Congratulations to Nate Pile — the editor of the industry-leading growth stock advisory Nate's Notes has just released the first issue of a new service focused on retirement investing, The Little River Investment Guide. Here, he reviews the initial 12 stocks that will make up his portfolio.
My goal with this new newsletter is to put together a more conservative basket of stocks that will generate some income via dividends or other forms of distribution to shareholders, but, at the same time, also offer a bit more growth potential than one would get if they invested in a basket of stocks solely for the dividends they paid.
In order to help people stay focused on the long-term, I will also only be making trades once a month, and I will also be taking the same patient approach I use in Nate's Notes of scaling-in (or -out) of positions over time rather than doing it all once.
After lots of searching, sifting, and sorting, I am pleased to report that I have finally settled on a list of stocks that I am willing to recommend as part of getting The Little River Guide portfolio off the ground.
There are four real estate investment trusts (REITs), five “growth” stocks (some with more growth potential than the others), and three utilities. Not surprisingly, all of these stocks pay a dividend of some sort. I have also set up a real world account with $10,000 to track the performance of the recommendations I make in the newsletter as time goes by.
The first stock (alphabetically) that I am recommending is AES Corp. (AES), a global power generation and utility company that is based in Arlington, Virginia. The utility has at least a small footprint in virtually every part of the world (parts of South and Central America, Europe, Asia, etc.). AES, yielding 3.97%, is considered a buy under $16.
I am including Artisan Partners Asset Management (APAM) in our initial basket of stocks based on the fact that it pays a nice dividend (that, naturally, may be reduced if things turn more sour when it comes to the economy and the market).
I also like that it is a publicly owned investment manager that has established a presence around both the U.S. and London. As long as “the system” doesn’t collapse (yipes!), this firm should continue to grow. APAM — yielding 7.8% — is a buy under $35.
Blackstone Mortgage Trust class A (BXMT) is a mortgage REIT that originates senior loans collateralized by commercial properties in North America, Europe, and Australia.
With a recognition that the worst is almost certainly not behind us yet when it comes to how things will end up shaking out with commercial real estate in various part of the country (and the very sweet dividend yield may end up being reduced), I am ok with starting a position now. Blackstone Mortgage, which currently yields over 11%, is a buy under $25.
Shifting to the Pacific Northwest, with the same caveats just cited for Blackstone Mortgage, I am also recommending Broadmark Realty Capital (BRMK), another mortgage REIT.
Based in Seattle, Broadmark yields 8%. It provides short-term and first deed of trust loans secured by real estate to fund projects associated with both residential and commercial properties around the U.S. With fingers optimistically crossed when it comes to the economy, BRMK is considered a buy under $10.
Though I am naturally concerned that the shares of Charles Schwab (SCHW) haven’t managed to hold up a little better in the current market environment, I also know that the whole sector is out of favor these days (which helps to explain the poor performance).
However, with my Peter Lynch hat on, I can tell you that, as a long-time (and satisfied!) user of Schwab’s services, I am excited to be including the stock in the initial line-up for our portfolio! Schwab — with a yield of 2% — is a buy under $38.
Ladder Capital (LADR) is the third and final mortgage REIT I am including in our portfolio. Ladder Capital operates in three different areas of the real estate market.
The company originates loans and provides other types of financing associated with commercial real estate; it invests in mortgage-backed securities and U.S. Agency Securities; and it owns and invests in a portfolio of commercial and residential properties around the country. Yielding 11%%, LADR is a buy under $9.
Our inaugural line-up of recommendations also include two more dividend-paying utilities, the first being PPL Corp. (PPL) which is an electricity and natural gas distributor operating in Kentucky, Virginia, Pennsylvania, and parts of the UK.
No, we are not likely to ever see huge growth from them, but by collecting dividends from a diversified basket of utilities, we should do allright. The stock, currently yielding 6.5%, is a buy under $28.
The second of these utilities is Public Service Enterprise Group (PEG), an energy company that both produces energy via variety of methods, as well as distributes electricity and gas throughout the northeast and mid-Atlantic region of the United States.
Many utilities seem to have found some footing, but please don’t chase the stock above the buy limits if it does start to creep up on us! PEG — with a yield of 3.8% — is considered a buy under $54.
Finally, although the focus of this new portfolio is primarily income, the following four stocks offer a bit more growth potential to go along with their dividends.
The first one in this category is long-running recommendation in our Nate’s Notes newsletter — Luminex (LMNX), an up-and-coming genetics company.
Luminex designs, manufactures, and sells products and software packages used to do genetic (and related) screening and testing in the diagnostic, pharmaceutical, research, and food safety settings (among others). The stock yields 1.1% and is considered a buy under $38.
Medifast (MED) manufactures and distributes various weight loss and weight management products in the U.S. and Asia… and, not surprisingly given the weight many folks have likely gained while quarantining, the stock has been on fire lately!
Though I am starting a position this month, I am hoping to also get a chance to buy it cheaper in the months ahead, and so I am only spending half as much here as elsewhere this month. Yielding 2.96%, MED is a buy under $160.
PetMed Express (PETS) is essentially an online pharmacy for both prescription and non-prescription pet medications and supplies.
Although you are naturally encouraged to support your local vet whenever you can, the reality of the situation is that even pet care in this country is changing rapidly.
I believe the surge in pet ownership we have seen during these “shelter-in-place times” is only going to help accelerate the trend. PETS — with a yield of 2.95% — is a buy under $42.
Though the growth rate at Pfizer (PFE) has been slower than some of the other major pharmaceutical companies out there, I am recommending the stock in our new portfolio.
First, it pays a nice dividend, and though growth rates for the industry are not what they were 30 years ago, there is still the potential for some growth while collecting the dividend. In addition, I expect the sector to come back in favor once the technology sector finally cools off a bit. PFE, yielding 4.5%, is a buy under $37.
