My High Dividend Stocks Blog http://myhighdividendstocks.posterous.com Most recent posts at My High Dividend Stocks Blog posterous.com Tue, 31 May 2011 13:11:19 -0700 More Motley Fools are taking notice of high dividend stock Safe Bulkers (SB) http://myhighdividendstocks.posterous.com/more-motley-fools-are-taking-notice-of-high-d http://myhighdividendstocks.posterous.com/more-motley-fools-are-taking-notice-of-high-d

The Motley Fools are taking notice of my current favorite high dividend stock – Safe Bulkers (SB).  I agree with the positive reasons for being long this stock.

Disclosure: I don’t own Safe Bulkers (SB)  right now, but I want to.   I’m working on freeing up some funds to purchase this high dividend stock while it is still on sale at a low price.

Click on this link to see all the articles I’ve written on Safe Bulkers:  http://www.myhighdividendstocks.com/category/high-dividend-stocks/sb

Subscribe today for free at www.myhighdividendstocks.com/feed to discover high dividend stocks with earning power and strong balance sheets.

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4-Star Stocks Poised to Pop: Safe Bulkers

By Brian D. Pacampara | More Articles
May 31, 2011 | Comments (0)

Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, dry bulk shipper Safe Bulkers (NYSE: SB  ) has earned a respected four-star ranking.

With that in mind, let's take a closer look at Safe Bulkers' business and see what CAPS investors are saying about the stock right now.

Safe Bulkers facts

Headquarters (Founded)

Athens, Greece (2007)

Market Cap

$521.7 million

Industry

Shipping

Trailing-12-Month Revenue

$165 million

Management

Chairman/CEO Polys Hajioannou

CFO Konstantinos Adamopoulos

Return on Capital (Average, Past 2 Years)

13.3%

Cash/Debt

$48.2 million / $486.4 million

Dividend Yield

8.2%

Competitors

Eagle Bulk Shipping (Nasdaq: EGLE  )

DryShips (Nasdaq: DRYS  )

Navios Maritime Holdings (NYSE: NM  )

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 92% of the 228 members who have rated Safe Bulkers believe the stock will outperform the S&P 500 going forward. These bulls include dh1000 and All-Star TSIF, who is ranked in the top 0.1% of our community.

Earlier this year, dh1000 listed several of Safe Bulkers' positives: "Relatively new ships on contracts for varying periods of time (staggered terms) with solid customers; reasonable debt and good dividends."

Currently, Safe Bulkers even sports a cheapish P/E of 4.6. That represents a discount to rivals like Eagle Bulk (10.0), DryShips (6.1), and Navios Maritime (7.9).

CAPS All-Star TSIF elaborates on the bargain opportunity:

The excess shipping is creating bargains for those who can afford to buy new ones from cancelled orders left at distressed shipyards, but they have to come to market profitably. I think Safe Bulkers after it's drop the last two months has a decent chance of holding it's own, which is all you really need right now. If they can maintain thieir dividend, (which at today's depressed share price is almost 8%, they should be able to hold up handily against the S&P).

What do you think about Safe Bulkers, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!  

Link to original article: http://www.fool.com/retirement/general/2011/05/31/4-star-stocks-poised-to-pop-safe-bulkers.aspx

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Sun, 09 Jan 2011 16:05:30 -0800 Should You Buy High Dividend REITs? The Motley Fool and I Disagree. http://myhighdividendstocks.posterous.com/should-you-buy-high-dividend-reits-the-motley http://myhighdividendstocks.posterous.com/should-you-buy-high-dividend-reits-the-motley
The market is already driving interest rates higher.  This is going to narrow profits at all of the REITs.  These high dividend stocks are for short term investors looking for a quick 3.5-5% quarterly dividend.  Remember that they are not qualified dividends that are taxed at 15%.  They are taxed as ordinary income (meaning 25% - 35%) for higher income investors.  Buy these at the bottom of the next crash if you really believe in the sustainability of there business models.

Please click on the Google Ads if you like the content of this blog.  I'm using those clicks to evaluate the profitability of this blog.  Visit my main blog site at www.myhighdividendstocks.com if you don't see the Google Ads.

The Federal Reserve is not currently in control of the Fed Funds rate (the rate that banks charge each other for overnight loans to meet their reserve requirements).  The large commercial banks are in control of this rate because they are flush with over a trillion dollars in excess reserves.  They aren't borrowing from each other overnight.  The short term rates can and will rise outside of the Federal Reserves control.

Recs

108

    Rising Star Buy: Annaly Capital


     | Comments (27)

    Don't let it get away!

    Keep track of the stocks that matter to you.

    Help yourself with the Fool's FREE and easy new watchlist service today.

    This article is part of our Rising Star Portfolios series. You can read about the Dada Portfolio here.

    Unemployment is obstinate, companies are operating below capacity, and inflation is low.

    Are there any companies that can actually benefit from the slump?

    Why, yes there are
    The name that's caught my interest is Annaly Capital(NYSE: NLY), one of the largest publicly traded residential real estate investment trusts (REITs).

    Annaly's business model seems complicated, but it's actually pretty straightforward: Imagine if you could borrow $10,000 at 2%, lend it at 4% to a guaranteed borrower, and keep the $200 difference.

    That's Annaly's business in a nutshell. The company issues shares to raise capital, which it levers up with short-term financing. It uses this capital to buy longer-term mortgage-backed securities (MBS's), collects the interest on these securities or sells them, and then repays its lenders.

    Virtually all the leftover profit is returned to shareholders via dividends. This currently works out to a 15% yield. (As a REIT, Annaly is required to distribute least 90% of its earnings as a dividend in exchange for not having to pay corporate income taxes. However, this dividend can be taxed differently than normal dividends.)

    The diagram below shows how it all comes together, with arrows representing money flows:

    anImage

    Shareholders and lenders provide Annaly with capital which the company uses to buy mortgage-backed securities.

    The bulk of Annaly's profit is the difference between the short term rates at which it borrows, and the long termrates at which it lends, multiplied by the amount ofleverage it employs – currently 6.4 times.

    This is similar to the profit model employed by many proprietary traders at banks likeGoldman Sachs (NYSE:GS)JPMorganBank of America (NYSE: BAC), andCitigroup (NYSE: C). The difference is that Annaly's investments are probably safer (all of them are issued and guaranteed by U.S. government agencies), a greater portion of the rewards are distributed to shareholders rather than as bonuses to traders, and proprietary trading will theoretically become illegal for the aforementioned banks should regulators actually enforce financial reform legislation.

    There are other companies similar to Annaly, such asAmerican Capital Agency (Nasdaq: AGNC)Hatteras Financial (NYSE: HTS), and Annaly-managed Chimera(NYSE: CIM). But Annaly's bigger, has an ultra-safe portfolio, a long track record, and a strong management team headed up by Michael Farrell.

    Here's where things get good
    When inflation is too low and unemployment too high -- as is the case today -- the Federal Reserve lowers short term interest rates to stimulate the economy. The Fed is currently targeting 0%-0.25%, pretty much as low as you can go.

    Since short-term rates are more responsive to the Fed's low interest rate targeting and Annaly borrows at short-term rates to purchase longer-term securities, its costs have fallen significantly faster than the interest it collects.

    Check out how the declining Fed funds rate (green) drags down Annaly's borrowing costs (red) much faster than its investments yield (blue). The area between red and blue is Annaly's interest spread (profit):

    anImage


    Source: Company filings and the Federal Reserve Bank of New York.

    This is an awesome environment for Annaly. The current spread of 2.11% (the area between the blue and red lines and the key determinant of the company's profitability) -- is nearly double its historical average of approximately 1.20%.

    And it's one that's likely to persist for some time. As it's exceedingly unlikely we're going to see any meaningful economic stimulus to address unemployment emerge from the soon-to-be Republican-controlled House of Representatives and dysfunctional Senate, we can expect the slump – and low interest rates – to continue for some time. Traditional monetary rules prescribe as many as four years (!) of near-zero percent interest rates to cope even with mainstream economic forecasts.

    Scenarios galore
    Here are a few possible scenarios and their outcomes for our investment in Annaly, ranked from most to least likely.

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