Sunday , 16 December 2018


My 5 Favorite U.S. Stocks Paying 5% Yield – Or More

If you follow strict investing rules you can find hidden gems that keep rewarding their shareholders with generous dividend payments…[Below are] 5 of my (rare) favorite stocks showing a 5%+ yield…

This version of the original article, by Mike McNeil, has been edited* here by munKNEE.com for length (…) and clarity ([ ]) to provide a fast & easy read.

1. Blackstone (BX) 6.88% yield

Blackstone is an asset manager with $456 billion in assets under management (AUM) that comes from private equity, real estate funds, hedge funds, and credit funds.

  • BX doesn’t invest in the stock market but developed a strong expertise in alternative assets investing in the past 30 years.
  • BX receives money from institutional clients or wealthy families and invests it as a general partner in the mentioned asset classes.
  • Since Blackstone keeps a cut of the profit realized on its investment, both revenues and earnings go up and down from one quarter to the other.
  • Moreover, the strong dividend payment is also based on performance.

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Blackstone (BX)

Source:  BX Q3 2018

The company shows steady assets under management growth and benefits from its good reputation.

2. W. P. Carey (WPC) 6.25% yield

Founded in 1973, W.P. Carey is one of the largest diversified, self-managed, net lease, Real Estate Investment Trusts….that owns and manages commercial real estate which is leased to companies on a long-term basis.

WPC:

  • manages 1,186 properties covering approximately 133 million square feet as of September 30, 2018 (including the merger with CPA:17). Its portfolio is located primarily in North America (70%) and Northern & Western Europe (30%),
  • is well-diversified by tenant, property type, geographic location and tenant industry,
  • offers…a solid yield and decent dividend growth perspectives for income-seeking investors,
  • shows an impressive occupancy rate (around 99%) and a top 10 tenants concentration of 32%,

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W. P. Carey (WPC)

Source: Q3 investors presentation

WP is now a serious candidate for any retirement portfolio. The dividend will continue to keep up with inflation and shows a 6% yield.

3. EPR Properties (EPR) 6.05% yield

EPR specializes in Triple Net Leases. This is when the tenant agrees to pay all real estate taxes, building insurance, and maintenance in addition to normal fees expected under the agreement (rent, utilities, etc.).

EPR:

  • shows nearly 400 locations rented by over 250 tenants for a total asset book value of nearly $7 billion.
  • EPR’s main business is focused on:
    • entertainment (158 megaplex theatres, 11 family entertainment centers),
    • recreation (32 golf complexes, 12 ski areas, 21 attractions)
    • and education (63 public schools, 14 private schools and 69 early childhood education centers).

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EPR Properties (EPR)

Source: EPR investors presentation

With the recent stock price drop (high of $84 back in 2016), this is a good opportunity to buy a high yielding REIT paying monthly dividends. EPR still shows an appetite for growth in the upcoming years and should benefit from the current economic tailwind well into the future. Management expects FFO/share of $5.75-$5.90 while paying $4.32 in dividend for 2018. The distribution is safe, sleep well.

4. Hannon Armstrong (HASI) 5.74% yield

HASI provides capital and services focused on reducing climate-changing greenhouse gas emissions…as well as mitigating the impact of, or increasing resiliency to, climate change. It focuses primarily on energy efficiency, renewable energy, and other sustainable infrastructure markets.

HASI:

  • shows about 175 investments and managed $4.8 billion worth of assets,
  • expects to invest around $1 billion per year going forward,
  • has investment
    • in solar (47%),
    • in wind (26%),
    • in efficiency (22%) and
    • in sustainable infrastructure (5%).

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Hannon Armstrong (HASI)

Source: HASI investors presentation Nov 2018

It’s hard not to invest in a 6-7% yielder that believes in renewable energy…Going forward, investors should expect a dividend policy matching inflation (2-3%). This is more than enough to beat inflation while enjoying a high yield.

5. Lazard (LAZ) 4.14% yield, 7.25% with special dividend

Lazard, together with its subsidiaries, operates worldwide as a financial advisory and asset management firm. The financial advisory segment offers services regarding mergers and acquisitions, strategic advisory matters, etc. LAZ was founded in 1840 and manages over $189B. It is well known for its experience in asset management and in M&A.

LAZ:

  • is surfing on the current market tailwind in the M&A activities, while gaining market shares,
  • has also developed a strong expertise in real asset management, which is gaining popularity among investors. Paying fees to have Lazard managing your money seems justified.
  • has a strong presence in 170 countries and aims to expand even further across the world. …  In late months, LAZ acquired a banking boutique in Canada in 2016 and opened a new office in Mexico in 2017. It has also built a strong brand in China for the past decade.

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Lazard (LAZ)

Source: LAZ investors presentation

The company has been beating down on the market recently creating a great opportunity. While the dividend yield is currently over 7%, it includes a special dividend. Management has started the tradition of rewarding shareholders in February with extra cash flow distribution for the past 4 consecutive years.

(*The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor)

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