Monday, March 20, 2006

Update on TSY REIT

Well, its been a few weeks since we talked about restaurant REIT TSY. Motley Fool recently had an article explaining that they have used lease cash flow to cover their dividend. In the past they had relied on proceeds from asset sales (which I still contend is a fair strategy for their space of the real estate industry). The author has concerns on some other issues and these are mentioned in the article. (ie debt levels)

From the article,

"For the fourth quarter, Trustreet turned in $0.34 per share in funds from operations (FFO), marking the first quarter in its short history in which the FFO has fully covered the $0.33 per share in quarterly dividend payments. (The company pays out $0.11 per share monthly.) In truth, Trustreet's profits on the sales of non-core assets and cash received toward the principal on capital leases more than provided the cash needed to fund the dividend in the past two quarters, but it is always preferable to see a dividend covered by FFO.

The most important concern with this company continues to be its high level of total debt and concentration of variable-rate debt. Secondary concerns include the quality of its tenants and how they perform in a more difficult economic environment, plus the soon-to-expire lockup on the company's secondary offering, which was completed in December."

Monday, March 13, 2006

Newer Hotel REIT Offers More Shares and Increases Dividend

Highland Hospitality, a new 'high end' hotel REIT that manages 24 hotels, is offering 7.3 million more shares around $12.30. (The stock went public at 10 in 2003).

They also declared a quarterly dividend of 16 cents -- here is a history of their dividends (mostly 14 cents a share). If that is annualized. that comes out to a little over a 5% yield. Doesn't really grab my attention, but its good to know REITS are in heavy demand. See the recent sale of CarrAmerica to the Blackstone group? The REIT sector continues to looks hot.

Sunday, March 05, 2006

ConAgra May Be Waiting For Our Money

This one seems straightforward?: Conagra Foods (NYSE - CAG). This bad boy is paying a little over 5%, has been raising dividends for at least 10 years, and seems to be poised for rediscovery by investors. With a price of $21.12, a p/e of around 14, the stock is at a lower valuation than others in its industry group (Univelever, Kraft, Danon, ADM).

The balance sheet looks to be okay, revenues are down, but its still profitable. Its clear this company is having some problems -- and you can read about it in their recent earnings release. Also, here is an early February press release from management detailing their exit from some frozen meat lines. That being said, their dividend has been strong (as mentioned above), they have some great brands, and it looks like a place to park some money and hope for a change of perception/business. Hey, if the stock moves a few bucks by the end of the year with the 5% dividend we could make some good $$$.

Any thoughts?

Saturday, March 04, 2006

Donaldson Capital: Rising Dividend Investing: Wells Fargo on the Move

Just found this guy Greg Donaldson whose blog is about dividend/value investing. He is a money manager in Evansville Indiana. He has held Wells Fargo for a long time and really seems to like it.

Donaldson Capital: Rising Dividend Investing: Wells Fargo on the Move

BTW, some WFC basics -- roughly 15 p/e and a dividend of over 3%. Pretty typical stats for a large banking firm.

Thursday, March 02, 2006

Iowa Senator Fights to Keep Dividend Tax @ 15%

Hey, if the dividend tax rate of 15% is ended that is gonna cost all us dividend investors twice -- higher taxes and potentially lost value. Get involved in the fight because there is no guarantee that the morons on the Hill are going to renew the low tax rate thru 2010.

Fortunately, Iowa Senator Chuck Grassley (Republican) is taking up the fight. According to today's Wall Street Journal, he has directly questioned the Congressional Budget Office's estimates that if the rate is extended it will 'cost' the treasury $20 billion. He points out in a letter that their projections have been awful for the last 30 years. Check out his letter.

For example writes Senator Grassley, "capital gains taxes are now projected to exceed the amount originally projected under higher capital gains tax rate (of 20%) that prevailed before 2003." Their answer was basically that they were wrong.

Call your congress persons and senators (or write an email) and tell them to keep dividend taxes low and grow the economy.

BTW, here is a biotech blogger who predicts that Johnson & Johnson is going to raise its dividend. The author, Eddy Elfenbein writes that at a p/e of 15, the stock is as cheap as it has been in 18 years. (check out the graphs on the first link in this paragraph). The yield of 2.6 is a little low for me, but the historically cheap price makes it somewhat attractive. Any thoughts?

Wednesday, March 01, 2006

Your Grandma Would Love This One

I've always liked Vermont (it has nothing to do with H. Dean). In fact, Green Mountain Coffee is really tastey as is Ben & Jerry's.

Green Mountain Power (NYSE-GMP), an electric utility serving 90 thousand people in Vermont, recently raised its quarterly dividend to 28 cents per share. If they can keep that going, the stock will pay $1.12 per year. At today's open of 28.20, that is a yield of 3.97%! P/E with last years earnings is around 15. Not too expensive and in line with most utilities. -- see overview of P/E's and yields for uitilities.

Tuesday, February 28, 2006

Restaurant REIT Looks Tasty to Me

I have been looking Trust Street Properties (NYSE - TSY) for a while now and am about to pull the trigger on some shares. Not only is it yielding just under 9% (under $15 a share; paying $1.32 a year), but there is a huge bonus. This REIT pays monthly!!!! That's right. You get some cash in hand (or dividend reinvestment) each month. That is huge. BTW, check out the dividend history since 1986, looks pretty fattening huh?

This REIT is all about restaurants and makes some of its profits via buying and selling properties. Some analysts don't like this, but I think that the market for restaurants as investments is pretty liquid. I would be worried if a REIT like EOP tried to make profits by flipping assets constantly (though they probably do), but with restaurants I am less concerned as that is a healthy market with lots of buyers. The run a 1031 business I believe.

Try this on for size -- lets say you buy 135 shares (about $2,000). With the first months dividend (11 cents per share) you can buy another share. By the end of the first year you have picked up another 11 shares to earn for you!!! That sounds pretty nice to me. Any one else out there think this stock smells delicious?