How I Would Invest $100,000 For Big Dividends In September 2024

seekingalpha09-06

I discuss which areas of the market are most opportunistic for generating high yield income right now.I share some of my top picks within those sectors.I also share how I would deploy $100,000 of new ...

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That being said, while my overall portfolio tends to be well-diversified and not overly weighted toward any current macroeconomic or sector trend, when allocating fresh capital, I do take current events into account when determining the most opportunistic buys at the moment. As a result, as I recently discussed, I am not deploying much of my new capital into the business development company (BIZD) space right now. Several companies are at risk of dividend cuts, and TriplePoint Venture Growth (TPVG) has already led the way with a recent 25% dividend cut. Others, like Prospect Capital Corporation (PSEC), may follow suit soon. This is due to the Federal Reserve being all but certain to begin a rate-cutting cycle and the economy increasingly appearing to be entering a slowdown, which will hurt BDCs that are overweight on short-term floating-rate loans and invest in companies that tend to be more impacted by economic downturns. On the other side of the equation, I think that utilities (XLU), infrastructure companies (UTF), and some REITs (VNQ) with long-dated cash flows and strong business models are much more opportunistic in the current environment. Additionally, I think that precious metals like gold and silver are very opportunistic right now, even after strong year-to-date rallies, given that interest rate cuts will make them more competitive against cash. Elevated geopolitical risks and runaway budget deficits are also tailwinds for traditional safe havens like gold and silver. With this in mind, I will detail how I would allocate $100,000 of fresh money into these opportunities in this article. The operating assumption is that I have $100,000 that recently matured from a certificate of deposit, another liquidated asset, and/or that I received as an inheritance. Where I Would Deploy $100,000 Of Fresh Capital In September 2024 I would put 20% of it into precious metals, with 10% into a gold bullion ETF like the GraniteShares Gold Trust ETF (BAR) due to its low expense ratio of just 0.17%, or the SPDR Gold Shares ETF (GLD), which, despite a 0.40% expense ratio, offers good options liquidity. I could potentially sell covered calls against GLD to generate some income, so perhaps I would put 5% into BAR and 5% into GLD. Then I would allocate another 5% to blue-chip gold miners, either through the VanEck Gold Miners ETF (GDX) or, if I wanted to be a bit more aggressive, Barrick Gold Corporation (GOLD) due to its substantial discount to peers such as Newmont Corporation (NEM) and Agnico Eagle Mines (AEM). While Barrick has higher geopolitical risks due to the location of its assets, its balance sheet is strong, its management is solid, and it appears to be at an inflection point in its business, which could help unlock some of its outsized discount relative to peers and its own historical valuations. I would allocate the final 5% of my precious metals exposure to a silver ETF, such as the abrdn Physical Silver Shares ETF (SIVR) due to its reasonable 0.30% expense ratio, or the iShares Silver Trust ETF (SLV), which, despite a 0.50% expense ratio, offers low option spreads and significant opportunities to sell covered calls. Hence, I might put 2.5% into SIVR and 2.5% into SLV to create balanced exposure to some uncapped upside potential as well as some income from the options sales. The remaining 80% of the portfolio would go into stocks that are likely to profit from interest rate cuts and outperform in a slower growth environment. In particular, I like blue-chip midstream operators like Enterprise Products Partners (EPD). EPD has an A- credit rating, a 7%+ distribution yield, and a 5% expected distribution CAGR for the foreseeable future. Its defensive and durable business model has proven to be stable across various economic cycles, making it a quintessential conservative investment for distribution income. Additionally, I believe its long-dated, stable contracted cash flows will become even more valuable in a falling rate environment and should hold up well if the economy weakens. I also really like Brookfield Renewable Partners (BEP) right now. It has very long-dated contracted cash flows, a 6% distribution yield, a 5% expected distribution CAGR, and over a 10%+ expected FFO per unit CAGR for the foreseeable future. BEP’s business model generates essential energy, and its BBB+ credit rating adds to its attractiveness and defensive nature. Not only will BEP's services remain in high demand during an economic slowdown, but its role in powering the AI boom - especially given Microsoft’s massive deal with Brookfield (BN)(BAM) to provide power for its AI investments - further boosts its long-term outlook. Another stock I like is W. P. Carey (WPC), a triple-net lease REIT that has lagged significantly behind its peers recently. As a result, it offers a dividend yield that is 100 to 175 basis points higher than what is currently delivered by peers like Agree Realty (ADC) and Realty Income (O). Last but not least, I like ATCO Ltd. (OTCPK:ACLLF) for its regulated utility business, as it trades at a clear discount to the sum of its parts. When you subtract the current market value of its underlying Canadian Utilities (OTCPK:CDUAF) stake, it trades at less than two times the earnings of its remaining Structures & Logistics and Neltume Ports businesses, which are growing quite rapidly. This makes ATCO a clear bargain. Combined with its strong investment-grade balance sheet and defensive regulated utility business, ATCO appears well-positioned for a falling rate and slowing economic environment. Investor Takeaway In summary, from this sample portfolio, you could invest about 20% in precious metals as outlined, about 20% into EPD and similar midstreams, about 20% into BEP and similar infrastructure businesses, about 20% into WPC and a few other defensive REITs, and about 20% into regulated utilities like ATCO. This approach should set investors up to generate attractive income while benefiting from the current macroeconomic environment, all while investing on a value basis, thereby providing outsized risk-adjusted returns and attractive passive income.  Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2465746693"}