The 30-year Treasury is quite possibly the worst investment option out there right now… even your Uncle Dave’s coin and baseball card collection might offer better long-term returns. #-ad_banner-#Let’s forget for a moment about the Federal Reserve’s intention to taper quantitative easing, which has already begun to place upward pressure on interest rates (and thus downward pressure on bond prices). And let’s forget that the longer a bond’s duration, the greater its sensitivity to interest rate movements. So with every basis point uptick, nothing will feel the pain more acutely than the 30-year “long bond.” Let’s even forget… Read More

The 30-year Treasury is quite possibly the worst investment option out there right now… even your Uncle Dave’s coin and baseball card collection might offer better long-term returns. #-ad_banner-#Let’s forget for a moment about the Federal Reserve’s intention to taper quantitative easing, which has already begun to place upward pressure on interest rates (and thus downward pressure on bond prices). And let’s forget that the longer a bond’s duration, the greater its sensitivity to interest rate movements. So with every basis point uptick, nothing will feel the pain more acutely than the 30-year “long bond.” Let’s even forget that Uncle Sam’s credit rating has already been downgraded by at least one ratings agency. Even if interest rates don’t rise and Congress miraculously balances the budget — a best-case scenario — you’re still tying up your capital for the next three decades at a paltry rate of around 3.5%. But here’s the kicker: When your principal is finally repaid in the distant future, those dollars will have lost much of their purchasing power. Just ask anyone who bought one of these bonds back in 1983. Maybe they lent the government $30,000, enough money to buy three average new cars… Read More

Saddled with a pile of debt and a looming war with England, France was in desperate need of cash in 1803. So Napoleon took the same course of action that many publicly traded companies do today — asset liquidation. The ensuing Louisiana Purchase was sealed for $15 million, or just 3 cents per acre. Thomas Jefferson’s emissaries to France struck an incredible bargain. They acquired a territory that stretched from the Gulf Coast to Canada, essentially doubling the size of the fledgling United States. France didn’t know it, but Jefferson was willing to pay $10 million just for the city… Read More

Saddled with a pile of debt and a looming war with England, France was in desperate need of cash in 1803. So Napoleon took the same course of action that many publicly traded companies do today — asset liquidation. The ensuing Louisiana Purchase was sealed for $15 million, or just 3 cents per acre. Thomas Jefferson’s emissaries to France struck an incredible bargain. They acquired a territory that stretched from the Gulf Coast to Canada, essentially doubling the size of the fledgling United States. France didn’t know it, but Jefferson was willing to pay $10 million just for the city of New Orleans. Control of the strategic port secured navigation and trade along the Mississippi River, which is what he was really after. #-ad_banner-#For half a century, this would be the cheapest and most transformative land grab in the nation’s history. But it was outdone in 1867, when Russia (a motivated seller that also feared war with England at the time) ceded what would later become the state of Alaska for $7.2 million. This purchase netted more than twice the land area of Texas for just 2 cents an acre. That’s an amazing deal — even before you consider the… Read More

I received this message in my inbox recently. It brings up a good point and captures what I imagine a lot of my readers have in their minds… “We own gobs of stocks in High-Yield Investing. Instead of having more and more new additions, would you consider adding to an existing holding?” – Lloyd F. #-ad_banner-#When you cover several exciting new investment ideas month after month, it doesn’t take very long to build a large collection of stocks and bonds. The current High-Yield Investing portfolio is diverse, but manageable. I keep close daily tabs on all of our holdings. Still,… Read More

I received this message in my inbox recently. It brings up a good point and captures what I imagine a lot of my readers have in their minds… “We own gobs of stocks in High-Yield Investing. Instead of having more and more new additions, would you consider adding to an existing holding?” – Lloyd F. #-ad_banner-#When you cover several exciting new investment ideas month after month, it doesn’t take very long to build a large collection of stocks and bonds. The current High-Yield Investing portfolio is diverse, but manageable. I keep close daily tabs on all of our holdings. Still, I wanted to accommodate Lloyd’s request in today’s essay — not because there is a shortage of new candidates, but because this is an opportune time to revisit an old favorite. And it remains a stellar dividend payer to this day…  As they say, sometimes your best new investment idea is a stock you already own. And subscribers who have joined within the past couple of years might be unfamiliar with this particular story. This company’s progress in recent years has been nothing short of amazing. I could tell you all about it, but I’d rather show you. The chart… Read More

For a landlord, there’s absolutely no better tenant than this one. Every year, the 12,000 employees at the U.S. government’s General Services Administration (GSA) are tasked with spending roughly $66 billion dollars on all of the goods and services needed to keep our government running. The biggest expense: real estate. Although Uncle Sam owns nearly 10,000 buildings, he’s also the nation’s largest renter. The government never bounces a rent check, and tends to look for long-term, stable leases. And as it turns out, renting to the government is quite profitable. A top landlord to Uncle Sam throws off sterling cash… Read More

For a landlord, there’s absolutely no better tenant than this one. Every year, the 12,000 employees at the U.S. government’s General Services Administration (GSA) are tasked with spending roughly $66 billion dollars on all of the goods and services needed to keep our government running. The biggest expense: real estate. Although Uncle Sam owns nearly 10,000 buildings, he’s also the nation’s largest renter. The government never bounces a rent check, and tends to look for long-term, stable leases. And as it turns out, renting to the government is quite profitable. A top landlord to Uncle Sam throws off sterling cash flow, which translates into a rock-solid 7% dividend yield for investors. That’s a lot of reward for little risk.  I’m talking about Government Properties Income Trust (NYSE: GOV), a real estate investment trust (REIT) that leases more than 10 million square feet spread across 82 buildings, mostly to the public sector. (Roughly 68% of revenues are derived from the U.S. government, another 20% from state governments, 7% from the private sector, and 5% from the United Nations).  A sample of tenants includes: — The Centers for Disease Control (CDC) in Atlanta — Many of the Federal Bureau of Investigation’s… Read More

Imagine pocketing checks from an investment throwing off 7% interest.  It’s not easy to picture in today’s low-interest environment with saving accounts paying less than 1% and the S&P 500 carrying a dividend yield just under 2%.  Now, imagine pocketing dividends from a company yielding 7% with rock-solid business income all but backed by, and coming directly from, the federal government. #-ad_banner-#Hard to believe, but an investment like this exists. Around the time that I first told High-Yield Investing readers about the company last month, one person was so excited about it, he was inspired to email me this question:  “I… Read More

Imagine pocketing checks from an investment throwing off 7% interest.  It’s not easy to picture in today’s low-interest environment with saving accounts paying less than 1% and the S&P 500 carrying a dividend yield just under 2%.  Now, imagine pocketing dividends from a company yielding 7% with rock-solid business income all but backed by, and coming directly from, the federal government. #-ad_banner-#Hard to believe, but an investment like this exists. Around the time that I first told High-Yield Investing readers about the company last month, one person was so excited about it, he was inspired to email me this question:  “I was recently reading about Government Properties Income Trust (NYSE: GOV). With monthly income plus special tax preference, it seems almost like a no-lose stock. Is it too good to ignore?” — David K. I wouldn’t call it a “no-lose” proposition, but GOV is definitely worthy of consideration.  As the name implies, Government Properties Income Trust owns buildings that are leased to state and federal government agencies. The company owns 82 properties from New York to California that hold more than 10 million square feet of rentable space. Virtually all (94%) of the income generated by these buildings comes from… Read More

Imagine buying a used paperback book for $5, reading the first few chapters, and then finding a $1 bill tucked neatly between two of the pages. Because the book came with a little cash, the net purchase price essentially drops to just $4. That’s essentially what we see with cash-rich companies like GPS-maker Garmin for example. The company holds $13.84 per share in cash with zero debt. So a potential acquirer that bought all the outstanding shares at the recent price of $46.25 would really only end up paying about $32.41. #-ad_banner-#Of course, buying a few shares doesn’t mean you… Read More

Imagine buying a used paperback book for $5, reading the first few chapters, and then finding a $1 bill tucked neatly between two of the pages. Because the book came with a little cash, the net purchase price essentially drops to just $4. That’s essentially what we see with cash-rich companies like GPS-maker Garmin for example. The company holds $13.84 per share in cash with zero debt. So a potential acquirer that bought all the outstanding shares at the recent price of $46.25 would really only end up paying about $32.41. #-ad_banner-#Of course, buying a few shares doesn’t mean you can march in and demand payment. But as a stockholder, you do have a pro-rata claim on that cash. And while you can’t spend it freely like the $1 in the book, it can still be used in numerous ways to enhance shareholder value.  That money can be used to repurchase stock, to make a special dividend distribution, to pay down debt, to upgrade equipment, to fund an acquisition… you name it. Equally important, having access to that much cash negates many of the financial worries that can cripple a stock. Expanding companies need capital, and raising it isn’t always… Read More

They say to never trust a skinny cook, the logic being that any chef who works in a kitchen all day and creates irresistible dishes probably can’t help but overindulge and pack on a few pounds. For much the same reason, I find it reassuring when a mutual fund manager invests their personal cash in his or her own fund. And I like it even better when CEOs and other top executives stash a sizable percentage of their net worth in their own company’s stock. Conventional wisdom says that it’s a bullish sign when a company invests in itself through… Read More

They say to never trust a skinny cook, the logic being that any chef who works in a kitchen all day and creates irresistible dishes probably can’t help but overindulge and pack on a few pounds. For much the same reason, I find it reassuring when a mutual fund manager invests their personal cash in his or her own fund. And I like it even better when CEOs and other top executives stash a sizable percentage of their net worth in their own company’s stock. Conventional wisdom says that it’s a bullish sign when a company invests in itself through stock buybacks. If that’s true (and in most cases it is), then what does it say when these same managers sink a few million dollars of their OWN money in the shares? After all, board members, directors, chairmen and other upper executives know the business and the industry better than anyone else. Who understands the inner workings of Apple (Nasdaq: AAPL) better than Tim Cook? Who has their finger on the pulse of online advertising quite like Google (Nasdaq: GOOG) boss Larry Page? These well-connected individuals also have access to privileged information that the rest of us don’t get to… Read More

This company has grown its dividend 11% a year since 2003. It’s also one of my favorite dividend stocks on the market today. In the uncertain world of investing, a regular stream of dividend payments is the closest thing investors have to a guaranteed return. We all buy common stocks in anticipation the shares will increase in value at some point, but dividend stocks can provide us with a steady paycheck while we wait for shares to increase in value. And while it’s hard to know what has “real” value in the stock market, dividends are undoubtedly real money. This… Read More

This company has grown its dividend 11% a year since 2003. It’s also one of my favorite dividend stocks on the market today. In the uncertain world of investing, a regular stream of dividend payments is the closest thing investors have to a guaranteed return. We all buy common stocks in anticipation the shares will increase in value at some point, but dividend stocks can provide us with a steady paycheck while we wait for shares to increase in value. And while it’s hard to know what has “real” value in the stock market, dividends are undoubtedly real money. This is why stocks that distribute reliable, recurring dividend payments year after year should form the core of an income investor’s portfolio. And I’ll show you exactly why… #-ad_banner-#Today, speculators often look to make a quick fortune on the next Microsoft — some fast-growing company operating in an exciting new industry. But it would be misguided to focus entirely on volatile, unproven industries or companies while overlooking the numerous benefits offered by well established dividend-paying companies. While the current 2% yield offered by the S&P 500 might seem trivial, it would be a huge mistake to dismiss dividends entirely. Read More

As a rule, most investors are utterly preoccupied with earnings.  That’s understandable, of course. At the end of the day, the goal of any business is to turn a profit. The problem comes when we focus on the bottom line to the exclusion of everything else.  At best, this offers an incomplete view of how a company is performing. At worst, it can mask underlying weakness.  In response to the last recession, businesses of all shapes and sizes streamlined their operations to cut costs and preserve cash. Many did an outstanding job of erasing red ink from the books. The… Read More

As a rule, most investors are utterly preoccupied with earnings.  That’s understandable, of course. At the end of the day, the goal of any business is to turn a profit. The problem comes when we focus on the bottom line to the exclusion of everything else.  At best, this offers an incomplete view of how a company is performing. At worst, it can mask underlying weakness.  In response to the last recession, businesses of all shapes and sizes streamlined their operations to cut costs and preserve cash. Many did an outstanding job of erasing red ink from the books. The deeper they slashed, the more money they pocketed.  At first, this delighted investors. They saw growing earnings each quarter and cheered. But eventually, they began to realize that the phantom “growth” was nothing more than belt-tightening. In many cases, revenues were actually flat or sometimes even falling.  You can boost your household disposable income by eliminating the $100 weekly maid service and the $100 weekly lawn care service — but you’d much rather get a $200 weekly pay raise.  #-ad_banner-#The same rings true in the business world, where you’d much rather attract new customers or increase prices. There’s a limit… Read More

If lending money to the government for years is one of the worst things you can do, then this strategy is the smartest. The 30-year U.S. Treasury Bond is quite possibly the worst investment option out there right now. Even your Uncle Dave’s coin and baseball card collection might offer better long-term returns. Let’s forget for a moment about the Fed’s intention to taper quantitative easing, which has already begun to place upward pressure on interest rates (and thus downward pressure on bond prices). And let’s forget that the longer a bond’s duration, the greater its sensitivity to interest rate… Read More

If lending money to the government for years is one of the worst things you can do, then this strategy is the smartest. The 30-year U.S. Treasury Bond is quite possibly the worst investment option out there right now. Even your Uncle Dave’s coin and baseball card collection might offer better long-term returns. Let’s forget for a moment about the Fed’s intention to taper quantitative easing, which has already begun to place upward pressure on interest rates (and thus downward pressure on bond prices). And let’s forget that the longer a bond’s duration, the greater its sensitivity to interest rate movements. So with every basis point uptick, nothing will feel the pain more acutely than the 30-year “long bond.” #-ad_banner-#Let’s even forget that Uncle Sam’s credit rating has already been downgraded by at least one ratings agency.  Even if interest rates don’t rise and Congress miraculously balances the budget — a best-case scenario — you’re still tying up your capital for the next three decades at a paltry rate of around 3.5%. But here’s the kicker: when your principal is finally repaid in the distant future, those dollars will have lost much of their purchasing power. Just ask anyone who… Read More