Low Risk Income Alternatives to CD's (stocks, p2p lending etc)

I mentioned I’ve added significant stocks to my Dividend and growth pie and decided I’ll share it. About 1/2 the people on seeking alpha are very secretive because they want you to buy their marketplace service to see their whole portfolio’s. A few generously share information however and that’s who I’m trying to emulate. Obviously no guarantee’s but in the year I had the first 16 stocks they went up 35% in value. As I’ve added stocks it’s diluted that although at one point it was up to 45%…it’s currently at 30.70% return. kmi, bns, and vlo have done poorly in stock price but continue to pay an attractive dividend. T, PRU and ENB all pay a 7% return and are doing particularly well overall. There are many articles listing them as stocks for retiree’s. FYI there’s some additional content after his huge list too. :wink:

Stocks with a good dividend and growth potential

Holdings

38

Dividend Yield

7.365%

Expense Ratio

0.06%

Portfolio locations

Retirement

Dividend and Growth

Slices (38)

Name

Target



ABBV
AbbVie, Inc.
3%



ACC
American Campus Communities, Inc.
3%



T
AT&T
3%



AVB
AvalonBay Communities, Inc.
3%



BRX
Brixmor Property Group, Inc.
3%



DKL
Delek Logistics Partners LP
3%



ENB
Enbridge, Inc.
3%



FRT
Federal Realty Investment Trust
3%



GIS
General Mills, Inc.
3%



HT
Hersha Hospitality Trust
3%



NNN
National Retail Properties, Inc.
3%



OKE
ONEOK, Inc.
3%



PAA
Plains All American Pipeline LP
3%



PRU
Prudential Financial, Inc.
3%



O
Realty Income Corp.
3%



STX
Seagate Technology Plc
3%



SPG
Simon Property Group, Inc.
3%



SPE
Special Opportunities Fund, Inc.
3%



SQ
Square, Inc.
3%



STOR
STORE Capital Corp.
3%



SO
The Southern Co.
3%



TTD
The Trade Desk, Inc.
3%



WBA
Walgreens Boots Alliance, Inc.
3%



WELL
Welltower, Inc.
3%



AGNC
AGNC Investment Corp.
2%



AYX
Alteryx, Inc.
2%



C
Citigroup, Inc.
2%



EPR
EPR Properties
2%



F
Ford Motor Co.
2%



PEAK
Healthpeak Properties, Inc.
2%



KMI
Kinder Morgan, Inc.
2%



MAC
Macerich Co.
2%



MPW
Medical Properties Trust, Inc.
2%



SRC
Spirit Realty Capital, Inc.
2%



SKT
Tanger Factory Outlet Centers, Inc.
2%



BNS
The Bank of Nova Scotia
2%


UMH
UMH Properties, Inc.
2%



VLO
Valero Energy Corp.
2%

I’ve also setup A DGI Portfolio (stable blue chips that keep up with inflation), a 8% Growth Portfolio and a Risk Adjusted Rotation Strategy Portfolio in my IRA accounts. The article I used to set them up is now hidden on seeking alpha and I don’t see a way for me to upload a pdf I printed/saved of the article.

Dave Van KNapp publically shares his DGI (DGI = Dividend Growth Investing) Portfolio which is very similar to mine here:
https://dividendsandincome.com/reviewing-my-mature-dividend-growth-portfolio/

The latest research is often rosy. I’ve been watching a few REITs for over a decade, during which they’ve traded 10-15% below book value the entire time, rarely close to book value. I think you are implying that the price should increase to meet the current book value, but I see no reason to expect that. And book value could just as easily go down towards the current price, and the price could drop even more to retain the historic discount.

I’m not knocking your investments or strategy, just providing a contrarian point of view.

This just does not make sense to me. I think it is utterly idiotic to buy back stock. It’s a destruction of value. If they have nothing better to do with the money, they should pay out a larger dividend.

As I indicated, that was a quote from the article listed above it. I did not personally say any part of that.

That being said, Book value is determined by the assets of the stock divided by the outstanding shares yes? If they buy back shares then there are less outstanding shares therefore each one is worth more from a book value standpoint? Let me know if I got that wrong.

I personally do believe alot of people are going to jump on reits because they have not yet recovered from covid AND they have the higher interest rates along with being based on real assets and not hype (tech stocks…coughteslacough) When a bunch of the average joes starts buying it’s going to push the stock price up. In the meantime draw down the dividend.

If you want a safer alternative stick with T, PRU and ENB…7% returns and long standing companies with good dividend history. T is controversial however with some folks swearing it’s going to have short term pain and possibly long term if they don’t get their act together. It’s stock price has pretty much been a flat line for decades with only minor changes but it paid it’s dividend every year and I think they will fight hard to keep their dividend aristocrat reputation.

Also to put things into perspective all the stocks mentioned add up to 10% of my retirement portfolio with the other 90% in a retirement portfolio that has alot of low cost vanguard etf’s. While it has decent capital appreciation it was hit hard by covid too before recovering which certainly influenced me to look at dividends more closely. If the process works as expected I’ll be transferring funds to the stocks from the retirement portfolio. I’m not in a rush.

Also ask yourself if buying back stock is “useless” why are a BUNCH of companies doing it right now while the stock prices are down? https://www.investopedia.com/ask/answers/042015/why-would-company-buyback-its-own-shares.asp

That’s correct, but the slightly increased book value does not have a direct effect on the price of each share. The cash money spent on buybacks disappears into the ether. Paying out dividends returns the money directly to investors.

I do agree that buybacks may make sense when stock is obviously and significantly undervalued. I just don’t believe this to be the case with most buybacks. I have watched companies spend hundreds of millions of dollars for many years buying back shares while the prices of those shares kept decreasing. They would have been better off holding on to cash or paying out dividends.

In the case of these reits most were knocked down 60-80% when covid hit. Those are the ones I grabbed with both hands. The dividends are just gravy, I can wait a few years for them to recover if that’s what it takes or even longer as long as the keep the dividend. As one person on seeking alpha put it…think like a landlord when it comes to reits. Anyway I’ll keep folks updated on how things are going every so often. all my cd’s were 4 or 5 year ones so they will continue producing the 3.5-4% they were locked in at. The excess funds not used for everyday life will be invested…and probably the dividends until the cd’s start maturing.

Here’s the pdf I thought would be beneficial:

I question this statement. The principle is insured, not the expected interest earnings. And they’re borrowing to buy the notes - so that interest expense means they still lose money with every default. And it’s quite unnerving to be investing in 2% mortgages; there’s very little room for their borrowing costs to move before holding a note is costing them more than it’s earning.

There’s a reason REITs have historically paid a high dividend rate, their ongoing profitability is anything but “safe”.

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If anyone needs a decent dividend tracking spreadsheet here’s one I found…he both provides a copy and walks people through how to set one up. https://wealthcapitalist.com/investing/dividend_investing/how-to-make-a-dividend-tracking-spreadsheet/

If anyone has a spreadsheet that will break down into monthly income (keeping in mind some stocks pay at different times/months) I’ve love a copy. No joy on googling so far. There is an android app called “Dividend Flow” that does exactly what I want but the author limits the free version to 10 stocks. If you want to do more you have to subscribe to a monthly service. Now I don’t mind paying a one time fee but i’m not paying this joker $3 a month just to be able to add more stocks. It offered other features too but only 1 really was something I cared about.

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The pie/portfolio I’m using is now up to 50 stocks…most dividend payers of 5-7%. Many are reits that were down 60-80% in value and have high dividends as a result. They offer short term pain but long term gain both by value and dividend. Also some utilities that pay dividends as people always need electricity, water and natural gas…ditto visa, mastercard etc…to see all 50 stocks click the link.

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As an update, that pie link should auto reflect any updates I make to it in future so I’m not going to be posting additions here. If you have questions feel free to ask me and I’ll do my best to answer. I’ve targeted dividend stocks, reits and utilities primarily with a few growth stocks. I’ve gotten the monthly income level up to where it can supplement my other income sources. The market recently took a hit but if you are looking at the long term that means it’s time to buy the undervalued stocks which is what I’m doing. I add a little here and and little there…sometimes to specific stocks or I just add to the whole pie and let m1finance’s algorithm target the stocks that are below the % I set. The stocks tracking spreadsheet I posted previously works pretty well to provide info on your portfolio.

If you want to play without investing real money try a stock market simulator and see how you would have done. https://www.investopedia.com/articles/basics/09/stock-market-simulator.asp I suggest you stay away from trying “day trading” as alot of people, many using robinhood have been burned. Buy quality stocks that pay a decent dividend and let the ride.

Make a note for us to review this a couple of years from now.

Here’s an article that addresses many of your issues with REIT’s. He explains it better than I can.

https://seekingalpha.com/article/4375738-drops-i-buy?utm_medium=email&utm_source=seeking_alpha&mail_subject=jussi-askola-the-more-it-drops-the-more-i-buy&utm_campaign=rta-author-article&utm_content=link-0

Hey, I own some mortgage REITs. I don’t object to them. But there’s a reason their yields are so high, they’re anything but safe.

You remind me of CN47 (I think?) on Fatwallet a decade+ ago. If I’m remembering correctly, he had a similar attitude and pretty much went all-in, then suddenly crashed hard.

If “all in” is around 6% of my retirement fund consider me there. The simple fact is real estate is ALREADY 60-80% below valuation. Unless it suddenly becomes free which is highly unlikely given it’s tied to a real asset it doesn’t have anywhere BUT up to go OVER TIME and until that time I’ll take a nice 5-8% dividend. You lump all reits together but the one that suffered the most are mortgage reits…that says nothing about healthcare reits, data center reits, college campus reits etc all of which stayed consistantly in demand, had high rent collection and STILL tanked along with all the other reits. You act like I suggested buying every reit in site which is far from the case. Why don’t you review the portfolio and then come back with SPECIFIC issues rather than stereotypical reit responses in general.

I never gave two craps about the portfolio. I was only commenting on your declaration that this one particular stock was “very safe” because of a government guarantee. I don’t know how I could’ve been any more specific about the issue.

It could work out just fine, but it’s anything but safe.

Perhaps you should tone down your irrational exuberance a bit, since you are continuing to react to that single word of caution a month later.

There was no “continuing”. Today was the first I saw your post. I’ll do one better. I’m done posting here. Feel free to post whatever you want. Admin, please delete my account since you apparently do not provide me the method to do so.

I would have requested via email but you have not configured the forum/mail setup correctly.

Message not delivered

Your message couldn’t be delivered to admin@fragiledeal.com because the remote server is misconfigured. See technical details below for more information.
The response from the remote server was:

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Except for yesterday…

Seriously? You’re going to go nuclear because someone dare question, a whopping one time, the safety of something you declared to be “very safe”?

Heck, I even implied an endorsement of the investment, by virtue of stating I own some as well.

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Here is a bit of free advice…

If you really want to make an impression on a group, such as when you strongly disagree with what they are doing - don’t quit that group. All that happens is that they will soon forget about you and your quitting made no real impact.

Instead, if you really want to make a difference, stay on with that group and help to gradually guide them to your ways.

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