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A Combined Top-Yield Portfolio of Lee Ainslie, Mario Gabelli, Leon Cooperman, Wilbur Ross and Ron Baron

January 20, 2012 | About:
Mara Kohn

Mara Kohn

4 followers
Dividend stocks are, for long-term investments, those that provide stability and offer and opportunity to create a source of income. It is considered that they are safe and provide long-term success in the stock market. This type of stock usually provides profits to shareholders. Indeed, companies set a portion aside for such purpose.

Unfortunately, they tend to be ignored by investors even when a portion of returns are due to the dividends. Dividends also act as cushions upon downturns.

There are three essential reasons why investing in dividend stocks is important:

1) Dividends offer investors fantastic flexibility: they provide financial flexibility during the investing life.

2) Money cannot be faked: dividends cannot be easily faked by companies.

3) Dividends are paid from the company’s cash flow: dividends are a result of a company’s operational success. Dividend payments allow investors to make money even when prices are low.

Now why is it interesting to invest in dividend stocks? There are some points to consider:

• Quicker compounding

• Increased financial flexibility

• Cash in the pocket without selling

• A hedge against inflation

• A check on the company’s accounting

• Cash flow in a down market

Here is a combined portfolio of the above-mentioned investors:

THL Credit (TCRD): TRCD provides junior debt and equity to middle-market companies seeking capital for growth, acquisition, recapitalization and/or change of control.

In the last quarter it reported earnings. Income per Share was $0.29; Net Asset Value was $13.17 and the company still has no debt.

Furthermore, TCRD announced the recapitalization of Pomeroy IT Solutions. The investment is in the form of junior debt. The company has also carried out other two deals: Charming Charlie and Purple Communications.

Although no information has been released in respect to those three deals as the company is reluctant to do so, the market seems to be confident as THL Credit stock is trading at $13.1.

Portugal Telecom SGPS SA (PT): PT is a telecommunications operator. It is engaged in rendering a range of telecommunications and multimedia services in Portugal and other countries or regions, including Brazil and Africa.

In terms of figures, the market price is $5.60 and its dividend yields at 15.9%. For 2012 the company expects that EPS will grow 16% to $1.03. Portugal Telecom has an extremely low PEG of 0.12 compared to its peers and a quarterly revenue growth of 83.50% compared to its competitors.

Medley Capital (MCC): MCC focuses on direct lending, generally senior secured, in amounts from $10mn-$50mn to North American borrowers.

From a shareholder standpoint, MCC intends to pay a $1.0-1.20 dividend a year but there is no guaranty in that sense. Furthermore, MCC expects to use SBIC money, which properly deployed, should improve shareholders return. It accrues low interest rates and has long maturities.

Should Medley Capital access $150 million of SBIC money, assets will increase in two-thirds.

Corporate Office Properties Trust (OFC): Corporate Office Properties Trust is a specialty office real estate investment trust, which focuses on the specialized tenant requirements in the United States Government and defense information technology, and data sectors.

The Government sector used to be strength and in 2010 accounted for more than 50% of the company’s revenue. Unfortunately, this could be affected by the government’s financial situation and defense cuts.

Financially speaking, the stock price is trading at $19.37 and the dividend yields at 8.5%. Free cash flow reached its peak in 2009.

Now, OFC is trying to expand the Strategic Reallocation Plan to include an additional $312 million of assets to be sold within the next three years.

Manitowoc Co. Inc. (MTW): Manitowoc is a multi-industry, capital goods manufacturer with several facilities across the world and is one of the world's largest providers of lifting equipment for the global construction industry. It is also a leading manufacturer of commercial foodservice equipment serving the ice, beverage, refrigeration, food preparation and cooking needs of restaurants, convenience stores, hotels, health care and institutional applications.

MTW stock is currently trading at $10 per share and pays an annual dividend of 8%. It has no current P/E due to losses and has reported EPS of 18 cents. In terms of cash, MTW does not have much money and is limited in capital spending, purchases or investment.

After several downturns, the company is recovering and holds a strong market position. Most importantly, MTW is trying to expand to emerging markets such as Asia, Latin America, India and the Middle East.

Rating: 2.7/5 (7 votes)

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