Global Yields Worth Holding

Source: Adrian Day for The Gold Report 04/19/2017

Money manager Adrian Day reviews some of the companies in his portfolio, including some global companies with yields up to 7.5%.

Loews Corp. (L:NYSE, 46.09) has finally made a long-awaited new acquisition, spending $1.2 billion of its $5 billion cash hoard to buy Consolidated Container Company, a plastic packaging manufacturer. If not exactly exciting, the company meets Loews’ acquisition criteria as set out by CEO James Tisch: it is in a fragmented industry offering opportunities for further acquisitions, it has strong cash flows and is unlikely to be subject to major technological disruption. The acquisition also diversifies Loews’ portfolio into a relatively stable area to help offset the volatile oil and gas sectors.

Loews, trading at a 14% discount to its Net Asset Value, with upside potential from its oil and gas as well as more steady cash flows from its hotels and insurance units, and a still rock-solid balance sheet, remains a long-term holding. Given the discount is well below historical average, we would look for a wider NAV discount to step up buying.

High yields from around the world
Hutchison Port Holdings Trust (HPHT:Singapore), US$0.40) reported a 15% decline in profits on a 6% decline in throughput for 2016, in line with expectations. But the company lowered dividend guidance for this year, for an implied yield of 7.5%.

The trust is under pressure from macro issues, including shipping alliance rationalization leading to pricing pressures, sluggish global trade and pressures on the Hong Kong port, as well as the trust’s debt repayment plans.

However, given the outlook for steady revenues and dividends over the next few years as well …read more

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