I believe income and dividend investing will outperform the overall stock market for the next few years, but what if I'm wrong? What if stocks do rise? We have a way to profit in either case.
We can use an investment theme that works whether stocks rise or fall. We can buy Covered Call Funds, also known as Buy-Write Funds.
If you aren't familiar with covered call funds, they are similar to Mutual Funds except for one very important aspect; they sell options against the funds holdings to generate additional income. Selling options for income has an added benefit of providing stability to the price of the fund. You should also know they will rise less during strong Bull markets, because they will have sold stocks for smaller gains than they might have made by holding. Since I don't see a strong Bull market in our future, that shouldn't be an issue.
Covered Call funds also play into a theme I hold dear. In the long run you will come out better by making reasonable gains year after year while keeping losses to a minimum. Losses can be more devastating to a portfolio than most people realize. A 33% loss requires a 50% gain to get even and a 50% loss requires a 100% gain to get back even.
The first fund is:
Nasdaq Premium Income & Growth Fund (QQQX)
The Fund's investment objective is to provide stockholders with income and capital appreciation. The Fund pursues its investment objective principally through a two-part strategy. First, the Fund will invest, under normal circumstances, substantially all of its net assets in a portfolio of investments designed to closely track the NASDAQ 100 Index. Second, the Fund will write (sell) call options on the Index (the "Written Options") which are fully collateralized by the NASDAQ Investment Portfolio. Under normal circumstances, the notional value of the Written Options is not expected to exceed 50% of the Fund's net assets.
The yield on QQQX is over 13%.
click here for a current chart of QQQX
The second is:
Eaton Vance Tax-Managed Global Buy-Write Opportunities Fund (ETW)
The Fund's investment program will consist primarily of owning a diversified portfolio of common stocks, a segment of which holds stocks of U.S. issuers and a segment of which holds stocks of non-U.S. issuers, and selling on a continuous basis call options on broad-based domestic stock indices on at least 80% of the value of the U.S. Segment and call options on broad-based foreign country and/or regional stock indices on at least 80% of the value of the International Segment.
The yield on ETW is over 14%.
Click here for a curent chart of ETW
Both these funds sold off hard during the Bear Market crash, but since the March 2009 bottom they have recovered much better than the market as a whole. QQQX and ETW are nearly back to pre -crash levels. The same can't be said for the S&P 500.
Click here the see a current chart
Owning these covered call funds provides us global diversification, income, and the potential added kicker of appreciation if the stock market does rise. We can have it all.
Showing posts with label Stocks. Show all posts
Showing posts with label Stocks. Show all posts
Thursday, July 16, 2009
Monday, July 13, 2009
It is time to buy two Shippers
In spite of what we are hearing on the news, the worlds economies have not come to an end, and as long as international trade exists, we'll need to ship goods between countries. For that we need big boats.
The first big boat company is Nordic American Tanker Shipping Ltd. (NAT)
Nordic American Tanker Shipping Ltd., an international tanker company, owns and operates crude oil tankers. It operates its vessels in the spot market, on time charters, or on bareboat charters. As of December 31, 2008 the company owned 15 double hull Suezmax tankers. Nordic American Tanker Shipping Ltd. was founded in 1995 and is headquartered in Hamilton, Bermuda.
The second is: Navios Maritime Partners L.P. (NMM)
Navios Maritime Partners L.P operates as an international owner and operator of drybulk carriers in Greece. The company engages in the seaborne transportation services of a range of drybulk commodities comprising iron ore, coal, grains, and fertilizers, as well as chartering its vessels under medium to long term charters. As of December 31, 2008, it operated a fleet of 10 vessels, including 8 Panamax vessels and 2 Capesize vessels. Navios GP L.L.C. serves as the general partner of the company. Navios Maritime Partners was founded in 2007 and is headquartered in Piraeus, Greece.
At todays prices:
NAT is $30.50 a share, with a distribution yield of 11.5%
NMM is $9.40 a share and has a 17% distribution yield.
Both of these companies are well funded and should have no problem holding their payouts at the current level and then increasing the distributions in an improved economy.
Current Charts
Click Here for a current chart
Click Here for a current chart
July 15th update
Both NAT and NMM are moving higher.
NAT closed today at $31.86, or 4.5% higher than the buy point. It is still a buy.
NMM closed today at $10.20, or 8.5% higher than the buy point. It is still a buy.
The first big boat company is Nordic American Tanker Shipping Ltd. (NAT)
Nordic American Tanker Shipping Ltd., an international tanker company, owns and operates crude oil tankers. It operates its vessels in the spot market, on time charters, or on bareboat charters. As of December 31, 2008 the company owned 15 double hull Suezmax tankers. Nordic American Tanker Shipping Ltd. was founded in 1995 and is headquartered in Hamilton, Bermuda.
The second is: Navios Maritime Partners L.P. (NMM)
Navios Maritime Partners L.P operates as an international owner and operator of drybulk carriers in Greece. The company engages in the seaborne transportation services of a range of drybulk commodities comprising iron ore, coal, grains, and fertilizers, as well as chartering its vessels under medium to long term charters. As of December 31, 2008, it operated a fleet of 10 vessels, including 8 Panamax vessels and 2 Capesize vessels. Navios GP L.L.C. serves as the general partner of the company. Navios Maritime Partners was founded in 2007 and is headquartered in Piraeus, Greece.
At todays prices:
NAT is $30.50 a share, with a distribution yield of 11.5%
NMM is $9.40 a share and has a 17% distribution yield.
Both of these companies are well funded and should have no problem holding their payouts at the current level and then increasing the distributions in an improved economy.
Current Charts
Click Here for a current chart
Click Here for a current chart
July 15th update
Both NAT and NMM are moving higher.
NAT closed today at $31.86, or 4.5% higher than the buy point. It is still a buy.
NMM closed today at $10.20, or 8.5% higher than the buy point. It is still a buy.
Friday, June 26, 2009
Is Propane a Clean Fuel Play?
Or are people flocking to dividend stocks again?
I think it could be both and noticed propane stocks such as AmerGas Partners LP (APU), and Ferrellgas Partners LP (FGP) doing well today.
APU is yielding 7.9% and FGP is yielding 12.3% at todays prices.
Both operate as Master Limited Limited Partnerships ( MLPs) and distribute the majority of profits to the unit holders rather than pay taxes.
AmeriGas Partners, L.P. (APU) Is the nation’s largest retail propane marketer, serving nearly 1.3 million customers from approximately 600 locations in 46 states.
Ferrellgas Partners LP (FGP) was founded in 1939, and is the largest provider of propane by branded propane tank exchange through its Blue Rhino brand. It serves approximately 1 million Customers in all 50 states, the District of Columbia, and Puerto Rico.
We can only speculate whether propane becomes a clean fuel for cars or not. These two companies already pay a fair distribution and the stocks look ready to move higher. If propane finds increase use as a motor vehicle fuel, so much the better.
APU chart
click charts for a larger view
FGP chart
I have a position in FGP.
By the way, MLPs have their own language; they call dividends distributions, and share holders are called Unit holders. MLP distributions are often treated differently than typical stock dividends. You may want to contact your accountant prior to purchasing Master Limited Partnerships.
I think it could be both and noticed propane stocks such as AmerGas Partners LP (APU), and Ferrellgas Partners LP (FGP) doing well today.
APU is yielding 7.9% and FGP is yielding 12.3% at todays prices.
Both operate as Master Limited Limited Partnerships ( MLPs) and distribute the majority of profits to the unit holders rather than pay taxes.
AmeriGas Partners, L.P. (APU) Is the nation’s largest retail propane marketer, serving nearly 1.3 million customers from approximately 600 locations in 46 states.
Ferrellgas Partners LP (FGP) was founded in 1939, and is the largest provider of propane by branded propane tank exchange through its Blue Rhino brand. It serves approximately 1 million Customers in all 50 states, the District of Columbia, and Puerto Rico.
We can only speculate whether propane becomes a clean fuel for cars or not. These two companies already pay a fair distribution and the stocks look ready to move higher. If propane finds increase use as a motor vehicle fuel, so much the better.
APU chart
click charts for a larger view
FGP chart
I have a position in FGP.
By the way, MLPs have their own language; they call dividends distributions, and share holders are called Unit holders. MLP distributions are often treated differently than typical stock dividends. You may want to contact your accountant prior to purchasing Master Limited Partnerships.
Thursday, June 25, 2009
GLO - An Overlooked Fund
Most people have never heard of Closed End Funds (CEFs) and that creates opportunity for the rest of us.
Closed End Funds are like Mutual Funds except they trade openly during the day, and the price is set by buyers and sellers. They trade for what people are willing to pay.
When CEFs become popular they can sell for more then they should and when they aren't they can sell for less than they should. That brings us to Clough Global Opportunities Fund (GLO).
GLO is on sale. It is trading at almost 20% off.
GLO is managed by Charles I. Clough, Jr. Founder, Clough Capital Partners LP and former chief investment strategist, Merrill Lynch & Co.
The investment objective of the Fund is to provide a high level of total return. The Fund seeks to pursue this objective by applying a fundamental research driven investment process and will invest in equity and equity-related securities as well as fixed income securities including both corporate and sovereign debt in both U.S. and non-U.S. markets. The Fund is flexibly managed so that depending on the Fund investment adviser outlook it sometimes will be more heavily invested in equity securities or in debt or fixed income securities. Investments in non-U.S. markets will be made primarily through liquid securities including depositary and exchange traded funds.
It is a go anywhere, flexible fund with a good manager paying over 8% and selling at a 19% discount. Mr. Clough has a proven record and is invested in the right areas such as Energy, China and Brazil. As the world economy recovers, these are areas I want to own and GLO has them at a discount.
I don't own it yet, but I will.
Chart
click chart to enlarge
Closed End Funds are like Mutual Funds except they trade openly during the day, and the price is set by buyers and sellers. They trade for what people are willing to pay.
When CEFs become popular they can sell for more then they should and when they aren't they can sell for less than they should. That brings us to Clough Global Opportunities Fund (GLO).
GLO is on sale. It is trading at almost 20% off.
GLO is managed by Charles I. Clough, Jr. Founder, Clough Capital Partners LP and former chief investment strategist, Merrill Lynch & Co.
The investment objective of the Fund is to provide a high level of total return. The Fund seeks to pursue this objective by applying a fundamental research driven investment process and will invest in equity and equity-related securities as well as fixed income securities including both corporate and sovereign debt in both U.S. and non-U.S. markets. The Fund is flexibly managed so that depending on the Fund investment adviser outlook it sometimes will be more heavily invested in equity securities or in debt or fixed income securities. Investments in non-U.S. markets will be made primarily through liquid securities including depositary and exchange traded funds.
It is a go anywhere, flexible fund with a good manager paying over 8% and selling at a 19% discount. Mr. Clough has a proven record and is invested in the right areas such as Energy, China and Brazil. As the world economy recovers, these are areas I want to own and GLO has them at a discount.
I don't own it yet, but I will.
Chart
click chart to enlarge
Some stocks are worth owning
There are a few public companies with the potential to take advantage of the mess created in housing and on Wall Street. In particular I am looking at Business Development Companies (BDC) and Real Estate Investment Trusts (REIT).
Some of the best of these companies can be found in one CEF (closed end fund) under one symbol; FGB - First Trust/Gallatin Specialty Finance and Financial Opportunities Fund.
This fund owns stock in companies that loan money to and invest in other businesses. These include two of my favorite areas of investing; Business Development Companies (BDC) and Real Estate Investment Trusts (REIT).
To reduce taxes, these types of businesses are required to pass along the bulk of their earnings to the share holders as distributions. I have found it harder for Company Management to squander investor money when they can't keep it to themselves.
The top holding make up about 80%:
Prospect Energy Corp -
MVC Capital Inc -
Annaly Capital Management, Inc
Ares Capital Corp.
Gladstone Capital Corp.
Hatteras Financial Corp.
BlackRock Kelso Capital Corp.
Cypress Sharpridge Investments, Inc.
Medallion Financial Corp.
Hercules Technology Growth Capital, Inc
This fund is currently selling for $4.26 a share and paying over 13% yield.
It trades in fairly light volume so use limit orders if you buy it.
current chart link
Click chart to enlarge
Be aware, there are special tax considerations to contend with when you own these. You may want to consult an accountant.
Some of the best of these companies can be found in one CEF (closed end fund) under one symbol; FGB - First Trust/Gallatin Specialty Finance and Financial Opportunities Fund.
This fund owns stock in companies that loan money to and invest in other businesses. These include two of my favorite areas of investing; Business Development Companies (BDC) and Real Estate Investment Trusts (REIT).
To reduce taxes, these types of businesses are required to pass along the bulk of their earnings to the share holders as distributions. I have found it harder for Company Management to squander investor money when they can't keep it to themselves.
The top holding make up about 80%:
Prospect Energy Corp -
MVC Capital Inc -
Annaly Capital Management, Inc
Ares Capital Corp.
Gladstone Capital Corp.
Hatteras Financial Corp.
BlackRock Kelso Capital Corp.
Cypress Sharpridge Investments, Inc.
Medallion Financial Corp.
Hercules Technology Growth Capital, Inc
This fund is currently selling for $4.26 a share and paying over 13% yield.
It trades in fairly light volume so use limit orders if you buy it.
current chart link
Click chart to enlarge
Be aware, there are special tax considerations to contend with when you own these. You may want to consult an accountant.
Labels:
Dividends,
ETF,
Income,
Investments,
Stocks
Wednesday, June 24, 2009
Compounding Divdends
Since the Markets bottomed in March 2009, we've had a nice recovery in both stocks and bonds. Both have advanced around 40% off their lows. Of the two, my favorite long term investment right now would be High Yield Bond funds.
In spite of the rise, High Yield bonds are still attractively priced and yielding over 10%. The easiest way to own these are with ETFs (exchange trades funds) and CEFs (closed end funds).
You could buy mutual funds, but I prefer both ETFs and CEFs over Mutual funds, because they trade all day and can often be purchased at a discount to actual value. Purchasing funds at a discount increases your yield and lowers risk; two things we should always be concerned with.
Three examples I own: JNK, HYG and HYV
Barclays Capital High Yield Bond ETF (JNK) is paying over 14%.
iShares iBoxx $ High Yield Corporate Bond Fund (HYG) is paying 11%.
BlackRock Corporate High Yield Fund V, Inc. (HYV) is paying 13% and selling at a 7% discount.
Things can change, dividends could be reduced, but I believe these are worth owning and in my opinion will beat the stock market over the next few years.
If you purchase these, and don't need the income right away you should consider having your dividends automatically re-invested allowing your investment to compound. Just tell your broker you would like the dividends re-invested.
I would not recommend buying individual high yield bonds. These require knowledge and research capabilities beyond the average investor, myself included and I believe funds or ETFs are a safer, more practical way for individual investors to participate.
As always, you should do your own research to become familiar with these or other investments before putting your money at risk.
In spite of the rise, High Yield bonds are still attractively priced and yielding over 10%. The easiest way to own these are with ETFs (exchange trades funds) and CEFs (closed end funds).
You could buy mutual funds, but I prefer both ETFs and CEFs over Mutual funds, because they trade all day and can often be purchased at a discount to actual value. Purchasing funds at a discount increases your yield and lowers risk; two things we should always be concerned with.
Three examples I own: JNK, HYG and HYV
Barclays Capital High Yield Bond ETF (JNK) is paying over 14%.
iShares iBoxx $ High Yield Corporate Bond Fund (HYG) is paying 11%.
BlackRock Corporate High Yield Fund V, Inc. (HYV) is paying 13% and selling at a 7% discount.
Things can change, dividends could be reduced, but I believe these are worth owning and in my opinion will beat the stock market over the next few years.
If you purchase these, and don't need the income right away you should consider having your dividends automatically re-invested allowing your investment to compound. Just tell your broker you would like the dividends re-invested.
I would not recommend buying individual high yield bonds. These require knowledge and research capabilities beyond the average investor, myself included and I believe funds or ETFs are a safer, more practical way for individual investors to participate.
As always, you should do your own research to become familiar with these or other investments before putting your money at risk.
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