Quick question for the AF community, what’s your top pick for a high dividend yield stock? And why? Just looking for high level ideas and then doing more reearch. Thanks!
TRMK, AMNB, PACW are the ones that come to mind for my space. First two are conservative banks in their markets. The latter is just a really high yield with solid business profitability And then of course Lending Club notes for regular income
Check out some BDCs, like MAIN, PSEC, ARCC
How do you conceptualize the slow bleeding of equity due to this structure?
TERP and GLBL yay!
That’s some seriously bad advice. I mean really, really horrible. BDCs? They’re dying faster than a horse with a broken leg and AIDS.
Okay thanks all, didn’t mean for it to get heated!
My familiarity with BDCs is via my work…they are required to mark their investments to market each reporting period and we often serve as the 3rd party independent appraiser. Curious to hear more though as to why they are dying (STL) or the bleeding of equity (raw).
Funding is drying up. It’s just started this year, but it’s only going to get worse. At LPL, the largest buyer of private REITs and BDCs of any broker-dealer, sales are down 70% YoY.
All comes down to fee transparency. BDCs are a great way for advisors to screw their clients without them knowing. Or, they were a good way. Now that fees have to be disclosed, BDCs just aren’t worth buying.
Please pardon my market naivety, but which funding is drying up? I believe the companies I mentioned are closed-end, so I’m not sure if you’re referring to their ability to raise capital. Or is it that the capital markets are tightening (fewer lending options for BDCs)?
I am aware of there being a key difference if the BDC is internally managed vs. externally, are these the fees you are referring?
I’m genuinely interested in learning more as not only is my workflow partially dependent on such companies, but I have started to also acquire positions in various companies (nothing huge, but still want to be educated).
Again, this is a simple perspective, but these companies tend to trade at sizeable discounts to NAV, while offering double digit yields since they distribute 90% of their income. Their investments are typically in small, middle market companies, so the risk profile of their assets is higher than the broader market, which is reflected in the yield they are capable of generating (i.e. lend money at 10%+ and receive warrant coverage). Seems like a reasonable risk/return proposition.
I’ve only done limited reading on BDCs, but this is what I mean. From what I’ve heard, When BDCs have to pay out current earnings, it means that when we have credit problems in excess of earnings, it would deplete capital with no way of “retaining” earnings to grow it back. For an entity to take credit risk, that seems like a very inefficient structure. I assumed this is why the discount to NAV exists
Infrastructure my friends, power and infrastructure. Nothing else you need at these levels.
throw out some names Geo
NEP, MIC, VSN.TO, PPL.TO, ENF.TO, IPL.TO, RNW.TO, BIP, ABY, even TRP at these levels.
LGCY and BAS.
For income, what do you guys think about bond funds like HYD, HYG, or REITs like IYR?
This is a somewhat interesting thread to me, as so far, I have purposely tried to avoid investments with high dividend yields to avoid tax.
LGCY suspended distributions.
I actually have been looking at high yeild dividend stocks for a bit, and ended up getting myself a (somewhat diverse, but REIT heavy basket) near the bottom in february. Has done fairly well for me:
BRE, CHW, CHR.B, ERF, GH, GEL, INO.UN, DR, STB (all CAD but GEL).
I know ERF and GEL are somewhat punts, but not sizeable enough to make me worry.
Overall im 11% up in cap gain and already collected 1% in yield, with more distribution to come soon.
Doesn’t surprise me. A friend who works in Revenue Accounting told me that they’re discussing restructuring options, including becoming a C-Corp.