This posting has nothing to do with the Bakken (except perhaps the blurb on EEP, indirectly). These are some data points I noted after reading today (July 13, 2010) that Intel had its best quarter in 42 years, during one of the worst recessions in history, and when the possibility of a double-dip recession has some folks talking, and yet, reaction to INTC's news was fairly quiet based on share price action. That prompted me to look at a couple of other publicly traded companies
American Hospitality Trust (AHT): I used to own this for the dividend; I got in at about $6. A couple of years ago, AHT tanked, dropping to 95 cents/share. One year ago, one could buy shares in AHT for $3.00. Today, trending upward, it's high for the day was $8.
Intel (INTC): This looks a lot like what I'm seeing in the Bakken -- boredom. Nothing impresses the investor any more, it seems. Intel just announced its best quarter in 42 years and yet it hardly moved, in the big scheme of things. It has a p/e of 19. It has a dividend of 3%. It can be had for less than it's 52-week high; it is in a trading range but is still $3 less than it's recent high, and well below its all-time high of around $75.
EEP: I trade in and out of this one for the dividend. I do not look for price appreciation. It pays 7% or greater, depending when one bought in. It is in a trading range but is trending up and selling for $54 today. Three months ago, one could buy shares for $47. EEP increased its distribution in May, 2010, and will payout again in early August, I believe. Others agree: EEP is a very interesting play. Even during the worse of the natural gas recession (back in 2008), EEP did not miss a dividend payment.
NLY: I trade in and out of this one for the dividend. I do not look for price appreciation. It pays 15% or thereabouts. It is also in a trading range but at $18 today, one could have gotten in at about $16 three months ago. It recently raised its dividend by 5% which will be paid at the end of July. In after-hours trading, it dropped 3% today (and will probably drop more tomorrow) after announcing dilution of its per share value by offering to sell an addition 60 million shares of common stock, and will sell an additional 9 million if oversubscribed. That probably explains why it raised its dividend a bit; to keep investors from getting too upset when the new public offering was announced. NLY has 560 million shares outstanding. The big question is why NLY felt the need to raise more cash? Problems or opportunities? I have no idea. The message boards suggest opportunities. If the public offering is oversubscribed at $17.75, it will speak volumes.
Howdy Bruce,
ReplyDeleteNLY raising cash is normal and should be expected by every REIT investor. Due to the nature of the REIT not paying corporate taxes, they must always sell shares to raise capital for investments...while investors look at these shelf offerings as dilutive, in actuality they are accretive as long as they are making a good return on the newly raised money.
I own a little NLY myself, but AGNC is another REIT to look at. (Cramer has said he doesn't like it do to the excessive dividend...which is the stamp of approval in my book). They opened for business in May of 2008 @$20.00, fell into the 12-13 range at its nadir(Yay for me, I own shares at this level in my ROTH), while paying around a 20-22% dividend.
They've paid a whopping $10.46 since their inception in 2008 and are paying another 1.40 this past quarter. Not bad for a $27 stock.
I appreciate the feedback regarding REITs. It looks like the price drop in NLY has stabilized (as expected) and actually went up slightly after-hours (although after-hours action is generally meaningless).
ReplyDeleteAgain, my general interest is in energy, but I have been raising a bit of cash for more Bakken-related purchases.