Oct 25 2015

My Latest Buys: RSO, AWP

With September’s projected average monthly dividend income barely advancing due to NCV’s dividend cut and then compensating for it by buying more EHI, I needed to boost my dividend income a bit if dividend income were to continue to grow. I bought 50 more shares of RSO (at $12.40/share) for the following three reasons:

1. A kick-ass yield (20.6%!!) which would give my dividend income the needed boost.
2. At $12.40 per share, RSO was still bargain priced, well below its 52-week average.
3. With a weight of 3.39%, I still had some room to further invest in RSO. Buying 50 more shares pushed its weight to 4.99%.

When I first bought RSO, I said I would limit its weight to about 3% because I deemed it rather risky. But 5-6% is my general rule of thumb for weight limiting a position, so this buy of 50 RSO shares brings its weight up to 4.99%. That’s enough, so I truly am done buying RSO.

Alpine Global Premier Properties Fund (NYSE:AWP)is an interesting stock that I recently discovered. It’s a closed-end fund specializing in international REITs. I only bought 70 shares at $5.94 per share because that’s all I could afford after buying RSO. I certainly plan to buy more AWP stock when I have more capital available. So what makes me think AWP is a good investment? Well, let’s look at its positives and negatives:

Dividend Yield. With a taxable dividend yield of 10%, AWP’s yield is where I generally aim for a balanced risk/reward point. Looking at its dividend payout history, it has maintained its current 5 cents per share dividend starting in 2011 and that was increased from 3 cents per share from 2009 to 2011. It has a history of stability and occasional dividend increases, so hopefully at some point in the future the dividend will be increased.
Discount. According to CEFConnect, it’s current price is discounted at 17% below NAV. It’s on sale! I always try to buy stocks that are below their 52-week average, so AWP should be a good buy at this price.
Low leverage. Unlike most of my ETF/CEF positions which are usually leveraged from 20-30%, AWP has an effective leverage of 2.15%. Given its high dividend yield, that’s astoundingly low and quite unusual.

Not old. AWP inception was in 2007, so it’s still a fairly young stock. I feel more confident in a stock that has made it through at least three recessions, which proves that it has resilience and competent management at the helm.

With these two buys, my projected average monthly dividend increases to $644.38. Yeah!

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