Harry Domash is a long-standing expert on income investing; in his latest Dividend Detective, he hig...
High-Yielding Trio from Dividend Detective
06/19/2018 5:00 am EST
Harry Domash in a leading expert on income investing. Here, the editor of Dividend Detective looks at some new favorites including a high-yielding small cap and a pair of preferred shares that are linked to real estate investment trusts.
We are adding the un-rated Annaly Capital 6.50% Series G (NLY-G) to our model portfolio of preferred stocks. Annaly is trading 8% below its call price, affording it with total return potential.
Annaly is a real estate investment trust (REIT) that invests mostly in debt secured by home mortgages that are insured by U.S. Government agencies.
These preferreds though not credit-rated,, are cumulative, meaning that Annaly must make up any missed dividends before paying common stock dividends or calling the preferreds Market yield is 6.9%, and the yield to its 3/31/23 call date is 7.8%.
We’re adding Kimco Realty 5.25% Series M (KIM-M) to the speculative preferred portfolio. Kimco, a REIT, owns 475 open-air shopping centers (not enclosed malls) in the U.S.
These preferreds are rated investment quality (BBB-) by S&P, and — as is the case for all the holdings in our preferred speculators portfolio — are cumulative, meaning that Kimco remains on the hook for any missed dividends. Market yield is 6.0% and upside potential is 14%.
In our dividend speculators portfolio, we’re adding BG Staffing (BGSF), a small-cap pick paying a 6.5% yield and growing revenues and earnings around 15% annually. Further, we don’t expect that growth rate to top out anytime soon.
BG serves three temporary staffing markets: multifamily (apartment management and maintenance), professional (controllers, accountants, clerks, programmers, etc.), and commercial (light assembly workers, call center operators, production workers, etc.).
Over the past five years, revenues have grown at a 16% annual clip. Operating cash flow has grown from $2 million in 2013 to $18 million in calendar 2017. Its growth comes from acquisitions as well as organically.
BG raised its quarterly dividend by 20% last month and is paying a 6.5% yield. With only a $200 million market-capitalization, BG is a small company and is lightly traded. Use price limits when buying and selling.
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