The Hunt for Dividends and Option Plays
Updated: Apr 2, 2022
BULLS : If you are on a safari for yield I have 2 tickers. Not Abbott Pharma or Costello Lab, but dividend hunters have got to examine two companies. Also be sure to watch the insightful commentary of Charlie Munger, included in this blog post. The two companies I am sharing with you are New Residential Investment Corp and FS KKR Capital Corp. Let's begin with (Ticker) NRZ. New Residential Investment Corp is categorized as a REIT investing in residential real estate mortgage-related products. In other words, they don't own buildings, but they do own the finance paper. NRZ has a ton of mortgage service rights (MSRs). These gain value when refinancing slows. The company figures to hold its own during a rising interest rate environment. The other ticker I'm bringing to your attention today is FSK. Otherwise known as FSK / FS KKR Capital Corp. It is business development company investing in debt securities of private middle market companies. Based in Hudson Yards in New York City, it controls hundreds of billions in total assets with a low leverage ratio. Fundamentally the company has a great earnings stability, a robust balance sheet, reasonable P/E ratio, and is offering an 11.2 percent dividend. Can these companies hold or increase their stock value? I think so. But we will see and hold a discerning leash based on technical analysis. So far, so good. An over aggressive fed might present problems but investors who are unfazed by a tiny bit of volatility can consider parking some capital here. Bottom line: Approximately $55,000 invested in these two names would deliver $5500 in dividend income for the year plus thousands in predicted capital appreciation. Here are a few additional names to ponder and buy, buy, buy.......
DSX, Diana Shipping - 11% dividend - strong sector
EPR, EPR Properties - 5.9% dividend - rebounding sector
BALLERS: Apple signed a new contract with Major League Baseball as it showcases exclusive games on Apple TV. Sooo, in order to see my favorite team play on certain days I need to subscribe. I'm not too happy about that but I'll probably give in. Despite some negative news related to EU restrictions on American tech companies, Apple still has a lot going for it, including new institutional stock purchases according to Investors Business Daily that are likely to spark the stock to a target of 200 per share at some point this year. I'm accumulating shares and some long term call options, LEAPS. (Long Term Equity Anticipation Securities) Here are a few other option plays I'm looking at: AKAM, ABNB.
SELL IN MAY ? This might be an especially good idea in May of 2022. Inflation will be difficult to curtail no matter what the FED does. Will the stock market be crushed by this or will it trend sideways for months to come. One of the greatest investors of all time, Charlie Munger, the long time partner and colleague of Warren Buffett shares his opinions on this fast moving CNBC video. Among the topics covered, break neck money printing, the impact of Artificial Intelligence, and a very problematic human emotion called ENVY, and also a lack of historic perspective on the progress of human civilization. Yet despite a plethora of concerns, it seems to me that Munger seemingly remains fully invested in a concentrated number of investments. Costco is still one of his favorite enterprises. Ticker: COST
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