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How you can crush the "Income Winners" from this week's Barron's

Recs

11

January 06, 2013 – Comments (5)

Let me begin by saying that I actually like Barron's for the most part.  I wouldn't subscribe to and continue to read it if I hadn't found profitable investment ideas in it in the past.  I can do without the opinion articles, anything they have to say in it about politics, most of the pieces on economics and of course the snooty Penta section, but some pieces particularly the 13D and the interviews with hedge fund and investment managers that contain real ideas are really good.  

I think that the cover story titled "Income Winners" from this week's issue was pretty weak though.  I can find a ton of ideas from my own real-world portfolio that have relatively safe yields that are significantly bettter than the ones featured in the piece.  Let's take a look at it sector by sector and find better choices for investors:

Preferred Stock 

Barron's:

iShares U.S. Preferred ETF (PFF): 5.98%

Wells Fargo 7.5% L: 6.09%

Bank of America 7.25% L: 6.34%

Average: 6.14% 

My Picks:

Evolution Petroleum Corp 8.5% Series A Cumulative Preferred (EPM+A): 7.73%

Pebblebrook Hotel Trust Preferred A (PEB+A): 7.64%

Strategic Hotels and Resorts Inc. Preferred C (BEE+C): 8.28%

Winthrop Realty Trust Preferred D (FUR+D): 8.71%

American International Group Inc 7.70% Series A (AVF): 7.54%

Average: 7.98%

 

Junk Bonds 

Barron's: iShares iBoxx H/Y Corp (HYG): 6.56%

Mainstay High Yield Corp. (PACIX): 7.11%

Fidelity Capital and Income (FAGIX): 5.88%

My Picks:

Peritus High Yield ETF (HYLD): 8.37%

More individual corporate bonds than you can shake a stick at.  The problem is that I bought most of them during the credit crisis when yields were outrageous and I continue to hold them today.  The yields back then were anywhere from 6% to I'd say 12% or so.  Of course, many of them that were callable are being called back today.  I continue to hold corporate paper for Alcoa, Caterpillar, Corning, Goldman Sachs, Leucadia, Nabors, Reynolds American, JP Morgan Chase, Morgan Stanley and Transocean amongst others.  I'm very happy with the fund that these bonds provide me with.  I can turn around and invest the money in new, interesting ideas.  Having said that, even with their high yields I have enough bonds acting as an anchor for my portfoio in what has been a bull market.  

 

REITs 

Barron's

Vanguard REIT ETF (VNQ): 3.52%

Simon Prioerty Group (SPG): 2.59%

Cohen & Steers Realty Shares (CSRSX): 2.53%

My Picks:

Mystery stock (to be announced this week): Around 8%

Retail Opportunity Investments Corp (ROIC): 4.33%

 

MLPs 

Barron's:

JP Morgan Alerian ETF (AMJ):  5.03%

Alerian MLP ETF (AMLP): 6.06%

Enterprise Products Partners (EPD): 4.83%

My Picks:

Boardwalk Pipeline Partners (BWP): 7.98%

CVR Partners (UAN): likely 9% in 2013, 8.49% now

 

Dividend-Paying Stocks

Barron's:

Vanguard High Dividend ETF (VYM): 3.16%

Vanguard Dividend Appre. ETF (VIG): 2.31%

SPDR Down Jones Indust. ETF (DIA): 2.48%

My Picks:

Sprott Resource Corp (SCPZF): 10%+

Vodafone Group (VOD): 5.93% + special

Exelis (XLS): spinoff with 3.54%

I own a ton more that pay dividends right around or slightly less than the Barron's picks, but...they all have one or several potential catalysts that have the potential to unlock a ton of value in the future.  

I also have a ton of companies that do not pay dividends right now, but likely will in the future.  One example of this is Lamar Advertising (LAMR), an outdoor advertising company that is attempting to convert into a REIT.  Stocks that are likely to significantly raise their dividends in the future are a great type of special situation.  I made a great return on Macquarie Infrastructure Company (MIC) when it nearly doubled its dividend last year (I think that it was last year).

Anyhow, I guess that the point of this post is, if you're looking for yield you can do a lot better than the recommendations in this week's Barron's cover story.

Thanks for reading everyone.

Deej 

5 Comments – Post Your Own

#1) On January 06, 2013 at 7:02 PM, awallejr (81.52) wrote:

Well if you are willing to gamble on "junk" I suggest GMXR-P.  Made my pitch here:

 http://caps.fool.com/Blogs/gmxr-preferred/701427

So far they have always paid the dividend and the company has made great strides in reducing it's debt expenditures.

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#2) On January 06, 2013 at 7:45 PM, Mega (99.96) wrote:

So your mystery stock is a REIT! The plot thickens.

The CyrusOne and Corner Store spinoffs haven't happened yet, so it can't be them. BXG / BFCF is an interesting special situation but they don't pay a dividend. SBY, JMI, SRC and ACRE recently IPOed but don't seem likely.

I guess I'll just have to wait a few more days. 

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#3) On January 06, 2013 at 8:16 PM, Option1307 (29.79) wrote:

So basically we should be following deej instead ha ha! A news letter in the works? ;)

Just to play devils advocate, Im not sure when you bought into these companies but possibly they are not at great entry levels anymore. Whereas the Barron's article is suggesting new buys??

Again I haven't looked into either group much but just throwing out food for thought.  

I do own FUR and will continue to do so for the future. VOD has been on my list for a long time since reading your posts just haven't ever been able to pull the trigger. UAN is a recent addition to potential buy list. Really interested and reading more about it after your recent rec. 

Excited for your new REIT find coming soon!

 

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#4) On January 06, 2013 at 8:16 PM, Option1307 (29.79) wrote:

So basically we should be following deej instead ha ha! A news letter in the works? ;)

Just to play devils advocate, Im not sure when you bought into these companies but possibly they are not at great entry levels anymore. Whereas the Barron's article is suggesting new buys??

Again I haven't looked into either group much but just throwing out food for thought.  

I do own FUR and will continue to do so for the future. VOD has been on my list for a long time since reading your posts just haven't ever been able to pull the trigger. UAN is a recent addition to potential buy list. Really interested and reading more about it after your recent rec. 

Excited for your new REIT find coming soon!

 

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#5) On January 07, 2013 at 2:12 PM, EnigmaDude (87.58) wrote:

Well NCT announced a new spinoff today. I'm guessing that is your "mystery" REIT (although the current dividend yield is closer to 10%)

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