Dear Mr. Berko: I'm in search of a better yield with the money I'll be getting from a $53,000 certificate of deposit that comes due next week. The following stocks were recommended by a stockbroker. I can be aggressive. Please give me your opinion on them. — PL, Wilmington, N.C.
Dear PL: OK, let's begin with Apollo Global Management (APO-$19.05). It's a huge global alternative investment manager with nearly $170 billion under management, including hedge funds, mutual funds, real estate, financial services, business services, stocks in multiple industries — including metals, mining, entertainment, cable, satellite and wireless — buyouts, carve-outs, recapitalizations, distressed capital, commercial mortgage obligations and collateralized loan obligations. APO's $1.48 dividend yields 7.9 percent. Value Line suggest a three- to five-year appreciation of 60 percent. Just buy 300 shares.
Frontier Communications (FTR-$3.65) provides broadband, satellite video, wireless internet, data access, data security solutions and special bundled offerings for small businesses and home offices and advanced communications for medium to large businesses. FTR has 3.2 million residential customers, almost 300,000 business customers and 2.5 million broadband subscribers, which produce over $10 billion in revenues but no profits. FTR yields 13.4 percent, but I wouldn't touch this stock with a barge pole. Standard & Poor's likes the stock, but I think those guys are nuts. Don't touch it.
Computer Programs & Systems' (CPSI-$23.85) $1.36 dividend yields 3.9 percent. CPSI designs health care information technology, primarily for smaller community hospitals. It automates the management of clinical and financial data and allows hospitals to outsource various data-related business processes. Wall Street doesn't seem to care for CPSI, which recently reduced its dividend, and I agree.
Royal Dutch Shell (RDS-B) trades at $52.59, and its $3.76 dividend does not yield 9.1 percent as reported by Yahoo; rather, the yield is 7.1 percent. Relying on Yahoo for financial data is like asking a dung beetle to explain gravity. Still, this $235 billion-revenue oil giant (expected $335 billion revenues in 2017) is a wise buy. The dividend is safe, and Morgan Stanley's recent research report strongly recommends this issue for an impressive five-year recovery. Buy 200 shares.
CVR Partners (UAN-$4.50) is a wild-hair speculation yielding 14.4 percent. It produces, distributes and markets nitrogen fertilizer products in the U.S. Carl Icahn recently acquired a 59 percent stake and helped UAN successfully place a $625 million note due in 2023. UAN is also part of a cash-rich family of companies that includes CVR Energy and CVR Refining. Buying UAN is a bet on the improving strength of the nitrogen fertilizer market and the wily machinations of Icahn. Though the dividend may be cut, there is a strong speculative possibility of significant capital gains. Buy 500 shares.
Plains All American Pipeline (PAA-$30.63) pays a $2.80 dividend that yields 7.4 percent. PAA is engaged in the transportation, storage, terminaling and marketing of crude oil, natural gas liquids and refined products. Its having 20,000 miles of pipeline, 64 transportation tugs, 142 storage and transportation barges, 990 trucks, six marine facilities, 28 crude oil terminals, 10 natural gas processing plants, 1,100 trailers and 10,100 crude and natural gas rail cars, plus hundreds of billions of cubic feet of natural gas storage capacity, augurs well for a nicely improved 2017, as well as a dividend increase. UBS and Oppenheimer agree. Buy 200 shares.
AmeriGas Partners (APU-$45) distributes $2.4 billion worth of propane and related equipment in the U.S. to about 2 million residential, commercial, industrial, agricultural, wholesale and motor fuel customers in every state via 2,000 distribution centers. It also sells, installs and services propane appliances and air conditioning systems. The $3.76 dividend yields 8.32 percent and has been raised annually since 2005. Buy 200 shares.
The GEO Group (GEO-$30.32) is the largest provider of correctional, detention and community re-entry services, with 98 facilities, 77,000 beds and 18,000 employees worldwide. The $2.60 dividend yields 8.6 percent. GEO stands to lose some of its government contracts, which might cost the company nearly $300 million in revenues and force the board to reduce the dividend. The newly empty compounds might be used to house arriving immigrants. Buy 200 shares.
After making your purchases, put the remaining money in a 12-month CD. Good luck!
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.