We could see price appreciation at the 20 cents dividend level without any dividend increase. What is still needed here is for RSO to convince the "market" that it can cover the dividend from AFFO. Frankly, I was a little surprised about the 80 cent dividend guidance for 2014. I already lightened up my position from 10,000 to 3,000 shares several months ago. I wanted to hold some because somehow RSO has managed to maintain a good dividend. (Another way to look at it is that I already made a large profit and the 3000 shares are free.)
Remember, at the end of 2010 they did say that their $1.00 dividend looked solid for 2011. That was true, but then we saw a cut in early 2012. We'll see what happens in the next quarter or two...
How much you or I make per month is relative and has nothing to do with how good/bad our investments are. I won't say what my income is -- it could be $1000 per month or $1 million per month; that's not relevant. It's about "today's money" and what you need to sustain your life style. History says don't try to time anything, and history says keep your money invested and continue to reinvest your dividends.
IMO: if something thinks they can "time" the market, he/she is a fool. The saying goes: A fool and his money are easily parted comes to mind... That saying has proven to be true for hundreds of years. Is there really something special about today? I don't thing so....
The 3x short ETFs is strictly a gambling position. Why?
You are about seven years older than I, so I don't know if you are still working. I'm thinking about long-term dividend stocks that will allow me to live comfortably without burning up any principal. My IRA holds taxable dividend-paying stocks, my 401K holds taxable bonds and slowly my regular account is shifting to tax deferred MLPs or real estate stocks that pay mostly ROC. (Recently picked up ARCP and I'm strongly thinking about O at its current price.) I still work and probably will for many years, so any dividends get re-invested (not necessarily in the same stock). Long term this seems to be the way to go.
This "good is bad and bad is good" is headline BS, as is talk about how Obama-Care will kill our economy. Maybe stocks are getting expensive, maybe not. My time frame is 10+ years, not what may or may not happen on Monday.
Management fee is a flat 2% (per year) of our gross assets, including any investments made with borrowings, but excluding any cash and cash equivalents. This is the part that creates a potential conflict of interest between management and shareholders. (Analysts were right for being very critical of FSC for its recent SPO.)
The incentive fee has two parts:
1) The "2" is the first part: If they don't earn 2% NII in any given quarter (8% on annual basis), they get nothing. If NII falls between 2% but less than 2.5%, then mgmt gets some incentive fee, and of course they get more yet if they exceed 2.5% in any quarter. Obviously they want to target more then 8% per year.
2) The "20" is the second part and is related to capital gains -- they get 20% of realized capital gains.
True, yields are compressing -- especially for secured debt, and more so for quality companies. FSC is focused on making loans in that area and the competition for those loans is also causing early repayments on many of FSC's existing loans. The natural thing for FSC is to cut its dividend to be inline with their NII. If they did not do that, they could lose their credit rating. FSC is a good long-term investment, especially if you can get it at a low price. The early repayments will subside soon enough as there is a limit to how low its competitors rates will go. And FSC is well positioned for rate increases. That will happen; that may be next year or may not happen for ten years -- no body knows, but most people are betting it won't happen for at least a few years. (Three years ago analysts' were blessing FSC because of its fixed rate borrowing and senior-secured, floating-rate loans. Now loans are being refinanced at lower rates and people are calling FSC a dog. That could change very rapidly. Look at how quickly PSEC went from "dog" three years ago to becoming everyone's darling BDC.)
PSEC is taking on some additional risks and is looking at subordinate within CLOs. These are great investments when the economy is improving, even if it improves only slowly. PSEC's CFO referred to its investments in CLOs as clydesdales pulling PSEC's NII forward. PSEC says it's well positioned for rate increases, but it's very hard to say that all the loans in those CLOs will be able to pay if rates begin to rise either too quickly or too high. Right now that is not a red flag, but it is something to keep an eye on.
Bottom line: FSC vs. PSEC -- not "apples to applies." In fact, of all the BDCs I follow, each has its own niche that makes it different enough such that one could do very well, while the other does only okay in the same economic environment.
Give it a few years, but the idea of completely cutting off SS benefits to the wealthy will probably happen, likewise for Medicaid. That savings, however, won't save SS -- or any of these entitlement programs.
When SS was created, it's intention was to help those that actually needed it. Today, it's just "fun money" for most people. Frankly, SS and other entitlements should have been killed long ago. But hey, promising this kind of stuff is how many politician are able to buy votes.
I don't know about buying more here, but I do think it's oversold because of AGNC's report. (In AGNC, I hold only the preferred in an IRA -- and that has not budged. Frankly, their report of protecting BV at all costs is a big positive for the preferred.)
My position is small and I'm good with holding. (Easy for me to say with cost basis under $15 and having collected dividends for three years. My effective cost is closer to $5.)