Alternative Income Cheapies
Before moving on to fresh topics and kicking over rocks in the corners of the market, I want to address one more market segment where I have found a few stocks to buy. The alternative-income, high-yield stocks have long been a favorite of mine.
I have found that a collection of higher-yielding, traditional real estate investment trusts, mortgage-backed REITs, commercial real estate finance companies and business development companies have delivered outstanding long-term returns. The caveat is that I would move even slower and stay smaller than usual with these securities.
The alternative-income stocks usually provide plenty of bumps and bounces that allow me to add to my positions at lower prices. There will be stock offerings that depress the price and dividend cuts and changes that move the stock prices around quite a bit.
As I wrote in a recent piece on income investing, the idea here is not to have a concentrated portfolio but to buy a lot of them and add a little when they are cheaper. It is also important only to buy these when they trade below net asset value.
This article originally appeared on March 15, 2013 on RealMoney. To read more content like this + see inside Jim Cramer's $3 Million portfolio for FREE Click Here NOW.
Most of these have rallied so far this year and pickings are a little slim. If I were putting a new portfolio together today, I would start with Annaly Capital
The Federal Reserve's mortgage buying and low-rate policy limits new opportunities for the mortgage REITs, but this M-REIT has done a good job of negotiating differing environments and I see no reason this time will be different. Again, I would not be a pig here, but just buy a little with the idea of adding lower.
I would buy a little ARMOUR Residential