My Recent Buy – May 2014

I’m always looking for securities that are fairly valued, have a decent dividend yield(3% to 6%) and have a fairly long history of paying dividends consistently for 10 years or more. However, there could be some cases for exceptionally good company or a strategic buy for a very long term.

I’ve bought following securities in this month of May:

1) Prospect Capital Corp (PSEC)

PSEC is a leading provider of private debt and equity capital and is a genre of business development company (BDC) and due to its monthly payment, it can be a great fit for dividend income earners.

I wrote about this company in my watch list for April and I’ve added another 50 positions to my already existing 50 positions. PSEC has P/E ratio of 9.30, an excellent yield of 12.30%, market cap of $3.36 Billion and fairly valued. A note of caution is in order due to SEC’s initial ruling regarding financial statement, as explained in Scott’s article.

2)  American Realty Capital Properties Inc. (ARCP) 

ARCP is world’s largest net lease real estate investment trust (REIT) that acquires, owns and operates single-tenant and multi-tenant commercial real estate properties. 

ARCP is down almost 30% from its 52 week high of $18.05 and currently has a dividend yield of 7.60% and provided me an attractive entry point. I bought ARCP at $13.12 and initiated 75 positions in this company.  It will add $75.00 of passive income on an annual basis that I do not have to earn and work for 🙂 It was also a recent buy by Dividend Mantra. If you want to dig deeper, check corporate profile and prospectus, here it is.

3) Pimco Corporate & Income Opportunity Fund (PTY) 

PTY invests at least 80% of its total assets in a combination of corporate debt obligations of varying maturities, other corporate income-producing securities, and income-producing securities of non-corporate issuers like US Government securities, municipalities securities and mortgage-backed securities and other asset-backed securities issued on a public or private basis. 

PTY has a healthly dividend yield of 8.40% and at $18.62, it is almost 16% lower than its 52 week high of $22.10 and provides a good entry point. I added 50 positions at $18.34 to my existing 50 positions and this will incrementally add $78.00 of passive income on an annual basis. Note that PTY may drop in value if rates were to rise faster and suddenly.

4) iShares Mortgage Real Estate Capped ETF (REM)

REM is a mortgage real estate investment trust (mREIT) and seeks to track the investment results of an index composed of US REITs that hold residential and commercial mortgages. It can be used to diversify your portfolio and express a view on a specific US real estate sector.

REM is currently trading at $12.37 and almost down 20% from its 52 week high of $15.53 and has moved up quite a bit from its 52 week low of $11.25. It has a mouth-watering dividend yield of 16.40% and currently pays $2.03 on an annual basis. I added 50 positions of REM to my existing 50 positions.

Note that this is a risky bet and understand that this security could be very volatile and drop in price significantly if housing market were to go sour in future due to rising rates or other external factors. With high reward comes high risk as well 😉

5) Omega Heathcare Investors, Inc. (OHI)

OHI is a healthcare real estate investment trust (hREIT) and provides financing and capital to the long-term healthcare industry with a particular focus on a skilled nursing facilities located in the United States. Company owned or held mortgages on 547 skilled nursing facilities, assisted living facilities and other specialty hospitals located in 37 states and operated by 49 third-party healthcare operating companies. 

OHI is currently trading at $36.15 and not far from its all time high of $38.41. It has a relatively high P/E ratio of 23, dividend yield of 5.50% and Market cap of $4.46 Billion. Considering that baby boomers generation in US is rapidly graying, OHI will be a nice play catering to the needs of big spender and one of the richest generation of our times. I initiated 30 positions at $35.00, handing me a nice dividend income of $60.00 on an annual basis. I’m a happy camper as well as fellow share holders are.

I’ve to say that I definitely took big risks this month, perhaps summer effect 🙂 and let’s see how these bets turn out over time.

Were any of the securities that you bought this month, were big risks, causing stomach churning?

Full Disclosure: Long on all above mentioned securities.

Thanks for reading.

4 thoughts on “My Recent Buy – May 2014

  1. Wow… a very aggressive list if I ever saw one. You really seem to love yield as we all do here but a bit too aggressive for me. OHI is on my list as I happen to like to health REIT space. With regard to your PTY be cautious of the amount of leverage used. Most closed end funds are very leveraged and can cause some wild price swings or div/distribution cuts.

    1. Hi DivHut,

      True, I took some liberty this month and juice up passive dividend income 🙂 I’m comfortable in doing so as I’m invested in 3 portfolios with different strategies and that helps me in diversification. These securities may not be for everyone and I do not recommend it for everyone, as I mentioned several cautionary notes. Hope it helps.

      Thanks for stopping by and commenting!

      Best wishes.

  2. Hi,
    Pretty aggressive but hej, you can always give it a try. Personally I am building up a cash position as I do not see anything worth investing into.
    I wish you a good portion of luck with the above.

    KR
    Lars

    1. I agree with you Lars. I struggled a lot to finally pull trigger on some of these securities due to high risks that I was taking.

      I ran through many scenarios, like manual Monte-Carlo simulation 😉 and finally decided that I feel comfortable in taking this kind of risk in one Portfolio only, and other Portfolios are fairly conservative, like blue chip Aristocrats as well as ETFs. I do not recommend these securities to all, especially investors who are just starting out.

      Thanks for stopping by! Much Appreciated.

      Best wishes.

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