Ahhhhh, another dividend stock buy. Receiving dividend payouts is the best part of dividend investing, but the next best thing is buying more stocks to increase future dividend payouts (it’s as if I’m buying myself a pay raise!). So with money fron May’s dividend payouts and my matching contributions, I bought 50 additional shares of Brookfield Total Return Fund (HTR) at $23.10 per share. This will add $9.50 to my monthly dividend income, which lifts my projected average monthly dividend income up to $606.22. That isn’t enough to reach my 2015 goal of $625.00 per month (projected average), but it’s a strong step towards that goal.
This isn’t my first order for shares of HTR (that happened in January 2014). I thought it was a good buy then (even if the price was higher at the time), and it’s now an even better buy with the lower price and subsequent higher yield. This blog wasn’t around back when I made my last buy of HTR in May 2014, so I didn’t go over the positives and negatives for investing in HTR. Let’s do that right now:
Positives:
- Monthly payout. I like dividend stocks that pay out monthly instead of quarterly. Not only is it just plain nice to get a payout every month, it also smooths out my porfolio’s payout spikes caused by other portfolio stocks that pay quarterly.
- Yield. HTR’s dividend yield of over 9.8% is high, but not insanely high. HTR has maintained its 19 cents per share dividend since late 2008, so it has a good track record of keeping shareholders happy with consistent dividend payouts.
- Age. HTR has been around since its inception in July 1989, so it has experienced 2 recessions (early 1990s, early 2000s) and the Great Recession during its 26 year history. Having weathered these serious economic downturns, it’s clear that the fund has competent leadership that has guided HTR well through the good times and bad.
Negatives:
- Leverage. HTR has an effective leverage of 30.05%, which is rather high. A high leverage rate is a major reason why HTR has such a great (but not spectacular) dividend yield. The high leverage is certainly something to be concerned about, but hopefully it won’t prove to be a severe problem when the ineveitable market correction arrives.
I often look at the percentage of institutional investment as an indicator of how optimistic other investors are in a company or fund. With 21% of HTR’s stocks owned by institutional investors, it seems these investors are only lukewarm about HTC. Because the rate of institutional investors is so-so, this metric isn’t large or small enough to place in either of the Pro or Con camps.
Overall, I think HTR’s positives outweigh its negatives enough for me to own a total of 200 shares so far. As long as HTR maintains its dividend of 19 cents per share, HTR should be a good choice for future buys as well.
I havent seen this name thrown around much in the community. It sure has been pretty consistent since 2008 hasn’t it? I mean the stock has hovered around the $23-25 range and payed .19c per month since then.
Its too bad that it hasn’t increased it’s dividend at all in the past 7 years but its also hard to argue with a 9% or more consistent yield.
I’m going to dig into this one a bit more and add it to my watchlist. Thanks for the name!
Glad to be of help Adam, and thanks for dropping by. Yes, HTR has a pretty sweet yield right now. It may not be a growing dividend, but how many years would one have to hold a dividend growth stock to reach a 9% yield, assuming one started with a typical yield of 3 percent? It would take many years, that’s for sure. Being 48, I don’t have that kind of time.