Atlanta AAII Income
Investing Subgroup
Stan and Michael Herndon
October 27, 2011
Agenda
• Introductions
• Purpose of the Group
• Overview of Income Investing Opportunities
• Open Forum
• Ideas for future meetings
• Open discussion
2
Income Investing
Opportunities
• Stocks
• Preferred Stocks
• Income-focused Mutual Funds
• Income-focused Exchange Traded Funds (ETFs)
• Real Estate Investment Trusts (REITs)
• Business Development Companies (BDCs)
• Master Limited Partnerships (MLPs)
3
Stocks
• Units of ownership of a public corporation.
Owners are typically are entitled to vote on the
selection of directors and other important matters
as well as to receive dividend on their holdings. In
the event that a corporation is liquidated, the
claims of secured and unsecured creditors and
owners of bonds and preferred stock take
precedence over the claims of those who own
common stock. For the most part, however,
common stock has more potential for
appreciation.
4
Bank, Manufacturing and
Utility Stocks
Name of Company
Ticker Current Price/Sh Forward
Symbol Yield
are
P/E
Beta
Bank of America
BAC
0.61%
$6.59
6.36
2.18
JP Morgan Chase
JPM
2.93%
$34.18
6.78
1.20
Wells Fargo and Co.
WFC
1.86%
$25.76
7.82
1.35
Catepillar
CAT
2.01%
$91.57
10.14
1.78
Deere & Co.
DE
2.22%
$73.93
10.45
1.49
General Electric Co.
GE
3.67%
$16.35
10.30
1.63
The Southern Company
SO
4.38%
$43.78
15.97
0.33
Consolidated Edison, Inc.
ED
4.08%
$59.68
15.92
0.29
Dominion Resources, Inc.
D
3.85%
$52.20
15.70
0.55
All investments listed are merely examples; you should conduct your own research before investing.
5
Canadian Stocks
Name of Company
Suncor Energy, Inc.
Ticker Current Price/Sh Forward
Symbol Yield
are
P/E
Beta
SU
1.85%
$32.68
8.88
1.63
Encana, Corp.
ECA
3.82%
$21.70
26.84
0.92
Tailsman Energy, Inc.
TLM
1.45%
$14.36
10.00
1.47
10.09%
$10.54
n/a
n/a
Sentry Select Prime Mtls. SPMLF
Exchange Income Corp.
EIFZF
8.06%
$21.02
n/a
n/a
Prism Medical, Ltd.
PSDLF
6.38%
$4.94
n/a
n/a
All investments listed are merely examples; you should conduct your own research before investing.
6
Preferred Stocks
• Class of capital stock that pays dividends at a
specified rate and that has preference over
common stock in the payment of dividends and
the liquidation of assets. Preferred stock does not
ordinarily carry voting rights.
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Preferred Stocks
Name of Company
Ticker
Symbol
Current Price/Sh Forward
Yield
are
P/E
Beta
Alabama Power
ALP/PRP
5.20%
$25.90
n/a
0.11
Alcoa, Inc.
AA/PR
4.85%
$100.00
n/a
0.11
Anworth Mortgage
ANH/PRB
6.70%
$23.20
n/a
0.27
All investments listed are merely examples; you should conduct your own research before investing.
8
Income-Focused
Mutual Funds
• An investment vehicle that is made up of a pool of
funds collected from many investors for the
purpose of investing in securities such as stocks,
bonds, money market instruments and similar
assets. Mutual funds are operated by money
managers, who invest the fund's capital and
attempt to produce capital gains and income for
the fund's investors. Income-focused mutual funds
typically focus on high-dividend paying stocks, use
covered call strategies, or invest in bonds.
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Income-Focused
Mutual Funds
Name of Company
Ticker
Symbol
Current Price/Sh Forward
Yield
are
P/E
Alpine Total Dividend
AOD
1.11%
$4.90
n/a
1.17
Eton Vance Tax
Managed
ETV
11.50%
$11.86
n/a
0.61
Eton Vance Enhanced
EOS
0.80%
$10.44
n/a
n/a
Beta
All investments listed are merely examples; you should conduct your own research before investing.
10
Income-Focused Exchange
Traded Funds (ETFs)
• Exchange Traded Funds (ETFs) offer public
investors an undivided interest in a pool of
securities and other assets and thus are similar in
many ways to traditional mutual funds, except
that shares in an ETF can be bought and sold
throughout the day like stocks on a securities
exchange through a broker-dealer.
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Income-Focused Exchange
Traded Funds (ETFs)
Name of Company
Ticker
Symbol
Current Price/Sh Forward
Yield
are
P/E
Beta
S&P Dividend ETF
SDY
3.56%
$54.48
7.46
0.88
Power Shrs Div,
Achivers
PID
4.18%
$15.69
3.84
1.21
I Shrs Barclay Bond
AGG
3.23%
$109.00
23.92
0.03
All investments listed are merely examples; you should conduct your own research before investing.
12
Real Estate Investment
Trusts (REITs)
• Real Estate Investment Trusts (REITs) manage a
portfolio of real estate to earn profits for shareholders.
REITs can avoid taxation at the corporate level as long
as 95% of net earnings are distributed to shareholders
annually. Because REITs must distribute most of their
earnings, they tend to pay high yields. Mortgage REITs
loan money for mortgages to owners of real estate, or
purchase existing mortgages or mortgage-backed
securities. Their revenues are generated primarily by
the interest that they earn on the mortgage loans.
13
Real Estate Investment
Trusts (REITs)
Name of Company
Ticker
Symbol
Current Price/Sh Forward
Yield
are
P/E
Simon Property Group
SPG
2.60%
$128.01
17.81
1.74
Crexus Investment Co.
CXS
12.74%
$12.12
7.71
n/a
Armour Residential
ARR
18.40%
$7.09
5.79
n/a
Beta
Rio Can REIT
RIDCF
5.51%
$10.54
n/a
n/a
Crombie REIT
CROMF
6.79%
$21.02
n/a
n/a
Primaris REIT
PMZFF
5.97%
$4.94
n/a
n/a
Annaly Capital Mgt,
Inc.
NLY
14.50%
$16.63
6.62
0.18
CYS Investments
CYS
17.40%
$12.76
n/a
0.14
Cmiera Investment
Corp.
CIM
17.63%
$3.00
6.14
1.23
All investments listed are merely examples; you should conduct your own research before investing.
14
Business Development
Companies (BDCs)
• To qualify as a Business Development Company
(BDC), a company must be registered in
compliance with Section 54 of the Investment
Company Act of 1940. A major difference between
a BDC and a venture capital fund is that BDCs
allow smaller, non-accredited investors to invest
in startup companies. Some of the reasons why
BDCs have become popular is that they provide
permanent capital to their management, allow
investments by the general public and use
mezzanine financing opportunities.
15
Business Development
Companies (BDCs)
Name of Company
Ticker
Symbol
Current Price/Sh Forward
Yield
are
P/E
Beta
Apollo
AINV
14.16%
$8.38
8.40
1.80
Pennant Park
Investments
PNNT
10.35%
$10.50
8.71
1.69
ARES
ARCC
10.35%
$15.63
7.00
2.00
All investments listed are merely examples; you should conduct your own research before investing.
16
Master Limited Partnerships
(MLPs)
• A Master Limited Partnership (MLP) must derive
most (~90%) of its cash flows from real estate,
natural resources and commodities. The
advantage of an MLP is that it combines the tax
benefits of a limited partnership (the partnership
does not pay taxes from the profit – the money is
only taxed when unitholders receive
distributions) with the liquidity of a publically
traded company.
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Master Limited Partnerships
(MLPs)
Name of Company
Ticker
Symbol
Current Price/Sh Forward
Yield
are
P/E
Beta
Kinder Morgan
Energy
KMP
5.96%
$76.46
32.51
0.28
ONEOK, Inc.
OKS
2.34%
$50.49
20.35
0.32
NS
7.82%
$56.41
17.09
0.29
New Star Energy
All investments listed are merely examples; you should conduct your own research before investing.
18
References
• Seeking Alpha: http://www.seekingalpha.com
• Investopedia: http://www.investopedia.com
• Yahoo Finance: http://finance.yahoo.com
• Google Finance: http://www.google.com/finance
• Security Analysis. Benjamin Graham and David
Dodd.
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Ideas for Future
Meetings and Open
Forum
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