Get Rich - Stay Rich - Investing for Monthly Income

Posts Tagged ‘MAIN’

Main Street increases Monthly Dividends Again in Q3

Main Street Capital Corporation (MAIN) announced today that its Board of Directors declared monthly dividends of $0.145 per share for each of July, August and September 2012. These monthly dividends equal a total of $0.435 per share for the third quarter of 2012. The third quarter 2012 dividends represent an 11.5% increase from the dividends declared for the third quarter of 2011 and a 3.6% increase compared to the second quarter of 2012. Including the dividends declared for the third quarter of 2012, Main Street will have paid $7.58 per share in cumulative dividends since its October 2007 initial public offering.

MAIN is trading at $25.68 with a market cap of $695 million.  MAIN has a current annual dividend yield of 6.5% that is paid monthly.  MAIN will report Q1 earnings on May 3.  MAIN has had a positive EPS surprise in 7 straight quarters so this is one stock to watch this week.

Last post for MAIN Dividend Increase.

Main Street Capital Corporation (MSCC) is a principal investment firm primarily focused on providing customized debt and equity financing to lower middle market (LMM) companies with annual revenues between $10 million and $100 million that operate in diverse industries. The Company invests primarily in secured debt instruments, equity investments, warrants and other securities of LMM companies based in the United States. Its principal investment objective is to maximize its portfolio’s total return by generating current income from its debt investments and capital appreciation from its equity and equity-related investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company.

 

Main Street Capital (MAIN) Increases Monthly Dividend 7.7%

Main Street Capital Corporation (MAIN) announced that its Board of Directors declared monthly dividends of $0.14 per share for each of April, May
and June 2012.  These monthly dividends, which will be payable pursuant to the table below, equal a total of $0.42 per share for the second quarter of 2012. The second quarter 2012 dividends represent a 7.7% increase from the dividends declared for the second quarter of 2011 and a 3.7% increase compared to the first quarter of 2012.  Including the dividends  declared for the second quarter of 2012, Main Street will have paid $7.14 per share in cumulative dividends since its October 2007 initial public offering.

MAIN is trading at $24.83 with an annual dividend yield of 6.8% paid on a monthly basis.  It has a PE of 9.3 and a market cap of $662 million.  MAIN has an equity summary score of 10 out of 10 for a very bullish outlook.  On 03/08/12, the company announced quarterly earnings of 0.45 per share, a positive surprise of 9.2% above the consensus 0.41.  Over the past 4 quarters, the company has reported 4 positive (>2%), 0 negative(<-2%), and 0 in-line (within 2%) surprises.  The average surprise for this time period has been 14.7%.  MAIN’s current quarter consensus estimate has remained relatively unchanged over the past 90 days at 0.42.  Estimates within its Industry have moved an average of 0.0% during the same time period.  During the past four weeks, analysts covering MAIN have made no upward or downward EPS estimate revisions for the current quarter.  Ativo Research projects as of this date that MAIN will GREATLY OUTPERFORM the market averages over the next 6 to 12 months leading to our decision of a STRONG BUY.

Main Street Capital Corporation (MSCC) is a principal investment firm focused on providing customized financing solutions to lower middle-market companies with annual revenues between $10 million and $100 million. The Company was formed for the purpose of acquiring 100% of the equity interests of Main Street Mezzanine Fund, LP (MSMF) and its general partner, Main Street Mezzanine Management, LLC (MSMF GP); acquiring 100% of the equity interests of Main Street Capital Partners, LLC (the Investment Manager); raising capital in an initial public offering (IPO), which was completed in October 2007, and thereafter operating as an internally managed business development company (BDC).  MSMF is licensed as a Small Business Investment Company (SBIC) by the United States Small Business Administration (SBA) and the Investment Manager acts as MSMF’s manager and investment adviser. The Company invests primarily in secured debt instruments, equity y investments, warrants and other securities.

Quality Stocks with High Yield Dividends

With so investors seeking high yield, it’s important for income investors to find dependable high yield dividend payers that they can count on.  With projections for a slower growth economy amid historically low  interest rates, it’s now more important than ever to find these solid dividend paying companies as there are fewer places to turn to for high yielding investments without taking on unwelcomed risk.  By screening for stocks with market beating yields, double digit growth rates, above median increasing cash flows and a strong balance sheet, this screen seeks to do just that by finding those companies that could turn into long-term core holdings for an income producing portfolio.  And with a Zacks Recommendation of a Buy or at least a Hold, these stocks have the potential to become total return winners as well.

Dividend paying stocks can help you build out a well diversified portfolio.  And if projections for a slower growth economy come true, the investment vehicles with ‘something extra’, i.e., solid and dependable dividends, will become even more highly sought after as investors seek out the best total returns while keeping a watchful eye on risk.

This list is filled with high yield stocks, many above 10%, that are ranked buy or hold by Zachs Investment Research.  Some of the popular names include: FUN that is being recommenmded by Jim Cramer; FSC & MAIN that are monthly dividend payers, CXS & PMT that offer mortgage REIT yields; and several energy stocks for continuing dividends.  The table belows displays the list of high yield dividend stocks.

high yield dividend stock with high quality ratings

Click to enlarge

Dividends from High Quality, High Yield Stocks

With so many companies being affected by the financial crisis, it’s important for income investors to find dependable dividend payers that they can count on. With projections for a slower growth economy amid historically low interest rates, it’s now more important than ever to find these solid dividend paying companies as there are fewer places to turn to for high yielding investments without taking on unwelcomed risk.  By screening for stocks with market beating yields, double digit growth rates, above median increasing cash flows and a strong balance sheet, this screen seeks to do just that by finding those companies that could turn into long-term core holdings for an income producing portfolio.

If you have not heard of TWO, then take note as this is a 9 on a 10 point scale.  Two Harbors Investment (TWO) is a holding company. The company operates as a real estate investment trust focused on investing in, financing and managing residential mortgage-backed securities (RMBS), and related investments. The company is externally managed and advised by PRCM Advisers LLC. The company’s target assets include the following: Agency RMBS, Non-Agency RMBS, and Financial assets other than RMBS, which include asset-backed securities and certain hedging transactions.

TWO is trading at $9.23 with a high dividend yield of 17%.  Yes, yields this high are scary but TWO is similar to Annaly as a mortage REIT.  EPS increased from $1.09 to an estimated $1.43 over the past 5 quarters indicating an improving growth rate. Analyst forecasts have recently been raised.  Company recently reported better than expected results.

Screening Criteria:
Dividend Yield Greater than or Equal to 5.00%; EPS Growth (Proj this Yr vs. Last Yr) – Greater than or Equal to 10.00%; P/E (This Year’s Estimate)Less than or Equal to 20.0; Cash Flow Growth Rate (TTM vs. Prior TTM) Greater than or Equal to 0.06%; Interest Coverage (Most Recent Qtr) Greater than or Equal to 3.0x; Security Price Greater than or Equal to $5.00.

 

Click to enlarge

Monthly Dividend Stocks Beating the S&P 500

Comparison of monthly dividend stocks and ETFs to the S&P 500

Click to enlarge

While dividend income is the hot item these days as the yield on fixed income investments is lower than income investors are seeking.  However, you do not want to give up some total return just to lock in a dividend.  The yield on the S&P 500 is only 2% and the price return has been 1% over the last year.  This creates a total return of 3% on the S&P 500. You should use this as the baseline for your income investments.  You can easily find monthly dividend stocks and ETFs that can beat the S&P 500 to make you even more money than just the monthly dividend.

Here are three monthly dividend stocks that have beaten the S&P 500 over the past year: (1) CRT, (2) MAIN and (3) UTG. The chart above shows the stock price returns compared to the S&P 500 over the past year.

Cross Timber Royalty Trust (CRT) is currently trading at $46.50. It has a 1-year price return of 24.05% compared to 1% for the S&P 500. CRT has a current dividend yield of 6.43% paid as a monthly dividend. CRT has a total return (1-year price return and dividend yield) of 30.48%. This is 8 times more profitable than the S&P 500. This is clear evidence that monthly dividend stocks can provide significant income investment returns beating the S&P 500.

CRT Company Profile: Cross Timbers Royalty Trust (Trust) is an express trust. The Trust is a widely held fixed investment trust (WHFIT). The Company entered into Cross Timbers Royalty Trust Indenture between predecessors of XTO Energy Inc. (XTO Energy), as grantors, and NCNB Texas National Bank, as trustee. As of December 31, 2010, Bank of America, N.A. is the trustee of the trust. Approximately 20 of the underlying royalty interests in the San Juan Basin burden working interests in properties operated by XTO Energy. XTO Energy also operates the Penwell Unit, which is the properties underlying the Texas 75% net profits interests and ExxonMobil operates the Hewitt Unit, which is the properties underlying the Oklahoma 75% net profits interests. Other than these properties, XTO Energy and ExxonMobil do not operate or control any of the underlying properties or related working interests.

Main Street Capital (MAIN) is currently trading at $17.50. MAIN has a 1-year price return of 13.77% compared to 1% for the S&P 500. MAIN has a current dividend yield of 8.64% paid as a monthly dividend. MAIN has a total return (1-year price return and dividend yield) of 22.41%. This is 7.5 times more profitable than the S&P 500. Again, this is another monthly dividend stock significantly beating the S&P 500.

MAIN Company Profile: Main Street Capital Corporation (MSCC) is a principal investment firm focused on providing customized financing solutions to lower middle-market companies with annual revenues between $10 million and $100 million. The Company was formed for the purpose of acquiring 100% of the equity interests of Main Street Mezzanine Fund, LP (MSMF) and its general partner, Main Street Mezzanine Management, LLC (MSMF GP); acquiring 100% of the equity interests of Main Street Capital Partners, LLC (the Investment Manager); raising capital in an initial public offering (IPO), which was completed in October 2007, and thereafter operating as an internally managed business development company (BDC). MSMF is licensed as a Small Business Investment Company (SBIC) by the United States Small Business Administration (SBA) and the Investment Manager acts as MSMF’s manager and investment adviser. The Company invests primarily in secured debt instruments, equity investments, warrants and other securities.

Reaves Utility Income Fund (UTG) is currently trading at $25.08. UTG has a 1-year price return of 14.09% compared to 1% for the S&P 500. UTG has a current dividend yield of 6.0% paid as a monthly dividend. UTG has a total return (1-year price return and dividend yield) of 20.09%. This is 6.7 times more profitable than the S&P 500. Again, this is another monthly dividend stock significantly beating the S&P 500.

UTG Company Profile: Reaves Utility Income Fund (the Fund) is a non-diversified closed-end investment Company. The Find’s investment objective is to provide a high level of after-tax income and total return consisting primarily of tax-advantaged dividend income and capital appreciation. The Fund may invest a portion of its assets in foreign securities. In the event that the Fund executes a foreign security transaction, the Fund will enter into a forward foreign currency contract to settle the foreign security transaction. It focuses to invest at least 80% of its total assets in dividend-paying common and preferred stocks and debt instruments of companies within the utility industry. The remaining 20% of its assets may be invested in other securities, including stocks, money market instruments and debt instruments, as well as certain derivative instruments in the utility industry or other industries.

Monthly Income from Main Street Capital

Main Street Capital (MAIN) is a business development company that pays a monthly dividend.  It currently has a dividend yield of 8.52% by paying a $0.13 dividend per month.  MAIN has a market cap of $350 million.  There is room for significant growth as MAIN offers more financing to companys between $10-100 million.  The ROE is 20.7% for this stock.

MAIN just completed a successful common stock offering with net proceeds of $70.5 million.  This money will be used to repay outstanding debt borrowed under its $100 million credit facility, to make investments in accordance with its investment objective and strategies, to make investments in marketable securities and idle funds investments, which may include investments in intermediate term bank debt, rated debt securities and other income producing investments, to pay operating expenses and other cash obligations and for general corporate purposes.

MAIN has a trailing PE of 7.63 which is cheap for a monthly dividend with a small capitalization.  MAIN’s PE ratio is among the lowest of any stock in the Investment Services industry and signals that investors have not been willing to pay a premium for this company’s business prospects. Additionally, during the past year, earnings growth has outpaced its historical five year growth rate.

MAIN business summary:

Main Street Capital Corporation (MSCC) is a principal investment firm focused on providing customized financing solutions to lower middle-market companies with annual revenues between $10 million and $100 million. The Company was formed for the purpose of acquiring 100% of the equity interests of Main Street Mezzanine Fund, LP (MSMF) and its general partner, Main Street Mezzanine Management, LLC (MSMF GP); acquiring 100% of the equity interests of Main Street Capital Partners, LLC (the Investment Manager); raising capital in an initial public offering (IPO), which was completed in October 2007, and thereafter operating as an internally managed business development company (BDC). MSMF is licensed as a Small Business Investment Company (SBIC) by the United States Small Business Administration (SBA) and the Investment Manager acts as MSMF’s manager and investment adviser. The Company invests primarily in secured debt instruments, equity investments, warrants and other securities.

On 3/10/2011, MAIN reported 4th quarter 2010 earnings of $0.19 per share. This result missed the $0.27 consensus expectations of the 4 analysts following the company and missed last year’s 4th quarter results by 17.39%.  The next earnings announcement is expected on 05/02/2011.  However, Q1 2011 earnings are expected to $0.34 per share.  For the year, earnings are expected to be above the dividend payout which lessens the chance of a dividend cut.  MAIN has a 5-year sales growth rate of 37%

Let Business Development Companies Pay You Monthly Dividends

This is the third in the investing for monthly income series: get paid by business development companies.

A business development company (BDC) is a publicly traded company that lends money to private companies.  BDCs must pay out 90% of their income to avoid paying taxes.  Therefore, BDCs pay out nearly all of their income to investors.

BDCs invest in companies that are private and do not have access to capital from the public stock exchanges.  Generally, BDCs make a loan to a private company that carries a significant interest rates i.e., 10-15% and an option to own shares of the company.  The BDCs are borrowing money at a fixed-rate of 3-4%.  This is a great business model to borrow at 3-4% and loan at 10-15%.  The difference minus expenses being income paid to the BDCs investors.

BDCs operate like a bank making loans to private companies.  To protect themselves, many BDC loans have a floating rate that will adjust if interest rates rise.  BDCs also are very adapt at managing the risk of each company they loan money to by judging the financial health of each prospective partner.  This decreases the risk of loan default by the private company.  Many BDCs make first lien loans that are similar to a mortgage.  If something goes wrong with the loan, the BDC gets the house.

The BDC model is so stable that many private equity firms will loan money to the BDCs to make returns for their high net worth clients.  Let’s look at a  small-cap BDC.

Main Street Capital (MAIN) is a small BDC with a market cap of $370 million. Main Street’s lower middle market investments are made to support management buyouts, recapitalizations, growth financings and acquisitions of companies that operate in diverse industry sectors and generally have annual revenues ranging from $10 million to $100 million.  Main Street seeks to partner with entrepreneurs, business owners and management teams and generally provides “one stop” financing alternatives within its lower middle market portfolio. Main Street also maintains a portfolio of privately placed secured, interest-bearing debt investments in middle market businesses that are generally larger in size than its lower middle market portfolio companies.

MAIN had a net profit margin of 91% and income of $30 million in 2010.  MAIN continues to grow new investments in new private companies.  The share price has increased from $14 in January 2010 to above $19 today. The yield was 11.14% in January 2010 but has decreased to 7.7% due to the share price increase.  Main pays a monthly dividend of $0.13 per share.  MAIN will continue to grow investment income as more private equity firms invest their capital in MAIN.

The next part of this series will discuss royalty trusts.

Subscribe for FREE Trades

Subscribe for FREE Trades

* indicates required
/ ( mm / dd )
Archives