Welcome to the first issue of Dividend PRO — my new trading service focused on high-income investing.
My colleagues at Eagle Publishing and I have been hard at work over the past few months getting Dividend PRO ready for today’s launch.
Dividend PRO is a trading service dedicated to generate consistent, market-beating dividends ranging from 5-15% by investing in stocks that are also poised to increase in price.
More specifically, it is based on my “Triple-Profit Strategy” of high dividend-paying investments; covered call “income boosters”; and home-run option plays. Make sure you review the details of these strategies in the special report that you received with your subscription.
As you’ll see in the “Portfolio Update” section below, in addition to today’s pick, I already have three recommendations in your Dividend PRO portfolio. You can find additional information on each recommendation on the Dividend PRO website.
Now, let’s move onto this week’s Dividend PRO recommendation…
Navios Partners (NMM) is a publicly traded master limited partnership which owns and operates dry cargo vessels. It currently boasts an impressive double–digit percentage yield of 10.7%.
Navios occupies a stable position in an otherwise volatile shipping industry. Much of that stability is thanks to management’s conservative financial and operating policies. Navios Maritime Partners’ fleet has an average of 4.6 years remaining on its outstanding charters to a strong group of counter parties including Mitsui O.S.K. Lines, Cosco, Ltd., Rio Tinto Shipping Pty. In addition, its current agreements are insured against default by an AA+ rated European Union (EU) governmental agency, which has already made good on one defaulted contract.
The company’s vessels are already under contract on 92% of available days in 2012. The company’s operating costs are also fixed until December 2013. All of that adds up to an annual yield that is safe from the vagaries of the global shipping industry.
In addition to its double-digit percentage yield, there may be substantial upside in Navios’ stock, as well. As Navios’ CEO Angeliki Frangou noted during a recent conference call, dry-bulk shipping rates have shown signs of recovery. This upturn is confirmed by the recent rise in the Baltic Dry Index, which tracks the prices of shipping major raw materials by sea.
The positive outlook for Navios was confirmed by its recent financial results. For the fourth quarter ended Dec. 31, the company beat expectations both on revenues and earnings per share.
So, buy Navios Partners (NMM) at market today, and set your stop at $15.00. I expect the company to pay out its next distribution on or around May 8. In light of the current pullback in the markets, I am going to hold off of recommending options on Navios for now.
Portfolio Update
Hospitality Properties Trust (HPT) is a Newton, Mass.-based real estate investment trust, or REIT, which owns 288 hotels and 185 travel centers located in 44 states, Puerto Rico and Canada. Its brands include Marriott and Travel Centers of America. Currently, HPT’s yield stands at a solid 6.9%.
I recommend selling a July $25 call option against the stock (1 call option is for 100 shares of stock) for a potential boost to its income returns.
Be aware that if you do sell a call option, there is a small chance that you will have to buy HPT stock (100 shares for each call option sold) at any point.
Seadrill (SDRL) is currently the largest offshore drilling company in the world by market cap.
After its recent pullback, Seadrill is yielding 8.3%. Morgan Stanley has a price target of $51.00 on the stock. That’s 36.2% higher from the close on Feb. 29. The stock had an ex-dividend date on March 8, paying a dividend of $0.80.
With the stock is now very oversold, I recommend July $43.00 call options on the stock.
Vanguard Natural Resources (VNR) is a multi-level partnership involved in the acquisition and development of oil and natural gas properties in the United States. Its current distribution yield is 7.9%.
Vanguard has a multi-year hedging program in place. As a result, the years 2012 and 2013 are heavily hedged against any swings in oil or natural gas prices. That situation, in turn, virtually guarantees the company’s current high distribution yield.
P.S. Please join me for the Las Vegas Money Show, May 14-17, at Caesar’s Palace. To register, call 1-800/970-4355 and mention priority code 026655 or go to NicholasVardy.lasvegasmoneyshow.com. I also encourage you to sign up for my hedge fund seminar, Wednesday, May 16, 9 a.m. – 11 a.m.
Advertisement.
