Tuesday, October 6, 2015
Stocks
I just bought 1000 shares of Suburban Propane (SPH) and 2000 of Frontier Communications (FTR). The dividend yield on SPH is 10.23%. FTR is 8.61%. Hard to beat those returns, and both stocks are rising in value. Another way of looking at it is that the SPH dividends from my last purchase were already covering my annual Suburban Propane bill, and the FTR dividends were already paying my Frontier Telephone bill, and cellphone bill.
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I hope you are adequately diversified as both of these stocks seem a bit risky. It appears to me that the bonds in both cases are rated BB-/Ba3 which isn't terrible but is below investment grade. So both companies aren't as safe as they could be. Which one would expect from the high yields.
ReplyDeleteYup. This is a small part of my portfolio. Both companies are close to natural monooolies. Frontier serves mostly rural customers unlikely to attract competition and not terribly inclined to innovative approaches. Much of Suburban 's customer base have Suburban - owned tanks so they can't have someone else fill the tank.
DeleteA dominant market position is good. A dominant market position in a declining market is less good. Eastman Kodak is an extreme example of what can go wrong. But if you like the companies a small position is reasonable.
ReplyDeleteAgreed local phone service is a declining market. I would not hold these stocks for 40 years. I won't be around that long anyway.
ReplyDelete