Dear Mr. Berko: I have $48,400 to invest and want to get an 8.0 percent yield on a portfolio of dividend stocks. I want stocks that trade only on the New York Stock Exchange, and I don't want cheap stocks, utility stocks, foreign stocks, closed-end fund stocks or ETF stocks. I don't want stocks that sell tobacco, alcohol or weapons. And I want stocks that will increase their dividends and can increase their share price by at least 50 percent in three years. Please send me a research report on each of your recommendations. And send me your answers by land mail because I don't trust the privacy of computer email and I don't read the paper every day and might miss your answer. And don't use my initials because I don't want people to know my personal business and that I'm writing you. — XX: Moline, Ill.
Dear XX: Wow ... you take the cupcake! When I was in Moline, the city had a population of 43,000. And I imagine the White Pages lists a few hundred Moliners who share your initials. So I'll respect your wishes and won't use your initials because I don't want folks in Moiline to know that I'm writing you.
I hope you recognize that regular payment of an 8.0 percent dividend yield in this market isn't even a guaranteed maybe. The following five issues are massively risky, even though they are recommended by respected analysts. And the probability that they will decline in value is greater than the probability they'll rise in value. There is even a possibility, which is better than remote, that each of the following high-yielding issues will decline in price and trade below your cost basis 12 months hence. Before purchasing these issues, I recommend a visit to your psychiatrist. Get his permission in writing, in case the buying broker questions your sanity.
APOLLO GLOBAL MANAGEMENT's (APO-$14.60) $1.40 dividend yields 8.5 percent. APO is a worldwide, institutional investment manager that provides services to endowment and sovereign wealth funds. APO launches hedge funds and mutual funds, manages real estate and private equity funds and invests in commodities, chemicals, corporate restructuring, carve- outs, distressed buy-outs and recapitalizations. Revenues may increase 50 percent in 2016 and earnings could grow 40 percent to $1.95. Hail Goldman Sachs for a copy of their buy report.
USA COMPRESSION PARTNERS (USAC-$7.93) provides natural gas compression services under contract with customers in the oil and gas business. USAC's engineers design, operate and service its compression units while maintaining related support inventory and equipment. Revenues and earnings should improved 10 percent and 5 percent respectively for 2016. The $2.10 dividend may be cut to $0.80 yielding 10 percent. Ring Raymond James Financial for their bullish report.
SUNOCO LP (SUN-$29.85) is a $20 billion revenue master limited partnership, earning $2.83 a share and paying a $2.77 dividend yielding 9.4 percent. SUN is in the wholesale distribution and retail sale of motor fuels and other petroleum products in Texas, Oklahoma, Kansas, Virginia, Maryland, Georgia, Tennessee and Hawaii. SUN owns 155 convenience stores and also contracts with other convenience stores for the sale of fuels, propane and lubricating oils. Dial Credit Suisse for their positive report.
THE GEO GROUP's (GEO-$28.32) $2.60 dividend yields 9.1 percent. GEO leases, owns and manages 101 correctional facilities for governments in the U.K., U.S., South Africa and Australia. It's proof positive that crime certainly pays. This year, revenues should grow 10 percent to $2 billion and earnings may increase 20 percent to $2.15. Contact Canaccord Genuity for their buy report.
BUCKEYE PARTNERS LP's (BPL-$58.11) $4.75 dividend yields 8.1 percent. BPL owns and operates 6,000 miles of pipeline that transports refined petroleum products (gasoline, distillates and jet fuel) and owns and operates 120 liquid petroleum products terminals with a 110 million barrels of storage capacity. Revenues for 2016 should grow by 12 percent to $3.75 billion and earnings may improve 30 percent to $4.00. Hail Stifel Nicolaus for their bullish report.
Invest $9,500 in each issue, and don't cherry pick from this teeny list.
Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775, or email him at [email protected] To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.