2 High-Yield Plays That Hold the Fort
11/24/2011 3:00 pm EST
The highest-yield instruments have more risk, says Bryan Perry of Cash Machine in this exclusive interview with MoneyShow.com, but there are a couple of specific high-yield issues that have held up well in this difficult market.
High yield, it’s somewhat risky. What’s your advice?
Well yeah, some people might consider it catching some knives in here or trying to catch a safe…you know it can be done, but it’s not easy.
At the same time, looking at the universe of high-yield securities that I follow—and that’s close to like 900 different, separate kinds of stocks and assets and funds and all kinds of manner of sectors—there are a few names out there that have held up extremely well.
For those people out there that are really want to, you know, take a step into the water here, with both feet, and start to look at some double-digit yields, there is some stuff out there to look at, in fairly defensive industries, that offer those whopping yields right now because everything has been taken out to the woodshed.
For instance, there are a lot of deals being done. There is still a lot of M&A out there in private equity.
One I like the most of all is Triangle Capital (TCAP). They call it TCAP for short. It carries a current yield of 10.82% right now in today’s market. That’s very strong.
They just had phenomenal earnings of 124% year-over-year. They’re based on the research triangle in North Carolina…therein lies the name. The stock has held up technically very well, around $17 a share; forecasting to raise their dividends sequentially for the next several quarters out based upon their current investments.
I really like that, in terms of wanting to be in a smart money pool where there are a lot of opportunities…that gives us a chance here to be in some growing industries that are showing, you know, excellent forward-looking prospects.
Do you have anything in the health sector?
OK, this where you get defensive in this market. The one I like most of all is Medical Facilities Corporation (MFCSF). They recently converted from what is called an income deposit security to a regular corporate structure.
What’s happened there is, the company has converted to common stock structure, which is nice, but they kept the yield up to where it is because they used to have a bond and a stock combined together as an income deposit security.
They went ahead and guaranteed the dividends going forward at the same rate, because they’re still bringing in that same—they’ve just converted that debt into another convertible bond, which they’ve sold off to institutions. With that said, your getting a current deal at a 10.35%, right now, pays monthly.
What they do is they’ve got a 51% interest in four acute-care hospitals in the Midwest. With Obamacare or not, whether you like it or not, outsourcing is still the future for a lot of health care.
I like these acute-care clinics, and they’re in strong areas where there is a lot of growth right now, especially in the Dakotas where you’ve seen a lot of oil and gas productions taking off up there. They’ve had great earnings all along the way. Very well managed company.
I want to have some health care because it’s always going to be there. We are always going to need good care.