JPMorgan (JPM) has broken out to new highs this week, but sits near a perilous technical level, writ...
02/17/2006 12:00 am EST
For those seeking high yields Paul Tracy, editor ofStreetAuthority Market Advisor, offers a trio of global favorites, choosing a NYSE-listed Canadian energy trust, a Russian closed-end fund, and a global infrastructure fund from Australia’s Macquarie Bank.
"Petrofund Energy Trust(PTF ASE), founded in 1988, is one of the oldest Canadian royalty trusts and the first to list on a US stock exchange. The Calgary-based trust relies on a strategy of buying (rather than finding) proven oil and gas reserves. These reserves then generate production and provide stable cash flows that can then be distributed to shareholders.
"The trust has fueled much of its growth via acquisitions. Recent purchases have boosted PetroFund's reserves by more than 40%. In mid December, PTF paid $485 million Canadian dollars to acquire Kaiser Energy. The transaction is expected to boost the firm's daily production by 14%. Although its acquisition strategy does carry some risk, we’d note that the purchases have greatly increased the trust's production capacity without taxing its balance sheet.
"Given heightened geopolitical tensions, PTF should deliver an impressive dividend stream as well as higher share prices in the years ahead. Last year, shareholders have received total payments of $1.99 per share, which works out to an attractive dividend yield of 9.8%. Even better, PTF recently boosted its monthly distribution from $0.17 to $0.20 (in Canadian Dollars), and that rate should remain in place for at least the next few months, giving the stock a yield of well over 10%.
"Launched in March 2004 by Macquarie, one of Australia's largest banks, the Global Infrastructure Utilities Dividend & Income Fund (MFD NYSE) is a closed-end specialty utility fund. It has a very concentrated portfolio, with the top ten positions soaking up approximately 60% of assets. Not surprisingly, given its income orientation, the fund has a value tilt, with roughly half trading on foreign exchanges. Among the top holdings are Italy's largest power provider Enel, Canada's Pembina Pipelines, and US electric generator Ameren.
"In addition to utility holdings, MFD invests 35% of its portfolio in floating rate loans, which makes the portfolio somewhat protected from rising rates. MFD distributed $1.95 per share last year. Based on the current price, that equates to a yield of 8.7%. The fund should deliver safe dividends and perform well over the long run, particularly in difficult market environments. The fund is trading at a 6% discount to its NAV. Despite its pricey 1.8% expense ratio, MFD is a solid choice for investors in search of low volatility and high yields.
"Shares of the Central Europe and Russia Fund (CEE NYSE) have rallied nearly 10% already this year, continuing a trend of stellar returns that dates back to the beginning of 2003. The fund is benefiting from the addition of several new Eastern European firms to the European Union, which has led to an influx of investment capital and strong economic growth in the region. Despite its recent gains, this closed-end fund still looks and is now trading at a sizable 6.9% discount to its NAV (net asset value).
"CEE should also continue to perform well in the coming year thanks to continued growth in Eastern Europe. Investors could also reap additional gains if the US dollar declines in value (as many analysts suspect it will), as this will boost the fund's returns when converted back into dollars. And finally, thanks to a special $3.05 per share dividend paid near the end of last year, this fund sports a dividend yield of 6.7%, making it a solid choice for both value and income-oriented investors."
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