companies like KKR and OZM. All of this rotation makes one wonder what's left to rotate into. I do think you are right that at the right price even the momo stocks will stabilize and make another run up. I have always found it hard to buy one of these momo stocks after it has corrected because they always crash at some point (usually after they've run up large percentages more).
Not sure. One day it's up and looks to be going higher, the next day it's down and looks to be going lower. Basically sideways. It is still in the upward slopping channel. However, it did the same thing at the beginning of the year for about 3 weeks before it cracked to the bottom of the trend channel. A break below the 50 dma at 1833 could be trouble flushing us down to 1775. The last low of 1746 would have to hold.
The action in April will be interesting. If this doesn't move to a new high soon (i.e. over 1875) we could easily sell in May and go away for a 10% correction down below 1700. That could set us up for the last rally up before the end of QE ushers in a far bigger correction in the Fall.
stagg, one more correction. The main driver for the price of a stock is the EXPECTED profit or loss, as the market tries to anticipate. This is why mREIT stocks react so quickly to changes in the 10 year because the market knows that increasing rates mean lower book values. The market doesn't have to wait until the quarterly report is published some 30 days after the quarter ends to see that rising rates negatively effected book value. They already know that relationship.