From Carla Pasternak at Street Authority...
A Beaten-Up Industry Poised for a Huge Comeback
I grew up in New York City, not far from the waterfront. As a special treat, my father would take me to the piers off Atlantic Avenue in downtown Brooklyn.
There we would stand and watch with amazement as forklifts unloaded heavy packages of cement and grains from gigantic ships that had just arrived from faraway places.
This was my first contact with the shipping industry, and little did I know how big an impact shipping would have on the world -- and my income investing.
Today, marine shipping is responsible for transporting an estimated 90% of world trade. And while shipping is an ancient form of transportation, it's being used more and more as world markets open up.
During the past 40 years, total shipping has grown four-fold -- from just more than 8,000 billion metric-ton miles in 1968 to an estimated 32,000 billion metric ton-miles in 2008, according to Fearnleys Review.
And in the economic downturn of the past two years, demand for shipping -- and the dividends paid by many shipping companies -- fell sharply. But now the industry has started to turn around, providing an early entry point for select high-yield shipping stocks.
Specifically, freight rates, an indicator of the health of the shipping industry, have recovered from record lows for shippers of all stripes. Consider the following:
The Baltic Dirty Tanker Index (BDTI), which tracks freight rates for crude oil transport on 12 routes, has nearly doubled from its September 2009 lows.
The Baltic Dry Index (BDI), which measures freight rates for dry bulk cargo like coal and iron, has been volatile. But it's still up almost +30% off the September lows
The Drewry Global Freight Rate Index for container ships, which carry consumer goods, has climbed +24% between July and November 2009, a trend of rising prices for the first time since mid-2008
So what do all these indices have to do with shipping stocks? The rates a shipper receives vary widely with the vessel size, routes, and contract terms, but higher freight rates generally translate to fatter profits.
Consider Bermuda-based Knightsbridge Tankers (Nasdaq: VLCCF). The shipper earned an average $36,900 per day for its oil supertankers and $44,300 per day for its dry bulk carriers in the fourth quarter of last year.
That's up from $32,900 per day for the tankers and $39,200 per day for the dry bulk carriers in the prior quarter. Meanwhile, break-even for these vessels is $19,300 per day for the tankers and $16,900 per day for the dry bulk carriers, providing the shipper with a tidy profit that more often than not is distributed in the form of a high yield.
Volatile? Absolutely.
With a global rebound in the works and strong demand from China, the shipping industry's outlook is optimistic -- shipping consultant Drewry forecasts a +3.4% increase in global container traffic this year versus rates from 2009. That will push up average container freight rates about +15%, Drewry says. But no matter how optimistic the forecasts, investors need to tread carefully in this sector. Shipping rates and stocks are nothing if not volatile.
For example, Capesize dry bulk vessels commanded an all-time high of $233,988 per day in June 2008, only to fall to a decade-low of $2,316 per day six months later.
Changing rates can lead to wild swings in the shares and dividends of some shippers. The problem is that some companies seek to maximize earnings by leasing out fleets under short-term charters at spot market rates. If rates rise, earnings -- and dividends -- rise in tandem, but the reverse is also true.
Steady the Ship and Your Portfolio
For investors seeking a steadier income stream, shippers with longer-term leases -- such as Navios Maritime (NYSE: NMM) -- are the way to go. Their vessels are leased out under long-term, fixed-rate contracts that provide stable cash flow and dividends despite fluctuations in the short-term spot market.
One final note: It's also important to check out the balance sheet of a shipper before you invest. Since many of them pay out most of their free cash flow as dividends, they often go to the capital markets to finance growth. New ship purchases and acquisitions can cost millions of dollars. As such, shippers tend to bear heavy debt loads, but some have more cash flow than others to cover their debt and dividends, while also financing growth.
This is one of the reasons many shippers saw their shares tumble in the financial crisis. Of course, with a rebound in both the global economy and shipping rates, now looks like an opportune time to pick up stable shippers at reasonable prices.
-- Carla Pasternak
Chief Investment Strategist
High Yield International
________________________________________
P.S. -- Shippers are great for income investors, but you do have to be choosy about what you buy. That's why I covered the industry in my March issue of High-Yield International -- bringing to light two of my favorite plays (yielding as high as 8.4%). Follow this link to subscribe and read my latest issue...
March 23, 2010
March 22, 2010
March 7, 2010
Daily Income for Life Trading Strategy
To do anything successfully in life, you need a plan. With the goal of creating Daily Income for Life, a plan is really, really important!
The Daily Income for Life Plan is a simple two step process:
Step 1: Grow Capital: Agressively Trade Small Cap stocks for fast capital Gain
We'll focus on finding stocks that have 200% growth potential, or a clear 2- 4 week swing trade or short term trade opportunity identyable with freely available internet charting and technical analysis. We won't day trade as it requires too much real-time attention to the market.
Step 2: Invest for Income and Reinvest that Income: Convert the short terms gains into investments that pay regular income. This could be dividend stocks, REITS, ETFs and Royalty Trusts that pay high dividends. Scour the market for income paying investments. Real Estate Trusts, Dividend ETFs, Oil and Gas Royalty trusts, Shipping companies, utilities and railways, Mortgage and investment trusts. Between 10% and 20% p/a returns are the goal. Reinvest all the dividends to utilize the power of compounding.
Rules for Selecting Daily Income for Life investments
1. Dividends beat growth
2. Reinvesting dividends beats cashing them
3. Higher yeilds beat lower yeilds
4. Small cap beats large caps
5. International beats domestic
6. Emerging markets beats developed
7. Tax-advantaged beats taxable
8. Monthly payments beat annual payments
Rules for Trading to Accumulate Capital
1. Swing trade off clear support levels
2. Use trailing stops to lock in profits
3. Seek out volatility
3. Take small profits and reinvest them into dividend payers to multiply them over time.
4. 10% in two weeks is a great trade! The are 10% gainers happening everywhere in the market.
The Daily Income for Life Plan is a simple two step process:
Step 1: Grow Capital: Agressively Trade Small Cap stocks for fast capital Gain
We'll focus on finding stocks that have 200% growth potential, or a clear 2- 4 week swing trade or short term trade opportunity identyable with freely available internet charting and technical analysis. We won't day trade as it requires too much real-time attention to the market.
Step 2: Invest for Income and Reinvest that Income: Convert the short terms gains into investments that pay regular income. This could be dividend stocks, REITS, ETFs and Royalty Trusts that pay high dividends. Scour the market for income paying investments. Real Estate Trusts, Dividend ETFs, Oil and Gas Royalty trusts, Shipping companies, utilities and railways, Mortgage and investment trusts. Between 10% and 20% p/a returns are the goal. Reinvest all the dividends to utilize the power of compounding.
Rules for Selecting Daily Income for Life investments
1. Dividends beat growth
2. Reinvesting dividends beats cashing them
3. Higher yeilds beat lower yeilds
4. Small cap beats large caps
5. International beats domestic
6. Emerging markets beats developed
7. Tax-advantaged beats taxable
8. Monthly payments beat annual payments
Rules for Trading to Accumulate Capital
1. Swing trade off clear support levels
2. Use trailing stops to lock in profits
3. Seek out volatility
3. Take small profits and reinvest them into dividend payers to multiply them over time.
4. 10% in two weeks is a great trade! The are 10% gainers happening everywhere in the market.
Top 10 Energy stocks with highest dividend yields for the last 12 months.
BP Prudhoe Bay Royalty Trust (NYSE:BPT) has the 1st highest dividend yield in this segment of the market. Its current dividend yield is 16.26%. Its dividend payout ratio was 100.00% for the last 12 months.
BPT This one is in my portfolio of dividend income payers- currently running at 32% profit over three months since purchased in December..
Encore Energy Partners LP (NYSE:ENP) has the 2nd highest dividend yield in this segment of the market. Its current dividend yield is 10.71%. Its dividend payout ratio was 90.46% for the last 12 months.
EV Energy Partners, L.P. (NASDAQ:EVEP) has the 3rd highest dividend yield in this segment of the market. Its current dividend yield is 10.03%. Its dividend payout ratio was 50.71% for the last 12 months.
MV Oil Trust (NYSE:MVO) has the 4th highest dividend yield in this segment of the market. Its current dividend yield is 9.85%. Its dividend payout ratio was 96.40% for the last 12 months. Legacy Reserves LP (NASDAQ:LGCY) has the 5th highest dividend yield in this segment of the market. Its current dividend yield is 9.79%. Its dividend payout ratio was 87.27% for the last 12 months.
Copano Energy, L.L.C. (NASDAQ:CPNO) has the 6th highest dividend yield in this segment of the market. Its current dividend yield is 9.76%. Its dividend payout ratio was 487.03% for the last 12 months.
Martin Midstream Partners L.P. (NASDAQ:MMLP) has the 7th highest dividend yield in this segment of the market. Its current dividend yield is 9.48%. Its dividend payout ratio was 142.90% for the last 12 months.
Calumet Specialty Products Partners, L.P (NASDAQ:CLMT) has the 8th highest dividend yield in this segment of the market. Its current dividend yield is 9.48%. Its dividend payout ratio was 97.76% for the last 12 months.
Linn Energy, LLC (NASDAQ:LINE) has the 9th highest dividend yield in this segment of the market. Its current dividend yield is 9.47%. Its dividend payout ratio was 44.74% for the last 12 months.
Enerplus Resources Fund (USA) (NYSE:ERF) has the 10th highest dividend yield in this segment of the market. Its current dividend yield is 9.26%. Its dividend payout ratio was 159.36% for the last 12 months.
From China Analyst Feb 10 2010
BPT This one is in my portfolio of dividend income payers- currently running at 32% profit over three months since purchased in December..
Encore Energy Partners LP (NYSE:ENP) has the 2nd highest dividend yield in this segment of the market. Its current dividend yield is 10.71%. Its dividend payout ratio was 90.46% for the last 12 months.
EV Energy Partners, L.P. (NASDAQ:EVEP) has the 3rd highest dividend yield in this segment of the market. Its current dividend yield is 10.03%. Its dividend payout ratio was 50.71% for the last 12 months.
MV Oil Trust (NYSE:MVO) has the 4th highest dividend yield in this segment of the market. Its current dividend yield is 9.85%. Its dividend payout ratio was 96.40% for the last 12 months. Legacy Reserves LP (NASDAQ:LGCY) has the 5th highest dividend yield in this segment of the market. Its current dividend yield is 9.79%. Its dividend payout ratio was 87.27% for the last 12 months.
Copano Energy, L.L.C. (NASDAQ:CPNO) has the 6th highest dividend yield in this segment of the market. Its current dividend yield is 9.76%. Its dividend payout ratio was 487.03% for the last 12 months.
Martin Midstream Partners L.P. (NASDAQ:MMLP) has the 7th highest dividend yield in this segment of the market. Its current dividend yield is 9.48%. Its dividend payout ratio was 142.90% for the last 12 months.
Calumet Specialty Products Partners, L.P (NASDAQ:CLMT) has the 8th highest dividend yield in this segment of the market. Its current dividend yield is 9.48%. Its dividend payout ratio was 97.76% for the last 12 months.
Linn Energy, LLC (NASDAQ:LINE) has the 9th highest dividend yield in this segment of the market. Its current dividend yield is 9.47%. Its dividend payout ratio was 44.74% for the last 12 months.
Enerplus Resources Fund (USA) (NYSE:ERF) has the 10th highest dividend yield in this segment of the market. Its current dividend yield is 9.26%. Its dividend payout ratio was 159.36% for the last 12 months.
From China Analyst Feb 10 2010
March 5, 2010
Amy Calistri
Amy Calistri is an analyst with Street Authority that offers great tips and inspiration for investors wanting Daily Income for Life. Paid Services as well of course. But she also offers a great free newsletter.
Her latest stock pick which pays a monthly dividend is MAIN. Need to check it out, as it pays $0.125 a month on a stock for under $15.
Her latest stock pick which pays a monthly dividend is MAIN. Need to check it out, as it pays $0.125 a month on a stock for under $15.
Make your success easy
My wife, who is a business coach, told me about this success coach. I'm going to start using this technique to remove mental and emotional blockages to success.
www.makeyoursuccesseasy.com
As any trader knows, there is a lot of emotion associated with trading the stockmarket, or in money in general.
We need all the help we can get to deal with trades that don't work, companies that go bankrupt, and swings in the market that affect our mood from week to week.
www.makeyoursuccesseasy.com
As any trader knows, there is a lot of emotion associated with trading the stockmarket, or in money in general.
We need all the help we can get to deal with trades that don't work, companies that go bankrupt, and swings in the market that affect our mood from week to week.
Using Trailing stop to profit on HXL Swing Trade
HXL Entry - Feb 16 @ $10.70 Graph from Clearstation
On this trade, I set the trailing stop intially at 5%. This was based on an approximate calculation of 1.5 times the average daily trading range. You don't want the stop to take you out just because the daily range is large.
Once the trade showed some nice profit and I decided I would be happy to take the profit, I tightened the trailing stop to 4%.
HXL Exit - March 11 @ $13.50
I exited the trade at $13.50 on 3/11. 20% profit in under 4 weeks.
From the graph, you can see I should have stuck with the trailing stop rather than my preset 20% profit point, and let this run a little longer. It jumped another 5% after I exited on 3/11.
The lesson is, if you are in a good trade, let it run with the trading stop, rather than tagging profit. That decision was fear based and greed based. Greed: making a nice trade with a healthy return in under a month. Fear: Didn't want to lose the gain I already had, so closed out too early.
Once the trade showed some nice profit and I decided I would be happy to take the profit, I tightened the trailing stop to 4%.
HXL Exit - March 11 @ $13.50
I exited the trade at $13.50 on 3/11. 20% profit in under 4 weeks.
The lesson is, if you are in a good trade, let it run with the trading stop, rather than tagging profit. That decision was fear based and greed based. Greed: making a nice trade with a healthy return in under a month. Fear: Didn't want to lose the gain I already had, so closed out too early.
Visionzation
Purpose
Visionation – the combination of vision and imagination necessary to define a goal or opportunity that you are committed to deliberately create in your life
Process for creating success
1. Use visualisation / imagination / contemplation to feel into all aspects of the new goal or opportunity
2. Create a mindmap
3. Make a visionation list
4. Make a visionation collage
5. Run the Goal Creation Process
6. Take deliberate action to achieving your desired outcome
What Do I Want To Create
Getting too involved, committed, increasing risk too fast
This is a hard goal, but an incredibly worthwhile one for me on multiple levels
What Is Unknown
How long it could take to create daily income for life
Visionation – the combination of vision and imagination necessary to define a goal or opportunity that you are committed to deliberately create in your life
Process for creating success
1. Use visualisation / imagination / contemplation to feel into all aspects of the new goal or opportunity
2. Create a mindmap
3. Make a visionation list
4. Make a visionation collage
5. Run the Goal Creation Process
6. Take deliberate action to achieving your desired outcome
What Do I Want To Create
- Intelligence, inspiration and integrity = Independent Income
- A deliberate pathway to lifelong independent income
- An intellectual, emotional, and organisational challenge
- A portfolio of high dividend stocks that provide 'income every day of my life'
- Trading skill and knowledge to make money in any market, over any time period
- Trade anywhere, in any time-zone, on any PC with internet access
- Investment account based on 50% income, 25% active trading, 25% cash
- Trade automated strategies to create time-zone free execution
- Scalable, leveragable and expandable overall income strategy
- Contain the opportunity to generate 100K income within 5 yrs
- My Beliefs about money and business necessary to understand markets and trading
- My existing balance between my current job, home office, fitness and family
- Risking family financial security
- Risking cash flow commitments
- Big bright 20" monitor creating a futuristic virtual console for trading at home
- Online Trading Academy ‘Professional Trader’ education in 2010
Getting too involved, committed, increasing risk too fast
- Getting ripped off by unnecessary investment research products, ideas, research services or training
This is a hard goal, but an incredibly worthwhile one for me on multiple levels
- In various guises, I have had this goal since nearly 15 yrs but never really made progress
- Living in the USA makes it the perfect time to focus on this goal
What Is Unknown
How long it could take to create daily income for life
- If working from home in a solitary profession fits my need for social interaction
Daily Income for Life is Launched
Every wondered if someone else out just like you, is wondering how to get paid every day for the rest of your life?
If you are, then welcome to the Daily Income for Life blog.
This blog will let you join my quest to figure out how to generate a paycheck every day, for the rest of my life.
I'm going to do this by trading the stockmarket online in order to create capital to invest in dividend paying stocks, income trusts, royalty trusts and so on. Or at least, that's where this is going to start. This blog will be an online diary into how well this strategy works, what the theory is, and how successful I am. If it changes, and I find a better way to secure my financial future, I'll let you know about it.
Welcome, and lets get going.
If you are, then welcome to the Daily Income for Life blog.
This blog will let you join my quest to figure out how to generate a paycheck every day, for the rest of my life.
I'm going to do this by trading the stockmarket online in order to create capital to invest in dividend paying stocks, income trusts, royalty trusts and so on. Or at least, that's where this is going to start. This blog will be an online diary into how well this strategy works, what the theory is, and how successful I am. If it changes, and I find a better way to secure my financial future, I'll let you know about it.
Welcome, and lets get going.
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