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Where To Invest $100,000 Today

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Co-produced pinch Treading Softly.

Life presents america pinch plentifulness of unsocial opportunities.

You person your recurring income, which is much aliases little nan aforesaid each month. Your monthly expenses and manner will accommodate to immoderate that budget is. Then 1 day, you get a lump sum of money. There are various ways you mightiness travel into an unusually ample lump sum of cash. Maybe a suit settlement, an inheritance, a lottery win, aliases possibly you waste your house.

So if you abruptly had $10,000, $50,000, aliases moreover $100,000 go available, what would you do pinch it? Hopefully, you would see investing a ample information of it for your future. One of nan champion uses of a lump sum of rate is to put it to work, creating an income for you.

Fixed-income investments would be my first recommendation. Fixed income for illustration preferred securities, accepted bonds, and babe bonds each connection a dependable watercourse of income and use from being higher successful nan superior stack.

I particularly for illustration preferred securities from patient dividend-paying companies, arsenic nan communal dividend would person to beryllium eliminated earlier nan preferred dividend could beryllium suspended aliases not paid. This provides an easy measurement to spot if location is imaginable problem up for nan preferred income stream.

Furthermore, arsenic nan Federal Reserve has been hiking liking rates, galore preferred securities person fallen into discount to PAR territory. This intends you tin fastener successful a higher output than astatine PAR and bask superior gains erstwhile nan value climbs again.

When will that happen? When nan Federal Reserve starts cutting rates again.

Why does this happen? The only measurement to set nan disposable output of a fixed interest-paying finance is to alteration nan magnitude it trades hands for. So arsenic rates rise, investors request a higher output and are unwilling to salary afloat value for a little yield. This effect happens successful reverse erstwhile rates fall. The demanded output falls, allowing prices to emergence from nan ashes.

Today we will look astatine aggregate fantabulous fixed-income investments for semipermanent income.

Let's dive in!

Pick #1: CODI Preferred Stock - Yield +7%

Compass Diversified (CODI) is simply a mini-conglomerate that invests successful middle-market businesses pinch goals towards semipermanent prospects. CODI differs from backstage equity - nan superior allocation is much imperishable pinch a semipermanent worth enhancement focus. This allows nan institution to put crossed nan layers of people, processes, org culture, and maturation opportunities to thrust transformational change.

Today, CODI's marketplace headdress stands astatine $1.3 billion. Since its IPO successful 2006, nan institution has paid $1.2 cardinal successful distributions. This institution has been an fantabulous dividend steward and stellar performer successful value preservation and full returns.

ChartData by YCharts

Since its IPO, CODI has been progressive pinch M&A. Their business attack is three-fold. They strategically get companies, supply financial and guidance support, hand-hold them to unlock value, and past opportunistically divest to seizure important gains.

graphic

CODI

CODI's existent portfolio comprises nan pursuing names, acquired astatine various periods and economical conditions.

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CODI website

Most of these companies whitethorn beryllium unfamiliar to nan mean individual, but these are captious players successful niche markets. Source: CODI November 2022 Investor Presentation.

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CODI

If you person been to a catered event, you whitethorn retrieve seeing those portable burners underneath nan nutrient containers. The Sterno Group (acquired by CODI successful 2016) is simply a leader successful that space. This institution is simply a 100-year-old marque and a shaper and marketer of portable nutrient warming systems, imaginative indoor and outdoor lighting, and location fragrance solutions for nan nutrient work manufacture and user markets.

Note: Compass Diversified Holdings was antecedently treated arsenic a business for U.S. national income taxation purposes but elected, effective September 1, 2021, to beryllium taxed arsenic an relation taxable arsenic a corporation.

Investors will nary longer person a Schedule K-1 for taxation purposes.

During Q3, CODI reported a 22% summation successful revenues and a 16% higher operating income. The company's adjusted net for Q3 accrued 28% YoY to $46.0 million, and adjusted EBITDA was up 27% to $98.3 million.

Despite higher ostentation and proviso concatenation disruptions, nan institution reported grounds YoY capacity owed to nan competitory positioning of its subsidiary companies. Due to its divers markets, business, investment, and inventory cycles, CODI is well-positioned to outperform successful bully and bad times.

At nan extremity of Q3, CODI reported $61.3 cardinal successful rate and rate equivalents. 70% of its full outstanding indebtedness carries a blended fixed complaint of 5.2% pinch maturities astatine 2029 and beyond. The institution has nary important indebtedness maturities until 2027.

We for illustration CODI's time-tested business exemplary pinch value portfolio companies but we activity higher yields. CODI has 3 preferred securities that pique our interest: CODI.PA, CODI.PB, and CODI.PC.

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Author's Calculations

YTD, CODI paid $18 cardinal towards preferred dividends, $58 cardinal connected liking expenses, and $53 cardinal connected communal dividends. With coagulated execution and increasing EBITDA, nan preferred dividends are adequately covered.

With CODI, you person a dividend-paying mini-Berkshire Hathaway (BRK.A, BRK.B), and we for illustration its preferreds for higher yields and amended income safety. Up to 7.9% dependable output is up for grabs for nan diligent investor.

Pick #2: GNL Preferred Securities

Global Net Lease, 7.25% Series A Cumulative Redeemable Perpetual Preferred (GNL.PA) - Yield 7.6%

Global Net Lease, 6.875% Series B Cumulative Redeemable Perpetual Preferred (GNL.PB) - Yield 7.4%

Global Net Lease, Inc. (GNL) operates 310 properties successful nan U.S., Canada, and Europe, diversified crossed 141 tenants successful 51 industries. Source.

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GNL Investor Presentation - Nov. 2022

GNL is simply a triple-net-lease REIT (real property finance trust) wherever tenants return attraction of maintenance, taxes, and security expenses successful summation to paying rent. As of September 30, 2022, GNL reported a 98.6% portfolio occupancy, and 61% of nan REIT's portfolio annualized straight-line rent ("SLR") was derived from Investment-Grade tenants.

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GNL website

At nan Q3 net call, GNL reported that complete 94% of its leases featured yearly rental increases, providing a hedge against nan semipermanent effects of inflation. Notably, since nan opening of nan COVID-19 pandemic, complete 82% of nan REIT's acquisitions person been business aliases distribution properties, expanding nan wide vulnerability to a highly dependable plus people that is immune from nan disruption of e-commerce aliases distant work.

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GNL Investor Presentation - Nov. 2022

Being income investors, our attraction is connected GNL's discounted preferred securities:

  • 7.25% Series A Cumulative Redeemable Perpetual Preferred (GNL.PA)

  • 6.875% Series B Cumulative Redeemable Perpetual Preferred (GNL.PB).

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Author's Calculations

GNL's balance sheet has a weighted-average liking complaint of 3.5%, and nan institution maintains 3.3x liking coverage. Moreover, 75% of GNL's indebtedness is fixed-rate, protecting nan institution against nan higher expenses of rising rates. GNL spends $20.4 cardinal connected preferred dividends, a sum well-covered by nan company's nett rate from operating activities of $160 cardinal for nan 9 months of FY 2022. The REIT spent $72 cardinal connected liking expenses up to Q3. GNL's indebtedness liking and preferred dividends are adequately covered by GNL's rate position ($128 cardinal arsenic of September 30, 2022) and its operating income.

Triple nett REITs are nan strongest arsenic a sector, and these structures of leases person proven to beryllium nan astir recession-resistant successful caller decades owed to nan building and nan semipermanent quality of nan lease agreements. GNL preferreds waste and acquisition astatine an charismatic discount, and existent value levels group investors up for a +5% superior upside and dependable ~7% yields for nan foreseeable future. We spot an charismatic operation of information and precocious yields for nan diligent income investor.

Conclusion

With fixed-income investments, you person a clear image of what income will beryllium coming and erstwhile it will arrive. How overmuch is that yearly income worthy to you?

By holding preferred securities from GNL and CODI, we fastener successful recurring and reliable income streams. This way, we tin cheque nan container of securing your financial early and let ourselves to move guardant to readying nan breathtaking adventures you will embark connected successful retirement.

The use of nan Federal Reserve's fierce complaint hiking has been that fixed-interest investments became quickly much attractive. Right now, we're nearing nan maximum level of attractiveness arsenic we attack a long-expected recession and eventual complaint cuts. When nan cuts come, investors will again look to preferred securities for unchangeable sources of recurring income. The champion clip to put is earlier nan crowd comes storming in.

We supply play fixed-income insights, dialogue, and opportunities to nan members of High Dividend Opportunities arsenic an exclusive portion of their membership. Due to nan debased trading measurement connected astir of our ideas, we only stock them pinch nan nationalist aft a delay, allowing our members to person nan first chance to act.

I'm happy that we tin supply these opportunities to nan nationalist coming and thief build much information into your status income!

If you want afloat entree to our Model Portfolio and our existent Top Picks, subordinate america for a 2-week free trial astatine High Dividend Opportunities (*Free proceedings only valid for first-time subscribers).

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Editor: Naga



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