More Dividends And Diversification

As a followup to Saturday's post I wanted to outline some ideas for building a dividend tranche for a portfolio where someone might have different buckets within a portfolio. So high yielders might be one bucket, themes another, core another and so on. I could see where it might be easier for some people to think of their portfolio this way. Although not my preference it is perfectly reasonable. Anyone going down this road might want to own high yielders from various parts of the market to capture some business diversification or maybe cyclical diversification. The following are just examples, I don't own any of them for clients. First is Brookfield Infrastructure Partners (BIP). This is sort of an investment product as opposed to a company. It manages a portfolio of infrastructure assets and it turns the assets over. I wrote about this for theStreet.com a few years ago when it came out and while some of the assets are still the same several are new. The current yield is 5.4% but the company is committed to steadily increasing the payout. The major assets now include utilities assets in Australia, New Zealand, Canada and Chile. BIP also has timber assets in Canada, gas pipelines and storage all over the place and a hospital. The revenue stream seems like it will be reliable but like many of these types of things it carries a lot of debt. Next is AT&T (T). It currently yields 5.6% which is well covered. The market cap is enormous as you know, estimates for earnings look to grow 7% with revenue growing a little less. You already know the stock, more often than not it is boring, slow moving and high yielding--but not always. I've mentioned American Campus Communities (ACC) a few times over the years but have never owned it. It owns apartments near college campuses in 30 states and two Canadian provinces. It has a low beta, a fair bit of debt, the trailing yield is 3.95% and is well covered. The story is simple when compared to other types of apartment stocks which is that the elasticity of demand should be more favorable with college based rentals. Energy Transfer Partners (ETP) is one of the larger MLPs. You've heard of the name, the yield is 7.5% and the dividends have been very steady.123... Read more