My Recent Purchases for My Taxable Portfolio
I recently invested much of my taxable portfolio. The aim of the portfolio was not crazy appreciation, but high yield. With this aim, I created a portfolio of my favorite types of dividend income stocks/funds. While this portfolio was mainly constructed for income, much of it has potential for decent appreciation, even my ETFs.
JNK: When I bought, the yield spread between JNK and the 10 year treasury was almost 10%. I know that defaults are expected to be as high as 14 to 16 percent, but I think that has been more than priced into the yield by the market. If the economy ever does get better, I expect some appreciation also.
PWE, PGH, ERF: These are 3 of my favorite Canadian Royalty Trusts. I wanted high dividend payers that would not be hurt by inflation as much as my junk bond portion would be hit. Oil and natural gas fit that bill. As a plus, I get possible 100% to 200% appreciation if I hold long enough because these are cheap right now. I prefer Canadian Royalty Trusts to REITs because these oil/natural gas plays have less long-term debt and similar dividend payouts. Oh, and they have good earnings histories and trade below book. I do realize that these things will probably stop being trusts in 2011, but I still expect better-than-average dividends, and a hedge against the weak US dollar via oil/natural gas and the Canadian dollar.
ENY: I liked the Canroys so much I had to get an ETF as well. I'm wondering whether I should've bought HTE here instead, but I like this pick nonetheless.
VNQ: REITs are burdened with VERY heavy debt loads, and they may or may not be able to refinance their long-term debt. While I do have a play or two I like in this sector, I thought I'd play it safe and buy the diversified ETF. Even with the commercial bomb explosion that hasn't happened yet, I think REIT prices are not so bad and I don't mind buying an ETF for the sector.
EPR-PE: This is Entertainment Properties Trust's convertible preferred stock, series E. At my purchase price of $12.80, I secured a yield of 17.6%. If EPR doesn't go bankrupt and one day calls these shares back, I also have potential for almost 100% appreciation based on the par value of $25. Anyway, this REIT actually has a great earnings history and a very manageable debt load compared to its peers. Most of its holdings are movie theaters, which are filled to the brim. It does have some questionable holdings in wineries, a casino, etc., but its movie theater tenants make up the majority of the company's revenue and 2009 ticket sales are UP compared to 2008. It's much healthier than your average REIT, and the commercial real estate time bomb won't take this one down.
While my taxable money is invested as listed above, my 401k and Roth IRA remain in micro/small cap value stocks and cash.