The earnings thus far are fine, but these yields, devine
The contrarians and bears will point to the weakness of earnings being, top line weakness. Meaning, you can only cut so much in expenses. They use this logic when setting short positons and every day the market rallies and they are forced back in to cover . As I stated in the past, this recovery should initially be a jobless one. We have excess capacity in the system of at least 12-14%, (the US economy historically runs at 80% in normal times give or take), so that slack in the system must be soaked up before new additions to headcount begin meaningfully. In the interim, a mere stabilizing of the economy should boost productivity and can drop right to the bottom line. Boosting earnings significantly while allowing for multiple expansions can command much higher market valuations. That's my story and I'm sticking to it, until data prove me wrong that is.
Now for the yield. Yields remain attractive in many sectors of the market. One must find investments with good coverage, reasonable debt levels, access to the capital market and a defensible position. Obviously the banks did not fall into that category once they levered up and chucked any and all underwriting criteria. But, back to the idea, Senior Housing Properties-SNH. This company fits the pre-stated criteria, has a history of increasing dividends. Demographics are in it's favor and it has a very attractive 8.6% yield. So, if you want to invest for your future income or your future retirement community Senior Housing just might be good for you.
On a note of full disclosure, I may own or may look to own in the future shares of Senior Housing Properties. Please do you own due diligence before investing.
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