It was “slow and steady” for your Dividend Pro portfolio last week, with most positions staying broadly flat.
You’ll note that there was one exception- fertilizer-maker CVR Partners, LP (UAN), which soared 6.37%.
With your portfolio chock full of steady income generators, this week’s Dividend Pro recommendation re-visits another red-hot fertilizer theme with Rentech Nitrogen Partners LP (RNF).
Like CVR Partners, RNF is a nitrogen fertilizer company. Since RNF was spun off by Rentech (RTK) in November 2011, the stock has been on a tear, almost doubling in price.
Here’s why I think RNF has more to go…
First, located in East Dubuque, Illinois, RNF’s facility is located smack dab in the middle of the U.S.’s Mid Corn Belt — the largest market in the U.S. for nitrogen fertilizer. Illinois and Iowa are the two largest corn producing and nitrogen fertilizer consuming states in the United States. Together they account for 34% of the U.S. corn production and about 20% of the U.S. nitrogen fertilizer consumption. So you can’t beat RNF for convenience.
Second, RNF’s central location also means that there is always plenty of demand for RNF’s products. In fact, RNF estimates that nitrogen fertilizer consumption in its market exceeds its production by 4.0x for ammonia and 1.4x for UAN (urea and ammonium nitrate).
Finally, thanks to the drought of 2012, nitrogen fertilizer prices should hold up for the next two years at least. And between the high prices of corn and the crop insurance, farmers have plenty of cash on hand to pay premium prices.
If there is one downside to RNF, it’s that it has been in a remarkable uptrend. In fact, the stock jumped over 5% just yesterday. That also means that the stock may sell off sharply during any market correction.
Ideally, I’d like to enter RNF on a good dip. At the same time, with its strong pricing power, a forward P/E of only 12.3, and a 12.7% dividend, I feel worse about missing the boat.
So buy Rentech Nitrogen Partners, L.P. (RNF) at market today, and place your stop at $29.00. I’ll recommend options on this once the stock’s volatility ebbs a bit.
Portfolio Update
Global X SuperDividend ETF (SDIV) rose 0.45%. SDIV tracks an international blend of equities, with the fund split 65-35 between international and US stocks. With a yield of 7.66%, SDIV remains a BUY.
Two Harbors Investment Corp. (TWO) rose 0.08% last week. The ex-dividend date for the company is today, Sept. 20. Owners of shares as of market close today will be eligible for a dividend of 36 cents per share. The dividend yield stands at 12.2%. TWO is a BUY.
American Capital Agency Corp. (AGNC) dropped 3.06% as the stock went ex-dividend yesterday, Sept. 19. The dividend of $1.25 is payable on Oct. 26 to shareholders of record as of Sept. 21. AGNC is a BUY.
Prospect Capital Corporation (PSEC) dropped 2.5%. Two different insiders have purchased shares Since Aug. 31 totaling $274,720. The company will pay a monthly dividend of $0.1016 for the month on Sept. 21. PSEC is a BUY.
iShares FTSE NAREIT Mortgage REIT (REM) rose 0.06%. REM attracted $52.4 million just last week — a 6.6% increase week over week in outstanding units. Trading at a 52-week high, REM’s current yield is 11.28% and it remains a BUY.
PIMCO Municipal Income Fund II (PML) was essentially flat, rising 0.15%. You should have received your $0.065 cent monthly dividend payment on Sept. 12. Slipping below its 50-day moving average (MA), PML is a HOLD.
UBS E-TRACS 2xLeveraged Long Wells Fargo Business Development Company ETN (BDCL) rose yet another 2.39%. Hitting a new record high and still yielding 13.43%, BDCL remains a BUY.
Apollo Investment (AINV) rose 0.62%. Brian Oswald, Apollo’s CFO and CCO, purchased 23,500 shares of the stock between Sept. 6 and Sept. 7 at an average price of about $11.70. The company will payout a dividend of 20 cents on Oct. 4. AINV is a BUY.
Omega Healthcare Investors Inc. (OHI) dropped back 2.85%. Omega Healthcare is a REIT with a portfolio of over 400 health care facilities, 370 of which are nursing homes. The stock pays a juicy 6.9% dividend, nearly four times what you’d get on a 10-year Treasury note. Slipping below its 50-day MA, OHI is a HOLD.
PowerShares Preferred (PGX) dropped 0.34%. PGX attracted $31.1 million dollar inflow just last week. Yielding over 6.4%, this monthly income payer remains a BUY.
Fifth Street Finance Corp. (FSC) rose 0.56%. Fifth Street Finance Corporation has been named as a Top 10 dividend-paying financial stock, by Dividend Channel. Just off a new 52-week high, and boasting an 11% yield, FSC remains a BUY.
PowerShares Emerging Mkts Sovereign Debt (PCY) dropped 0.46%. This ETF invest only in dollar-priced bonds, so you don’t face any currency risk. This play on foreign government debt now yields just under 5% and remains a BUY.
Vanguard Natural Resources (VNR) recovered 3.77% as the company paid out a monthly dividend of $0.20, on Sept. 14 — a yield of approximately 0.70% per month. VNR is back to a BUY.
CVR Partners, LP (UAN) soared 6.37% this past week. Continuing its recent upward trend, this stock has big break-out potential. UANs current yield stands at 9.2% and it remains a BUY.
PowerShares S&P 500 BuyWrite Portfolio (PBP) rose 0.43% it first week in the portfolio. This ETF is rebalanced and reconstituted quarterly. It has a 12-month yield of 10.23% paid quarterly. PBP remains a BUY.
