This One Stock Gets You Huge Dividends – and a Built-In Trading Strategy

Accelerating Dividends, Dividend Investing, Investing Strategies

Recently, Seeking Alpha put out a list of low-valuation ETFs with strong performance year-to-date for 2021 – and I noticed one very familiar name on the list…

The short discussion pointed out how investors may benefit from a shift away from high-valuation growth investments, to those with lower valuations that are also out of favor with the “hot stocks” crowd.

The low-valuation list sports some very attractive year-to-date returns. Take a scan through the ETFs, and I will tell you below which one I recommend to my subscribers: (Hint: the fund shares yield almost 10%.)

  • FCG: +21.12% in September and +89.58 YTD
  • AMZA: +5.03% in September and +51.45% YTD
  • IEO: +15.01% in September and +64.71% YTD
  • SYLD: -3.88% in September and +38.77% YTD
  • FTXN: +17.50% in September and +64.13% YTD
  • XSVM: -0.85% in September and +45.60% YTD
  • IAT: +4.14% in September and +36.06% YTD

I am sure you noticed the returns from 2021 to date range from 36% to 89%.

These gains are primarily due to smart money rotating out of growth and into value – mighty fine returns for investments described as “low valuation.”

Also, notice that while many investors lost money in September, these funds performed very well.

Now, as I mentioned, I recommend one of those funds to members of my premium The Dividend Hunter newsletter service.

But before I tell you all about this fund, if you want 30+ more high-yield dividend stocks and funds like this one, along with monthly updates, webinars, and much more, directly from me – click here.

Now then, let’s get to it. The fund I recommend, InfraCap MLP ETF (AMZA), provides very high yield exposure to the energy midstream, master limited partnership (MLP) sector.  The company invests at least 80% of its net assets in equity securities of MLPs in the energy infrastructure sector.

MLPs own and operate the backbone of U.S. energy sector operations.

These include pipelines, processing plants, storage facilities and loading/unloading terminals. The companies in the sector are organized as publicly traded limited partnerships and are intended to pay out the majority of free cash flow as distributions to limited partner unit holders.

AMZA’s top holdings include Western Midstream Partners LP (WES), and Magellan Midstream Partners (MMP), which are midstream MLP companies focused on oil and gas production and services.  

Being a LP investor is tax advantaged, but also entails additional reporting work at tax time.

The energy sector crash of 2015 into early 2016 was very hard on many MLPs and market values went into a deep, extended bear market. Many companies were forced to restructure their finances to lower debt loads and pay a smaller portion of free cash flow to investors.

The fundamentals for the sector started to improve in late 2017, and in the latter days of 2019 MLP market values had started a meaningful recovery.

The COVID outbreak was devastating to MLP share values, but it seems that the devastation of the energy fields is slowly passing away.  Positive vaccine news has boosted the global markets as well as brightened the demand outlook of the energy sector.

The stronger fundamentals point to an eventual strong bull market for MLPs.

AMZA owns a portfolio of MLPs. The fund is actively managed.

The Fund typically invests in 25-35 MLPs but the portfolio weights are based on fundamental analysis and not simply on market cap size. t The fund managers can also use a modest amount of leverage, usually a maximum of 20-30% to reduce volatility.

The factor that sets AMZA apart from the MLP fund pack is the use of call option selling to boost portfolio income. A covered call amounts to buying shares, then selling someone else the right to buy the shares from you at a higher price. This covered call strategy allows AMZA to have a double-digit yield in the form of monthly dividends.

Think of it as a fund with a built-in trading strategy, all to boost the dividends you get from it.

With AMZA it is important to understand that the value will track the MLP sector. That group is overdue for its next bull market. The large monthly dividends mean you get paid handsomely even as share prices start to rally.

Coming out of the Covid affected summer of 2020, AMZA along with the entire energy sector has performed very well. The twelve months through August 2021, the AMZA share price appreciated by over 60%. From here, MLPs still look undervalued and the monthly dividend gives investors a 10% yield.Remember, for more high-yield dividend stocks and funds like AMZA, along with more research, special reports, and live webinars, join me in The Dividend Hunterclick here to see how.