EARNING UPDATE $EPR EPR Properties for quarter ending q_Jun18 – Revenue grew, Margins expanded

[s2If !current_user_can(access_s2member_level0)]Please login to read the earning update on EPR [lwa][/s2If][s2If current_user_can(access_s2member_level0)]EPR Properties reported earnings (EPS) of 1.15 per share for the quarter ending q_Jun18. This is vis-vis 0.32 per share for the previous quarter ending q_Mar18, a growth of 259.4 %. Compared to last year same quarter (q_Jun17), earnings grew…

EARNING UPDATE $EPR EPR Properties for quarter ending q_Dec17 – Revenue rose but Margins contracted

[s2If !current_user_can(access_s2member_level0)]Please login to read the earning update on EPR [lwa][/s2If][s2If current_user_can(access_s2member_level0)]EPR Properties reported earnings (EPS) of 0.74 per share for the quarter ending q_Dec17. This is vis-vis 0.77 per share for the previous quarter ending q_Sep17, a decline of 3.9 %. Compared to last year same quarter (q_Dec16), earnings fell from…

We all have bills to pay. And whether it’s your mortgage, your utilities or just that pesky credit card bill, life’s little expenses tend to recur every month. There’s just one problem with this: If you’re living off of your investments, you normally get paid on a very different timeframe. Dividends are usually paid quarterly, and bond interest is usually paid semi-annually. 

I don’t know about you, but I don’t like trying to plan my expenses three to six months in advance. And for a retiree, I can’t think of too many things scarier than running out of money in between quarterly dividend payments. 

Well, fear not. I have a solution: Monthly dividend stocks. 

Many closed-end bond funds have traditionally paid their dividends monthly, which is nice. It shows that the managers understand their investors and try to accommodate them. But among everyday dividend stocks, it’s still surprisingly rare and usually limited to a REITs and business development companies. Today, we’re going to look at five solid monthly dividend stocks that can be used to round out an income portfolio.

STAG Industrial (STAG)

I’ll start with a young REIT that I’ve owned for years, STAG Industrial  (STAG). STAG is a small-cap REIT with a market cap of about $1.3 billion. That makes it large enough to be diversified but still small enough to fly under the radar of most investors. 

STAG switched from a quarterly dividend to a monthly dividend in late 2013. STAG’s business model is simple enough to understand. The REIT invests in single-tenant industrial real estate — things like warehouses and light manufacturing facilities — that tend to require little in the way of maintenance and ongoing expenses. As of the most recent investor presentation, STAG had a portfolio of 253 properties spread across 36 states and 231 tenants, most of which are investment-grade rated. 

More than 60% of STAG’s tenants have revenues of more than $1 billion per year, and the 10 largest tenants collectively only account for 15.5% of STAG’s annualized base rent. That’s a conservative profile, which is exactly what you want from one of your monthly dividend stocks. 

After the broad selloff in REITs this year, STAG’s monthly dividend yields a healthy 7.2%. And importantly, STAG has been a steady dividend raiser. STAG raised its dividend 4.5% this year after raising it 10% last year. That’s well ahead of the rate of inflation — something that every retiree should keep in mind.

EPR Properties (EPR)

Up next is a quirky REIT that I’ve highlighted in the past, EPR Properties (EPR). EPR operates in an interesting niche of the real estate market, focusing mostly on entertainment. (“EPR” is short for “Entertainment Properties.”) 

With its collection of non-traditional assets, including movie theaters, golf driving ranges and even charter schools, EPR is hard to classify. Most REITs get lumped into a broad sector, such as residential, commercial or office. There isn’t exactly a category for movie, golf and school REITs. 

That’s OK. I don’t need for EPR to fit into a neat category box. I just need it to keep paying its monthly dividends! In fact, EPR’s quirky asset mix works to our benefit, as it a lot of institutional investors frankly don’t know what to do with it. The lack of institutional buying helps to keep the price low and the yield high. 

Today, EPR yields a fat 6.8%, and the REIT has been a steady dividend raiser for years. Over the past five years, EPR has grown its dividend at a 6% clip. Not too shabby. As with STAG, EPR switched its dividend payment from quarterly to monthly in 2013.

Realty Income (O)

Of course, we can’t have a list of monthly dividend stocks and not mention the “Monthly Dividend Company” itself, Realty Income (O). 

In my view, Realty Income is about as close to a bond as you can get in the stock market in terms of reliability. It pays its dividend like clockwork every month, and its cash flows are supported by a rock-solid portfolio of high-traffic retail properties. 

This stock has made 542 consecutive dividend payments, and I see nothing short of nuclear war or the actual end of days breaking that chain. But while I consider Realty Income as safe as a bond, its returns are vastly superior. Since its 1994 listing, Realty Income has enjoyed compounded total returns of 16.4% per year. And it has also raised its dividend for 72 consecutive quarters. 

I have shares of Realty Income that I keep in my IRA that I have pledged never to sell. My dividends are set to automatically reinvest, and I never look at the account. (Well, I shouldn’t say “never.” Once a year I login just to make sure nothing is wrong.) I intend to leave these shares to my kids someday, and if they’re smart they’ll do the same for their own children. I expect Realty Income to still be around by then, and still kicking off a fantastic monthly dividend.

LTC Properties (LTC)

I’ll add one more REIT to our list of monthly dividend stocks: LTC Properties Inc  (LTC). To get an idea of what LTC does, just look at its ticker symbol: “LTC” stands for “long-term care,” making LTC an interesting way to play the aging of the Baby Boomers. More than 8,000 baby boomers turn 65 years old with every passing day, making this a durable trend with staying power. LTC is a stock you can buy and forget while enjoying a steady stream of monthly dividends. 

LTC Properties has a specialized portfolio of properties targeting skilled nursing, assisted living, independent living and memory care. About 20% of its portfolio is also invested in mortgages backed by these kinds of properties. 

LTC currently yields 4.9%. That’s lower than some of our other monthly payers, though still pretty competitive for a medical REIT. And like our other monthly-pay REITs, LTC has a long history of raising its dividend. LTC recently announced a 5.9% dividend hike, and the REIT has managed an 8.6% dividend growth rate over the past five years. 

Also worth noting: Unlike most of the REIT sector, LTC’s stock price is actually in positive territory for the year.

Prospect Capital (PSEC)

That’s enough about REITs. Let’s take this list of monthly dividend stocks a different direction, starting with business development company Prospect Capital (PSEC).

As with closed-end funds, business development companies (BDCs) tend to be held by individual investors rather than institutional investors. This goes a long way to explaining why many are monthly dividend stocks. They’re simply giving their investors what they want. 

Prospect Capital yields 13% at current prices and trades at a deep discount to book value, something that has only happened a handful of times in the company’s history. Use this as an opportunity. While you’re waiting for the stock to return to a more normal valuation, you get to collect a high monthly dividend.

Charles Lewis Sizemore, CFA, is chief investment officer of the investment firm Sizemore Capital Management and the author of the Sizemore Insights blog.

With bond yields in the gutter for these past six years, investors have grown accustomed to looking in… shall we say… “nonconventional” places for yield. Whether in odd corners of the stock market or in dodgy-looking private placements, anything offering a respectable current income is bound to get at least a little attention. 

It’s easy enough to understand why. The 10-year Treasury yields barely more than 2%, and traditionally high-yielding sectors like utilities and REITs yield less than 4%. Even “high-yield” junk bonds (and yes, you have to write “high-yield” in quotation marks these days) yield only 5.9%, and these come with the not-so-insignificant risk of default. 

Today, we’re going to take a look at seven high-dividend stocks that fall a little outside the mainstream. Not all of these are dividend stocks that I would necessarily recommend, but all are worth at least keeping on your radar. It is their quirkiness and lack of inclusion in major benchmark indexes that tends to keep them off limits to large institutional investors and create the very conditions that make them worth considering for us.

StoneMor Partners

I’ll start with a stock that is one of my personal favorites…but one that also tends to give a lot of investors the heebie jeebies: publicly-traded crypt keeper StoneMor Partners, LP (STON). StoneMor owns and operates 303 cemeteries and 98 funeral homes across the United States and Puerto Rico. 

StoneMor’s business is anything is not predictable. As none other than the great Benjamin Franklin noted, nothing can be said to be certain but death and taxes. And as the Baby Boomers—the largest generation in history—enter their golden years, end-of-life services are about to enjoy an unprecedented boom. Based on current life expectancies, the number of annual deaths in America will rise by more than 80% between 2015 and 2035. Even allowing for an increased preference for cremation over traditional burial, there is an incredible amount of growth all but guaranteed to come down the pipeline. And even better, we’re getting paid to wait: StoneMor pays an 8.4% distribution, and it has steadily raised its payout over the past ten years. 

If the unpleasant association with death wasn’t enough, StoneMor has some other quirks that make it difficult for a lot of investors to own: It’s structured as a master limited partnership (“MLP”) and can generate unrelated business taxable income (“UBTI”), which makes it all but untouchable for an IRA or Roth IRA account. Its status as an MLP also makes StoneMor problematic for a lot of institutional investors and non-US persons to own. 

Their loss is our gain. StoneMor is a stable company that throws off a high and growing cash distribution. Buy it and plan to own it until… well… until you become one of StoneMor’s permanent residents.

Cedar Fair

Let's now jump to something a little less macabre: Publicly-traded amusement park operator Cedar Fair, LP (FUN). Cedar Fair owns and operates 14 regional amusement parks scattered across the US and Canada. 

Cedar Fair does not really compete with destination parks like Disneyland or Walt Disney World. Its parks tend to cater to local population in mid-tier cities like Charlotte and Kansas City. This makes the parks a little less sensitive to the health of the economy and to fuel and transportation costs. 

It takes a certain amount of chutzpah to make “FUN” your ticker symbol, though I have no doubt that investors have found holding the stock to be enjoyable: the share price has more than tripled since 2011. That performance is all the more impressive when you consider that the economy hasn’t exactly been humming along for most of that period. 

Cedar Fair currently sports an attractive yield of 5.1%. While this high-dividend stock had to cut its distribution during the pits on the 2008-2009 crisis, it has been steadily raising it for the past four years. 

Like StonMor, Cedar Fair is an MLP. This means that it gets to avoid a layer of corporate taxation, and it leaves more cash on hand to distribute to investors. But it also makes the stock hard to own for IRA owners and some institutional investors. But to the nimble individual investor, this presents a potential opportunity to buy what others can’t or won’t.

The GEO Group

We covered death...so why not imprisonment? Our next quirky high-dividend stock is publicly-traded prison operator The GEO Group, Inc (GEO). 

Prison overcrowding in the US and other developed countries has been a problem for a long time. It seems that while taking a hard line on crime is popular with voters, paying to build new prisons is not. And herein lies the opportunity for GEO. The company owns, leases, and operates a range of correctional facilities, including, among other properties, maximum-security prisons. 

This is distinctly not a feel-good stock to own. I would rank it up there with tobacco stocks and munitions makers on the scale of political incorrectness, and I wouldn't expect to see it held by many "socially-responsible" mutual funds. But it has definitely been a profitable stock to own for investors that don’t mind playing the role of warden. The share price is up about 120% since the beginning of 2012. 

GEO is also an attractive dividend stock with a current yield of 6.5%. 

Is there anything to worry about here? 

Actually, yes. GEO’s business model only makes sense so long as the prison population remains too large for America’s public prisons to handle. Were we to see a bigger move towards drug legalization, for example, GEO’s business model might legitimately be at risk. GEO has responded to this threat by expanding into immigration detention centers and into training and rehabilitation centers. But I would still consider it a long-term risk to take under consideration.

Icahn Enterprises

He may not be a prison warden, but to many of the companies he has targeted over the years he is certainly no less terrifying. 

I’m taking, of course, about corporate-raider-cum-activist-investor Carl Icahn. Mr. Icahn is a living legend, and regular retail investors have the opportunity to invest with him via his holding company, Icahn Enterprises, LP (IEP). 

Icahn Enterprises is definitely a quirky dividend stock, and it’s one that most investors shy away from due to its complexity. It has nine primary business segments including investment, automotive, energy, gaming, railcar, food packaging, metals, real estate and home fashion. And compounding the complexity, it is also organized as an MLP, making it hard to own for IRA investors and institutions. 

Normally, I’d walk away from a conglomerate like this with no apparent rationale for its diverse holdings. But Icahn Enterprises is essentially a bet on the investment genius of Carl Icahn himself. This is his equivalent of Warren Buffett’s Berkshire Hathaway (BRK-A), and it’s the only real way to have Mr. Icahn invest your money. His hedge funds have been closed to outside money for years. 

Icahn Enterprises more than quadrupled in value between its 2009 bottom and 2014 top, though it has lost about a quarter of its value since. This is due in no small part to Icahn’s large investments in the energy sector, which took a major shellacking. But at today’s prices, IEP pays a very respectable 6.6% distribution.

Plum Creek Timber

Next up is forestry REIT Plum Creek Timber Co Inc (PCL). Plum Creek is one of America’s largest private landowners and owns more than six million acres of working forests. Plum Creek is also organized as a real-estate investment trust (“REIT”), making it something of a misfit for its sector. Most REITs own properties that generate rental income; Plum Creek owns timberland used to harvest trees. 

Plum Creek isn’t quite as quirky as it used to be. Timberland was “discovered” as an asset class about a decade ago when it became publicized that David Swensen, Yale University’s legendary endowment fund manager, favored it as a long-term investment. Timber had become almost trendy and was very regularly recommended in investment newsletters… right up until the housing bust and market panic of 2008. The crisis took some of the shine off of the asset class. 

All the same, timber remains a quirky asset class and one that has nature on its side. Unlike most natural resources, which are depleting, timber actually grows. During periodic rough patches in the construction industry, when demand for lumber falls, Plum Creek’s inventory of trees continue to grow and ultimately become bigger and more valuable to harvest when the market eventually turns around. Sure, you sacrifice cash flow today, and that makes for a lumpy profit stream. But lumpy profit streams are what create buying opportunities for astute value investors. 

At current prices, Plum Creek yields an attractive 4.2%. And impressively, given the collapse of new construction, Plum Creek did not cut its dividend during or after the financial crisis. Once home construction starts to really ramp up again, I would expect to see healthy dividend growth from Plum Creek and its timber peers.

EPR Properties

For our next off-the-beaten-path dividend stock, let’s take a look at EPR Properties (EPR). 

Like Plum Creek, EPR is organized as a REIT. This eliminates a layer of corporate taxation, and allows for a higher dividend. And also like Plum Creek, EPR is something of a misfit in the sector. Most REITs can be classified by broad sector, such as residential, commercial or office. But EPR’s portfolio consists of a hodgepodge of non-traditional assets, including movie theaters, golf driving ranges and charter schools. 

It’s a niche market, to say the least, and one in which EPR has very little competition, at least from large, publicly-traded REITs. In management’s own words, EPR is a “diversified specialist” with unique knowledge that other REITs simply don’t have. 

In a market in which most blue-chip REITs yield less than 5%, EPR is a high-yield gem. At current prices it yields a very impressive 6.2%. EPR had to reduce its dividend during the financial crisis, but it has been steadily raising it ever since. And starting in March of 2013, EPR started paying its dividend monthly rather than quarterly.

National Cinemedia

Like EPR properties, our last quirky dividend stock is also in the entertainment business. National CineMedia, Inc (NCMI) is one of those companies that most investors never knew existed. 

We’re all familiar with the major movie studios and their blockbuster offerings. But National CineMedia specializes in all the disposable junk you watch before the movie. The company offers an advertising and entertainment pre-show to movies and advertising programming on its lobby entertainment network. National CineMedia and rival Screenvision essentially rule this niche market as a duopoly and have no other real competition. 

National CineMedia started paying a dividend in 2007 and has done a decent job of raising it over the years. At current prices, the stock yields 5.6%. 

The share price hasn’t done much in recent years; it has bounced around in a range of $15-$20 since 2009. But as a high-yielding dividend stock in a quirky niche market, National CineMedia is a stock to keep on your radar. 

Disclosures: Long STON

Charles Lewis Sizemore, CFA, is chief investment officer of the investment firm Sizemore Capital Management and the author of the Sizemore Insights blog.