PTMN - Rose's Income Garden: 13 High Yield Financial Sector Investments

Summary

• Rose’s Income Garden/ RIG’s financial sector holds 9 BDCs, a bank, ETF, mREIT and mREIT preferred which are listed with current price, yearly dividend, and some analyst price targets.
• RIG value with dividends is just barely green by 0.7% while outperforming the S&P 500/SPY by ~16.4% year to date “YTD”.
• RIG has a 5.5% dividend yield compared to SPY at 1.7%.
• High yield investing with BDCs guarantee a roller coaster ride that should be expected and respected.

RIG Financial Sector Stocks - 13

RIG has a 9% value in financials which is close to the 11% suggested by most analysts. The income provided currently is 15.8% from the 13 stocks owned and confirms that a little goes a long way for income. The chart below with individual stocks reveals amazing yields; with the 9 BDCs listed first. The following abbreviations are used:

Current Price $: Price on Monday, Oct 17th.

2022 Yearly Div $: Known yearly dividend with any extra special payments included.

Est Div Yield = dividend yield using shown price and dividend.

RC/ Ready Capital is the only pure mREIT with RITM-B (RITM.PB) being an mREIT preferred.

ARDC is the only ETF, pays monthly as do PFLT and SLRC.

Valuations

The statistics are somewhat different from common stock metrics and are used in the chart below. I have only basic skills and am not an expert analyst, I therefore must search and look for these basic statistics, such as book value to guide many of my buy and sell decisions. The Macro Teller/ Fortune Teller has been a major source of information over the years and the reason I own most of what I do. I must reveal some of the more recent buys were solo picks from authors that I still follow and read, as they specialize in BDCs or mREITs.

There were no statistics available for the fund and preferred shares and those spots have been left blank. The only statistic found for the fund, ARDC, was an undervaluation which is listed.

The current price and analyst estimates are in the chart below along with 52 week High and Low prices along with the following abbreviations.

$ M* FV = Morningstar fair value

BUY 5* M* = The low cheap 5 star buy price suggested by M* and are in bold for those that have hit that price.

M* Price/ Book = value compared to price.

M* Price Discount = M* price/ book valuation discount.

Yahoo Fin $ = Yahoo Finance analyst price target for 1 year out

All are selling at a discount to book value at noted in that column, so please take note these are interesting investments. Time will tell if they trade lower.

All of the current valuations are below the Yahoo Finance analysts price targets as shown in the last column. It still remains very important to do your own due diligence and use these ideas as a foundation to start a BDC investing adventure. I am including some very simple individual information below.

Individual Information

The first 9 mentioned are all BDCs. It is not unusual for these not to have credit ratings and generally not much more than BBB-, such as the first one listed here, which is also the largest BDC holding in RIG.

1 - Ares Capital

Ares is a top name in asset management as a loan provider that is headquartered in Los Angeles, CA. It is one of very few that have a credit rating.

- BBB- S&P credit rating

- 8.9 billion market cap

- current dividend was raised by 1c from 42c to 43c for the quarter. It also has given out a 3c special dividend each quarter that will bring the next payment to 46c in December.

- It sells now at a 25% discount to normal per M* as shown in the chart.

2 - Carlyle Secured Lending

CGBD is an asset management provider, but quite a bit smaller than Ares and many others.

-headquartered in NY, NY, it has ~620 million in capital assets.

- The regular dividend was just raised from 32 to 34c. It also pays a special dividend and the last payment was an additional 6c.

- Selling at a 19% discount to normal valuation per M*.

3 - New Mountain Finance

NMFC is an asset management provider

-headquartered in NY, NY, it has ~1.18 billion in capital assets.

- The dividend was cut in 2020 to where it remains today at 30c per quarter.

4 - FS KKR Capital

FSK is an asset management provider that got new management in 2020 which provided a 1:4 reverse split. It has seen some tough times and is somewhat of a huge high roller coaster ride for price. It does appear to have been through the worst, I hope, so it can be considered somewhat risky.

-headquartered in Philadelphia, PA. it has ~5.1 billion in capital assets.

- The dividend has remained stable at 60c per quarter with it paying variable special dividends this past year to total 20c more.

5 - Blackstone TCP

TCPC is an asset management provider.

-headquartered in Santa Monica, CA. it has ~647 million in capital assets.

- The dividend was cut in 2020 to where it remains today at 30c per quarter.

6 - PennantPark Floating Rate

PFLT is an asset manager headquartered in Miami, FL.

-467 million in capital assets

- It pays monthly and the payment of 9.5c has not varied from 2016 when it was raised slightly.

7 - PennantPark Investment Corp.

PNNT is an asset manager headquartered in Miami, FL and yes, is the same one as for PFLT.

-368 million in capital assets

- The dividend has been raised slowly by 1/2c per quarter so far this year and sits now at 15c per quarter.

8 - Portman Ridge Finance Corp.

PTMN is an asset manager headquartered in NY, NY.

- ~192 million in capital assets.

- Dividend remains solid thus far at 63c per quarter.

9 - SLR Investment Corp.

SLRC is an asset manager headquartered in NY, NY.

- ~718 million in capital assets.

- The dividend started 2022 as quarterly but converted to 13.67c monthly in the second quarter. The total per year remains at $1.64 since 2018.

Bank

New York Community Bancorp

NYCB is a thrift and mortgage banker headquartered in Hicksville, NY.

- 3.98 billion in capital assets.

- BB+ S&P credit rating

Future earnings now look somewhat flat, but still close to 2021 on average with the dividend probably continuing at 68c where it has been since 2016 when it was cut from $1.

mREIT

Ready Capital Corp.

RC is a commercial mortgage REIT headquartered in NY, NY.

- 1.61 Billion in capital assets

- Dividend was raised 2c from 2021 and probably won't move up much more in 2023.

Ares Dynamic Credit Allocation Fund

Closed end fixed income mutual fund headquartered in Los Angeles, CA.

- 264 million in capital assets

The dividend is paid monthly and was just raised 1/2c from 0.975 to $1.025 which equates to $1.23 per year.

Rithm Capital Corp- preferred shares D

Rithm Capital, a hybrid mortgage REIT is headquartered in NY, NY.

It most recently changed its name from New Residential Inv Co. "NRZ".

-The parent company has a B credit rating.

- 3.4billion in capital assets.

The preferred shares pay 43.75c per quarter on the 15th in the months of February, May, August and November = $1.75 per year. The call date is November 2026, but has a possible extension clause based on the treasury rate.

Summary/ Conclusion

Caution advised with buying any of these. Prices can still go lower just like anything else within this current economy and volatile market.

The portfolio value continues to hold near even value on the more recent up days with a 5.5% income yield with holding 11.5% cash.

RIG is found listed and remains exclusive at The Macro Trading Factory where there are 2 major portfolios offered.

- FMP is funds only and exclusively managed by The Macro Teller with that portfolio out performing SPY by 23.6%, the value green at 2.68% and holding 60% cash.

- RIG, is as mentioned, is primarily stocks and managed by RoseNose.

RIG does contain and I still continue to look for quality low debt/high credit rated companies and offers a "WTB" / want to buy list of Non-RIG stocks for subscribers to follow. I also provide buy under prices and a deep value buy price for all stocks in RIG itself. The volatility and uncertainty of the current market, inflation, The Fed interest rate increases, housing market, and midterm elections keeps cash in the portfolio for now. The end of 2022 and into 2023 should offer better opportunities and a better outlook for the what and where to invest.

Happy Investing!

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