I’m back on The Final Round discussing REITs and MLPs. It’s such a pleasure to be able to develop a few ideas without the pressure of sticking to sound bites and limited time. I mean, come on, they gave me 7 minutes to let it roll like water off a ducks back. Let me give you the short version.
One of the places we look for yield over the next few years are mortgage REITs, which don’t own physical property, they just hold the mortgages backed by residential properties. With the Fed keeping rates low for a few years, these firms have lower funding costs, lower hedging costs, and they are yielding over 10% after many have cut or reduced dividend payments.
Same idea with energy infrastructure MLPs – high yield even after many have cut dividends. Yet, with oil over $40 a barrel, the bad news is old news. I’m just more interested in pipelines that have minimum fees and minimum contract commitments versus the more sketchy exploration companies.
Gold miners are easy – negative interest rates. We saw this back in 2000-2006. Rates were relatively stable, but real rates slowly dropped as gold and gold miners went up.
With the tech sector up huge this year, I explain what I’m buying now for the next 1-3 years.
Enjoy!