The market ignored rising interest rates and recession fears to make July the best month since November 2020. Why? The bad news was already baked into the cake and strong June quarter earnings reports got everybody excited, suggests Harry Domash, editor of Dividend Detective.
What’s next? The recent strong employment report should tamper recession fears, but rising interest rate concerns could still trip things up. Still, I’m guessing that the big down days are behind us.
In our Private Equity portfolio, we’re adding a player employing an unusual strategy. Compass Diversified Holdings (CODI) is different from most other private equity players; rather than simply lending money to its clients, Compass acquires and manages a variety of profitable, small and middle-market businesses, typically serving niche markets.
Compass has returned (price appreciation plus dividends) 6% over the past 12-months compared to the S&P 500’s 7% loss, and averaged 16% annually over the last three years. Its dividend yield is 4.1%.
In our portfolio of Business Development Companies, we’re adding OFS Capital (OFS) — a BDC that loans capital to, and makes equity investments in North American middle market companies.
It has returned 33% (not a typo) over 12-months and averaged 9% annually over three years. Already paying a 10.7% yield, over the last two years, it has hiked its payout by 3% or more every quarter.
In our ETF Growth Opportunities portfolio we’re adding a fund employing a proprietary strategy to identify high dividend paying members of the S&P 500 large-cap and S&P MidCap 400 indices with the strongest growth prospects.
It’s working so far. Invesco S&P Ultra Dividend Revenue (RDIV) has returned 10% over 12-months and averaged 9% annually over the past three- and five-year. It’s paying a 3.3% dividend yield.
In our CEF Growth Opportunities portfolio, we’re adding a fund that mainly holds large-cap tech stocks, and employs an option strategy to generate income to pay dividends.
Columbia Seligman Technology Growth (STK) has been flat over the past 12-months, but averaged 22% annually over three years and 18% annually over five years. It’s currently paying a 6.0% dividend yield.