Updated: April 15, 2013 10:26AM
Dear Mr. Berko: I had $66,000 to speculate with. Last year, my neighbor introduced me to his son in another city who specializes in trading stocks. Now I have $47,000 left to speculate with. I know you seldom recommend trading stocks, but could you recommend about six speculative stocks that also have dividends? I’d like to buy a few hundred shares of each and also get income. I won’t hold you to your recommendations, but I figure I have a better chance of success by asking someone who has no skin in the game.
— KH, Wilmington, N.C.
Dear KH: All low-priced stockbrokers remind me of a one-armed motorcyclist who is running late in stop-and-go traffic and smoking a cigarette. Though my advice is free, you should be advised that free advice is often worth what it cost. But for grins and giggles, I accept your request as a good excuse to ring a few dotty market enthusiasts I haven’t talked to since the summer solstice in the Northern Hemisphere.
A brilliant money manager (I’ve known him since 1974) in New York City, who probably lacks most social graces known to mankind, thinks KKR Financial Holdings (KFN-$11) is the cat’s pajamas. KFN is a specialty finance company that purchases investment-grade debt, distressed and stressed debt, and private equity. He thinks KFN could head to the high teens. Before the market crash, KFN traded in the high $20s and paid a $2.24 dividend. Today’s 84-cent dividend yields 7.6 percent and could rise higher this year.
A longtime acquaintance of mine at Merrill Lynch, the company known for its bull, likes Oritani Financial (ORIT-$14.75), a 24-location bank serving New Jersey clients in Bergen, Hudson, Essex and Passaic counties. He said Gov. Chris “Big Chris” Christie has a large account at ORIT. Revenue earnings and dividend growth have been solid since its 2008 initial public offering and should continue for the foreseeable future. He believes that ORIT could be a $20 stock. The current 60-cent dividend yields 4 percent.
A pro I know who summers and falls in one of those neat little Norman Rockwell towns in upstate New York has some of his managed accounts in StoneMor Partners (STON-$26.15) and Martin Midstream Partners (MMLP-$34.10), both of which are master limited partnerships. STON owns and operates cemeteries around the country, including 69 funeral homes with all the attendant kitsch. STON has a never-ending supply of customers. Revenues have grown nicely in the past decade, and the $2.36 distribution, yielding 9 percent (mostly nontaxable), should improve nicely. He also thinks you can hit the bull’s-eye with MMLP, an interesting company that stores, collects and transports petroleum and petroleum byproducts. MMLP owns 39 terminal facilities, 720 miles of pipeline, a natural gas pipeline, storage facilities, marine tankers, tug barges, push boats and sulfate production plants. Strong improvements in revenues, earnings and dividends are expected for 2013, and the current $3.08 distribution (mostly nontaxable) yields 9 percent.
A recently retired fund manager I’ve known since 1986, who recently moved to San Antonio because his black Lab’s arthritis couldn’t handle the Chicago cold, thinks Intersections (INTX-$10.38) is the bee’s knees. INTX is a subscription-based consumer protection services and consumer products company that markets online brand protection, bail bond solutions, identity theft services, data breach response and the like. Significant revenue growth is expected this year, as well as an increase in its 80-cent dividend, which yields 7.5 percent.
Finally, the mail guy (we kibbutz over coffee most mornings), who reads every financial publication before it’s delivered, decided to add his two cents today. He thinks Paychex (PAYX-$33) is the cat’s meow. PAYX provides payroll processing, human resource management, risk management, 401(k) management and commercial insurance services to small and medium-sized businesses. Revenues and earnings have doubled since 2003, and the current $1.32 dividend, yielding 4 percent, has tripled. He also owns 300 shares.
Take your pick, or pick them all.
Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775, or email him at firstname.lastname@example.org.