Top Picks 2016: Bunge Convertible

01/19/2016 7:00 am EST


Jack Adamo

Editor, Jack Adamo's Insiders Plus

In my view, the market seems too dicey this year for speculative ideas; rather, for my Top Pick for 2016, I am choosing a solid income stock, explains Jack Adamo, editor of Insiders Plus.

With the market so volatile and dividend yields painfully low, investors yearn for a solid company with a safe, substantial dividend.

Bunge Limited (BG) is 198 years old. It produces, processes, and markets edible oils, milled products, sugar, and fertilizer.

Its products are used in human foods, animal feed, and biofuels. It's not a glamorous business, but it makes money and weathers recessions well.

We own its Bunge Cumulative Convertible Perpetual Preference (OP:BGEPF). At its year-end closing price of $93.04 it yields 5.24%.

At our buy limit of $98.00, it yields 4.97%. Since it's convertible into 1.0846 shares of common stock at any time at your option, you also have long-term inflation protection. It's not callable by the company.

Note that Bunge has two other preferreds, but they don't seem to be publicly traded. The correct Cusip for the shares that we recommend is G16962204.

It is thinly traded on the Pink Sheets, not a regular exchange, so buy it only with a limit order, never a market order. Be patient. Buy Bunge Cumulative Convertible Preferred up to $105.

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