Archives 2025

Keith Kaplan goes live at 8:00 pm Eastern … global trade as “deteriorated sharply” … who really wins in the push for reshoring manufacturing

We’ll begin today’s Digest with a reminder…

Tonight at 8:00 pm Eastern, Keith Kaplan, the CEO of our corporate partner TradeSmith, is holding The AI Predictive Power Event.

The evening centers on TradeSmith’s AI-powered algorithm “An-E” (short for Analytical Engine).

Built in-house using machine learning models trained on over 1.3 quadrillion data points and 50,000+ backtests, An-E can help you better time and target your trade entries/exits within a 30-day price projection.

The technology forecasts the share price of thousands of stocks, funds, and ETFs one month into the future along with the conviction level of that prediction. It’s equally applicable in both bull and bear markets.

Here’s Keith:

While human investors react with fear, delay, or overconfidence, a new breed of trading algorithm – like our cutting-edge system, An-E – is making precise, unemotional forecasts about where the market is heading next…

Unlike humans, AI doesn’t get emotional. It doesn’t chase headlines.  It doesn’t second-guess every move. Instead, it digests mountains of data and makes calculated projections – especially when things get messy. 

And in this turbulent market, messy is the new normal…

Because the platform is rooted in quantitative analysis, its advanced predictive modeling isn’t guesswork. An-E analyzes millions of data points, learning patterns, pricing behavior, and momentum signals that most investors would never catch. 

It’s not too late to join Keith. By clicking here, you’ll automatically be signed up and registered to attend tonight at 8:00 pm Eastern.

Quick news roundup

There’s so much happening these days that it’s tough to stay on top of every headline.

I want to take today’s Digest in a specific direction, but let’s do a brief walk-through of a handful of stories impacting the market as I write Wednesday morning.

First, there’s Nvidia Corp. (NVDA), which announced on Tuesday that it will incur a $5.5 billion charge due to new U.S. export restrictions on its H20 AI chips. The U.S. Commerce Department now requires licenses for exporting these chips to China and certain other countries, citing national security concerns. This is dragging NVDA down about 10% as I write.

Related to the trade war, China is apparently open to tariff negotiations but wants to see a series of steps from the Trump administration before it will enter such talks.

These steps include showing more respect to Beijing and, according to Bloomberg, “a more consistent US position and a willingness to address China’s concerns around American sanctions and Taiwan.”

Michelle Lam, Greater China economist at Societe Generale SA says:

There is a bit more clarity on what China is looking from: respect, consistency and a point person.

So now the ball is in US court on whether they can meet these demands. But that is still difficult — especially if the aim is to contain China’s rise.

Next up, this morning’s retail sales report found sales increased 1.4% in March. This was more than the forecast of 1.2%.

In one sense, this is a great report, showing that the U.S. shopper remains able – and willing – to keep spending. On the other hand, the heavy spending might reflect a frantic “clearance sale” mentality as shoppers rushed to buy ahead of what many believe are higher prices on the way.

Finally, Federal Reserve Chair Jerome Powell spoke earlier today at the Economic Club of Chicago, saying:

We may find ourselves in the challenging scenario in which our dual-mandate goals are in tension.

If that were to occur, we would consider how far the economy is from each goal, and the potentially different time horizons over which those respective gaps would be anticipated to close.

Shortly after the comments, stocks hit their lows of the session (up to that point). As I write early-afternoon, they’re still sliding.

Switching gears, what could be the real impact of President Trump’s push for onshoring?

Let’s establish some context before we try to answer…

At face value, these trade wars are about unfair trade practices.

But that can’t be the whole story. After all, we’ve already had Israel, Vietnam, and the European Union either lower their tariffs on U.S. goods to 0% or propose such a move, and yet the Trump administration’s response was “not good enough.”

What appears to be “good enough” is mass onshoring. In other words, the real goal appears to be bringing back manufacturing to within the United States.

Last week in the Digest, we offered an explanation for why Trump finds this so important:

The U.S. has a key vulnerability that most Americans don’t realize: We no longer produce the vast majority of the goods that are critical for day-to-day “normal” life…

If China cut us off today, we’d have a national emergency on our hands tomorrow.

Just three days later, President Trump wrote:

What has been exposed is that we need to make products in the United States, and that we will not be held hostage by other Countries, especially hostile trading Nations like China, which will do everything within its power to disrespect the American People.

So, we have a huge push to bring back large swaths of the supply chain within U.S. borders.

Now, various politicians and business organizations are applauding the number of domestic jobs and economic tailwind this could create.

A few examples…

• “We’re going to bring jobs back, and we’re going to get new and improved reciprocal trade agreements done.” – Senator Roger Marshall, M.D. (R-Kansas)
• “President Trump has the right plan to secure our economy, restore fairness to international trade, and bring back good-paying jobs to the United States.” – Rep. Greg Steube (R-FL)
• “President Trump is right: restoring a level playing field on trade will unlock the next blue collar boom – creating jobs and powering our economy through ‘Made in America.’ Huge news for Main Street!” – Small Business Administration

They could be right. We hope they are.

Yet this is where we need to dig in. You see, even if they’re right, those jobs will come with an enormous asterisk – one that points toward an equally enormous investment opportunity.

“But then what might happen?”

That’s the question that most people (and investors) aren’t great at asking – much less answering correctly.

We’re decent at looking one step ahead to that first fork-in-the-road decision and its potential outcomes. But beyond that, most people stop evaluating.

Too often, this lack of “second-level thinking” leads to an array of suboptimal outcomes. In the investment world, the consequence is usually underperformance. 

In his book, The Most Important Thing, the co-chairman of Oaktree Capital Howard Marks writes:

First-level thinking is simplistic and superficial, and just about everyone can do it (a bad sign for anything involving an attempt at superiority).

All the first-level thinker needs is an opinion about the future, as in “The outlook for the company is favorable, meaning the stock will go up.” Second-level thinking is deep, complex and convoluted.

What does first-level thinking suggest about Trump’s onshoring push?

Tons of new jobs! Economic explosion! Earnings bonanza! Stocks to the moon!

Perhaps.

But second-level thinking suggests something else…

Rubber, meet road

Below, we quote RSM, which is a global network of audit, tax, and consulting firms, particularly focused on serving the middle market.

It’s from 2021 so the numbers have likely changed slightly, but you’ll get the idea.

From RSM:

In 2019, the average hourly manufacturing wages in China were about $5.25 per hour, according to the latest available data from the Chinese Bureau of Statistics.

The comparable U.S. average manufacturing wage in 2019 was nearly four times that, at $21.38 per hour. 

According to ZipRecruiter, the most recent average manufacturing wage in the U.S. has climbed to about $25.00 per hour.

A moment ago, I quoted Rep. Greg Steube, speaking about “good-paying jobs.”

I assume “$5.25 per hour” is not a good-paying job.

If not, then we have a tricky binary on our hands…

• We can choose “bad-paying jobs” that keep retail prices stable yet would seemingly not provide a livable wage (and potentially be illegal, coming in below minimum wage). Or…
• We can go with “good-paying jobs” that would be great for new workers, but the U.S. consumer would foot the bill via much higher retail prices.

Not a great choice.

“Jeff, you’re creating a false binary. Domestic hourly wages wouldn’t push retail prices that much higher.”

It depends on which sector and specific type of manufacturing. But overall, don’t fool yourself – payroll costs are a massive part of overall expense.

Here’s HR company, Paycor:

Labor costs can account for as much as 70% of total business costs according to the U.S. Bureau of Labor Statistics.

And while we could quibble about how much more expensive onshoring might be, “some degree of higher prices” appears inarguable. Shifting from lower-cost production overseas to higher-cost production domestically brings a cost.

Here’s the AP News:

Imports help keep prices in check, economists say, partly because of lower labor costs overseas and because increased competition in the U.S. market forces American companies to be more efficient.

Even if I’m wrong about salaries, it’s not just salary expense

Domestic real estate for manufacturing is significantly more expensive than foreign real estate for manufacturing.

Here’s Tetakawi, a business consulting company:

Industrial real estate is in hot demand in Mexico, but still remains highly competitive compared to costs found in many U.S. markets. 

Tetakawi’s research finds that “Typical Monthly Industrial Building Rent” in the U.S. is about 62% more expensive than rents in Mexico for mid-price rents, and 42% more expensive for high-price rents.

Tetakawi comes to the same conclusion when looking at typical electricity rates. They’re vastly more expensive in the U.S.

For one example, high-price rates (as measured in per kWh in USD) are about 78% more expensive in the U.S. than in Mexico. Mid-price rates are more in line, but remain more expensive in the U.S.

Bottom line: Someone eats this cost.

Will it be the U.S. companies (and our portfolios via lower earnings) or U.S. consumers (and our economy, via higher retail prices)?

Keeping with Marks and “second-level thinking,” what is Corporate America likely to do in this situation?

Trump is pushing hard for domestic jobs… but domestic jobs would explode labor costs… C-suite executives don’t want exploding labor costs because it hits earnings, stock prices, and their bonuses…

What’s the action step?

I suspect you already know…

Robotics.

What CEO won’t be doing a direct cost comparison?

On one hand, we have a human manufacturing workforce with its higher U.S. hourly wages, not to mention healthcare and other benefits expenses. Then there’s the downside of human error on the job…

On the other hand, we have the one-time CapEx expense of robots and their marginal upkeep expense. Of course, they don’t come with benefits expenses, not to mention sick days and human error.

Barring some sort of policy guardrails, how does this push for onshoring result in anything other than an acceleration of the transition to robotics?

From Time:

If tariffs persist in the medium term, [Nobel Prize-winning economist Daron Acemoglu] tells TIME, he expects companies “will have no choice but to bring some of their supply chains back home—but they will do it via AI and robots.”

Our technology expert Luke Lango has reached the same conclusion

Let’s go to Luke:

The U.S. government is now pursuing an economic strategy built on reindustrialization, supply chain security, domestic manufacturing, and economic sovereignty

But to pull it off in a globally competitive world? You need automation and robotics – AI in the real world.

With tariffs in place, trade deals being renegotiated, and the reshoring wave gaining steam, this strategy is already in motion. And the robotics arms race is officially on.

To achieve its economic goals, the U.S. will need to deploy millions of intelligent machines in warehouses, fulfillment centers, ports, airports, factories, fields, and construction sites.

In short, intelligent robots are now a national necessity.

We’re running long, but we’ll tackle this in more detail with Luke’s help in an upcoming Digest. But if you’d like to jump ahead to a research presentation Luke created on the topic, you can click here.

For now, let’s wrap up by stepping back to get a sense for the larger dynamics at work

Forget country-specific tariffs, trade imbalances, and “deals.”

Yes, all that stuff will push and pull at stock prices in the coming weeks. But big picture, it’s just noise.

The more important influence is Trump’s goal of radically reshaping domestic manufacturing and supply chains as a matter of national security. It carries a high price tag that businesses will be eager to work around.

And the winners of that workaround?

The companies that leverage robotics, and the investors who saw the writing on the wall.

Here’s Luke:

The trade war may have lit the match. But the fire now spreading across this country is an economic one, unleashing a new 21st-century Industrial Revolution powered by AI, fueled by necessity, and backed by policy.

If you’re an investor, this is your early-in moment…

Because we’re confident that in five years, everyone will be talking about robotics stocks the same way they talk about AI chip stocks today.

More on this to come.

Have a good evening,

Jeff Remsburg

Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist

Powell comments drive USD lower as equities slump

The greenback extended its losses, dropping below the key 100 level as Fed Chair Powell’s comments exacerbated market concerns.

The USD index fell to around 99.30 after Powell stated the “Fed has time to wait for greater clarity for the time being” and warned that tariffs may derail both labor market and inflation goals this year.

Powell noted he expects both unemployment and inflation rates to tick higher , emphasizing that “we can’t have strong labor markets without price stability” and that “inflationary effects of tariffs may be more persistent.”

The Canadian dollar was among the gainers, with USD/CAD close at 1.3859 after the Bank of Canada held rates steady.

The Japanese yen showed significant strength, with USD/JPY dropping to below 142.00 as US Treasury yields declined.

Several emerging market rate decisions are scheduled, with many countries observing local holidays ahead of a long weekend in the US.

Dollar index was down 0.3% overnight, Antipodeans were up with NZD/USD gained 0.6% and AUD/USD gained 0.4%. USD/CNH down 0.4%, USD/JPY down 0.9% and USD/SGD was down 0.6%.

Fed’s Hammack sees risks of reduced growth, employment, and higher inflation

Fed President Hammack, who did not cast a ballot, has stated in a speech that she believes the risks are skewed towards greater inflation, slower growth, and fewer jobs. 

She believes that a fairly conservative approach is justified because financial circumstances have tightened.  She reaffirmed the significance of maintaining anchored inflation expectations.

Looking at another safe haven proxy, the Yen, which has strengthened considerably overnight.

USD/JPY is now at the low end of its trading range, with the completion of head and shoulders top at 140.25, where USD buyers may look to take advantage.

China now faces the potential for up to 245% tariffs

A White House fact sheet released Tuesday night that claimed, “China now faces up to a 245% tariff on imports to the US as a result of its retaliatory actions,” has garnered a lot of attention. 

This doesn’t appear to be another escalation, which is why the word “faces up to” is crucial.  This most likely refers to the entire spectrum of tariffs imposed on particular commodities. 

President Trump’s 145% tariffs on China frequently come in addition to any existing levies.  With the addition of the most recent round of tariffs, the total for “syringes and needles” is now 245%. 

It appears that the White House information sheet also uses that number.  There is no need for further escalation; the issue now is how the two parties convince themselves to sit down for talks.

USD/CNH is now down circa 2% from its recent daily highs of 7.4257 on April 8^th, 2025.

USD buyers may look to take advantage, with the next key support for USD/CNH at 50-day EMA of 7.2860.

Antipodeans swing back to strength

Table: seven-day rolling currency trends and trading ranges  

Key global risk events

Calendar: 14 – 18 April

Have a question? [email protected]

*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.

Hertz (HTZ) shares soared 56% to close at $5.71 Wednesday after billionaire Bill Ackman’s investment firm Pershing Square disclosed a sizable stake in the struggling rental car company.

Pershing Square held over 12.7 million shares in the company at the end of the fourth quarter, a roughly 4% stake, according to a regulatory filing Wednesday. Hertz did not immediately respond to a request for comment. 

Hertz reported a loss of $2.86 billion in 2024 as the company took a hit from vehicle depreciation and the fallout from its unsuccessful efforts to switch its fleet to electric vehicles, among other things. The company’s stock lost close to two-thirds of its value in 2024.

Even with Wednesday’s gains, shares are down about 11% over the past 12 months. 

Separately, Hertz on Wednesday announced a partnership with UVeye, a move the company said will “introduce advanced AI inspection to its U.S. operations.”

Hello, Reader.

Nvidia Corp. (NVDA) has established itself as the undisputed AI darling of today’s stock market, without a doubt generating life-changing amounts of wealth for many investors.

But its soaring popularity and front-page dominance can sometimes lead investors to throw on their rose-colored glasses and see only what they want to see.

Just look at the latest headline Nvidia made…

On Monday, the tech giant announced that it plans to completely produce its AI computers in the United States, and it plans to produce up to $500 billion of AI infrastructure in the U.S. over the next four years through manufacturing partnerships. Shares of Nvidia popped on the news.

While this move is monumental for the company and continues to capture investors’ excitement, it’s up to us to look beyond Nvidia’s hype, and examine its current valuation.

So, in today’s Smart Money, I’ll dive into the details of Nvidia’s American manufacturing shift… and why it’s not quite as homegrown as the headlines suggest.

Then, I’ll share the name of a tech company that’s already manufacturing in the U.S. – and trading at bargain prices.

Nvidia’s “American” Move

Nvidia has secured over a million square feet of manufacturing space across the country with plans to produce Blackwell chips in Arizona and AI supercomputers in Texas.

Its partner Taiwan Semiconductor Manufacturing Co. Ltd. (TSM) has already begun Blackwell chip production at their Phoenix facilities. Meanwhile, construction is charging ahead on supercomputer manufacturing plants across Texas. Nvidia has also partnered with Taiwanese electronic manufacturing giants Foxconn (also known as Hon Hai Technology Group) to build supercomputer facilities in Houston and with Wistron for similar operations in Dallas.

According to Nvidia’s timeline, both plants are expected to escalate production in the next 12-15 months.

The chip king is also forming partnerships with Amkor Technology (AMKR) and Siliconware Precision Industries to establish packaging, assembly, and testing operations in Arizona.

Now, shares of Nvidia fell about 10% today after the company disclosed that the U.S. will limit sales of its advanced chips to China. But, in the wake of President Donald Trump’s everchanging tariff regime, it’s important to point out that this new manufacturing announcement has nothing to do with tariffs.

Major semiconductor companies like Micron Technology Inc. (MU) and Samsung Electronics have been gradually shifting production to the U.S. for several years now. But relocating such a sophisticated high-tech supply chain is a complex, time-consuming process that just can’t happen overnight.

That said, Nvidia’s stated goal is ambitious: to generate up to half a trillion dollars of AI infrastructure within the United States over the next four years. However, of the five major manufacturing partnerships Nvidia announced, four involve Taiwanese companies. So, Nvidia’s “domestic” production plans are still largely tied to foreign companies.

I’m not pointing this out from any political perspective, but rather as an important observation for investors. With Taiwanese partners collaborating with Nvidia on these projects, they could presumably maintain access to or ownership of the technologies behind these chips and supercomputers.

Both Republicans and Democrats have consistently advocated for American companies to independently design and manufacture next-generation AI technologies domestically.

And this is precisely what one lowly valued tech company has been striving to accomplish for years. It’s an “unpopular” company that faced a disappointing past… but I’m not abandoning this name just yet.

Balancing Innovation With Valuation

I’m talking about Intel Corp. (INTC).

Intel represents exactly what both political parties claim to want – an American company designing and building cutting-edge technology on American soil. Yet the market’s enthusiasm hasn’t followed political rhetoric.

Intel’s stock can’t seem to get out of its own way. Despite being America’s original semiconductor pioneer, most investors assume the company is a has-been. But when Intel finally begins producing chips from the multi-billion-dollar fabs it has in the U.S., the company’s earnings could lurch to the upside. Based on those prospective future earnings, the stock is trading for 16 times 2026 earnings and just 10 times the estimate 2027 result. That valuation is far below the S&P 500’s.

And with a market subject to the whims – and even social media posts – of the current administration, my strategy is to invest in companies with modest valuations, which typically offer greater downside protection than their high-flying counterparts.

Stocks trading at reasonable multiples tend to weather the storm far better than those with a pretty price tag. This is why my approach to investing prioritizes companies with solid fundamentals trading at attractive valuations.

And Intel is just one example of the value-oriented opportunities I’m keeping an eye on in this ever-changing market environment.

You can find the names of more undervalued gems in my Fry’s Investment Report portfolio. These are companies that offer both growth potential and defensive qualities that overvalued darlings simply cannot match.

Click here to learn how to join me at Fry’s Investment Report.

Regards,

Eric Fry

P.S. Tonight at 8 p.m. Eastern, TradeSmith CEO Keith Kaplan is holding a special AI Predictive Power Event to showcase TradeSmith’s breakthrough AI algorithm, An-E.

Short for Analytical Engine, An-E harnesses the incredible predictive power of AI to gain insights into the market by forecasting stock prices one month into the future, potentially handing you big gains while avoiding big losses.

As we find ourselves in this constantly changing, uncertain market, An-E could be more useful than ever. And just for signing up for tonight’s special event, you’ll receive five of An-E’s most bearish stock forecasts for free.

The AI Predictive Power Event is just hours away, so click here to reserve your seat now.

Updated on April 15th, 2025 by Nathan Parsh

Income investors looking to buy oil and gas stocks may want to gain exposure to the Permian and Haynesville Basins. Permianville Royalty Trust (PVL) is an oil and gas producer with properties in these two oil and gas-producing areas.

The trust also pays a monthly dividend. There are 76 monthly dividend stocks. You can see the full list of monthly dividend stocks (plus important financial metrics such as payout ratios and dividend yields) by clicking on the link below:

 

The coronavirus crisis severely damaged Permianville. In 2020, the pandemic caused the oil price to collapse, so Permianville suspended its dividend for 13 consecutive months, from mid-2020 to mid-2021.

Fortunately for the trust, oil and gas prices recovered strongly from the pandemic in 2021 thanks to the massive distribution of vaccines and the immense fiscal stimulus packages offered by most governments. As a result, Permianville reinstated its dividend in August 2021 and thus returned to the group of monthly dividend stocks.

Even better for the trust, oil and gas prices rallied to a 13-year high in 2023 thanks to the strict sanctions imposed by Western countries on Russia for its invasion of Ukraine. As a result, Permianville achieved an 8-year high distributable cash flow per unit in 2023.

The trust had suspended its dividend in 2025 until it declared a special dividend of $0.0085 for April.

Therefore, investors should remember that oil and gas royalty trusts are especially risky, and only investors with a high-risk tolerance should consider purchasing Permianville.

Business Overview

Permianville Royalty Trust is a statutory trust formed in 2011 to own a net profits interest representing the right to receive 80% of the net profits from the sale of oil and natural gas production from properties in Texas, Louisiana, and New Mexico, as well as the Permian and Haynesville basins.

The trust can receive 80% of the net profits from selling oil and natural gas production from its properties. After all obligations and expenses are paid, unitholders receive the remaining proceeds each month. The trust is not subject to any preset termination provisions.

However, the trust could dissolve if at least 75% of outstanding units vote in favor of dissolution, or the annual cash proceeds received by the trust are less than $2 million for each of any two consecutive years.

Permianville came under great pressure in 2020 due to the coronavirus crisis. Fortunately, the trust, along with the broader energy market, recovered strongly from the pandemic in 2021.

Thanks to the sanctions imposed by the U.S. and Europe on Russia for its invasion of Ukraine, the global oil and gas markets became extremely tight last year. Before the sanctions, Russia produced about 10% of global oil output and one-third of the natural gas consumed in Europe. Due to the sanctions, oil and gas prices rallied to 13-year highs in 2022. This tailwind gave Permianville an 8-year high annual distribution of $0.44 in 2022. This distribution corresponds to a 10.6% yield at the current stock price.

On March 19th, 2025, PVL reported financial results for the fourth quarter of fiscal 2024. Thanks to new Permian wells, oil volumes grew 45%. Gas volumes grew 8%, but were negatively impacted by low gas prices and excessive operating costs. As a result, there was no distributable income for March.

PVL suspended its distributions in the first half of 2024 before reinstating its dividend in August of last year. However, the trust has suspended payments to shareholders again due to the net profit shortfall.

We do project that PVL will distribute $0.03 to shareholders in total in 2025, equating to a 2.1% yield at current prices.

Growth Prospects

Royalty trusts are designed as income vehicles for unitholders. However, since these companies operate in the energy industry’s production segment, they are extremely reliant on the price of the underlying commodity.

Therefore, while higher energy prices will lead to higher royalty payments and a rising share price, the opposite occurs when commodity prices decline. Lower energy prices lead to lower dividend payments and a dropping share price for royalty trusts.

Distributions are based on the price of natural gas and crude oil, and when the cost of either declines, Permianville is impacted in two ways.

First, distributable income from royalties is reduced, lowering dividend payments. In addition, plans for exploration and development may be delayed or canceled, which could lead to future dividend cuts.

Permianville currently enjoys a favorable business environment thanks to Western countries’ sanctions on Russia and OPEC’s tight production quotas. However, it is prudent to expect oil and gas prices, infamous for their dramatic cycles, to deflate in the long run.

Due to the global energy crisis caused by the war in Ukraine, a record number of renewable energy projects are currently under development. When all these projects come online, they will probably take their toll on oil and gas prices. In such a case, Permianville is likely to have significant downside risk.

Dividend Analysis

Permianville has suspended its distribution in July 2020 due to the coronavirus pandemic, which had an extremely negative impact on the prices of oil and gas. Commodity prices plunged in 2020, leading many oil and gas royalty trusts to suspend their payouts.

Most royalty trusts, such as Permian Basin Royalty Trust and Sabine Royalty Trust, resumed paying dividends after a few months. However, Permianville suspended its dividend for 13 consecutive months, the longest absence of dividend payments among the well-known oil and gas trusts.

With prices falling, Permianville is currently offering a much lower yield than it typically does, which makes holding the name less attractive due to the increased risks regarding its business. Our expected yield of 2.1% is barely above the average yield of the S&P 500 Index.

Overall, the trust is ideal for those who are confident in higher future oil prices and want to gain exposure to the oil boom in the Permian and Haynesville basins. The trust is much more leveraged to the price of oil than the integrated oil companies, and hence it has much more upside in the positive scenario (higher oil and gas prices) and much more downside in the event of a downturn in the energy sector.

On the other hand, like the other oil and gas royalty trusts, Permianville will have excessive downside risk whenever oil and gas prices enter their next downcycle. The trust will reduce or suspend its dividends while its stock price comes under great pressure. It is thus suitable only for risk-loving investors who are confident in excessive oil and gas prices in the future.

Final Thoughts

Royalty trusts like Permianville have faced a number of challenges in the past few years, including the weak oil price environment and the coronavirus pandemic, which suppressed global oil demand. That said, Permianville operates in the most prolific oil-producing area in the U.S., the Permian and Haynesville basins. It also thrives when oil and gas prices are elevated, such as when Western countries placed sanctions on Russia.

The current business environment doesn’t appear favorable for Permianville, and another downturn in the energy sector is expected to show up in the upcoming years due to the cyclical nature of the oil and gas industry and the record number of clean energy projects that are under development right now. Due to the non-diversified business model of the trust and its dramatic reliance on the price of oil and gas, investors should not allocate a great portion of their portfolio to this stock.

Moreover, the trust’s short history leaves much to be desired for investors seeking reasonable levels of dividend safety and consistency.

Don’t miss the resources below for more monthly dividend stock investing research.

And see the resources below for more compelling investment ideas for dividend growth stocks and/or high-yield investment securities.

Updated on April 16th, 2025 by Nathan Parsh

Sabine Royalty Trust (SBR) has a high dividend yield of nearly 8% based on annualized distributions over the first four months of 2025. This places Sabine on the high-dividend stocks list. You can see all 5%+ yielding stocks here.

Sabine also pays dividends on a monthly schedule, which means investors receive their dividends more frequently than the traditional quarterly schedule.

There are 76 monthly dividend stocks. You can see our complete list of monthly dividend stocks, with important financial metrics like dividend yields, price-to-earnings ratios, and payout ratios, by clicking on the link below:

 

Royalty trusts have unique characteristics and risk factors that investors should consider before investing. However, thanks to their high yields, they could be appealing to income investors. Investors looking for exposure to the oil and gas industry may also find them attractive.

This article will discuss Sabine’s business model and why investors anticipating higher oil and gas prices may want to examine this royalty trust more closely.

Business Overview

Sabine Royalty Trust was established on December 31st, 1982. Its business model is based on income received from its royalty and mineral interests in various oil and gas properties. Sabine is a small-cap stock, with a market capitalization of $946 million.

Its oil and gas-producing properties are located in Florida, Louisiana, Mississippi, New Mexico, Oklahoma, and Texas. The trust has a long and successful history. When it was formed in 1982, its reserves were estimated at 9 million barrels of oil and 62 million cubic feet of gas.

At inception, the trust’s lifespan was pegged at 9 to 10 years. It was expected to be fully depleted by 1993. More than 40 years later, Sabine Royalty Trust is still kicking. In that time, the trust has produced 24.6 million barrels of oil and 313 billion cubic feet of gas.

Growth Prospects

Rising oil and gas prices are Sabine’s biggest growth catalyst. Supportive commodity prices are critical for the trust’s ability to generate higher royalty income, which yields higher distribution payouts. As oil and gas prices both rallied to multi-year highs in 2022, SBR achieved blowout results that year.

Sabine is a pass–through vehicle for royalty payments—essentially, all the royalty income (cash) it receives is passed through to unit holders. About 5%–8% of royalty income is consumed in administrative expenses. The trust generated distributable cash flow per unit of $5.45 per unit over the last year, down from $6.38 in 2023 and $8.65 in 2022.

However, Sabine’s cash flows are highly cyclical due to the dramatic swings in oil and gas prices, which have resulted in a markedly volatile performance record. Given the high comparison base in the very recent past, we expect a 4% average annual decline of distributable cash flow per unit over the next five years.

Dividend Analysis

Sabine Royalty Trust pays a monthly distribution. The record date each month is usually the 15th day.
Distributions are paid no later than 10 business days after the monthly record date.

The distribution of Sabine fluctuates depending on the direction of oil and gas prices. During favorable periods, the trust has distributed $3-$4 per unit annually. The trust exceeded this level by an impressive margin last year due to blowout commodity prices.

Sabine’s distribution history over the past 10 years is as follows:

• 2013 distributions of $3.92 per unit
• 2014 distributions of $4.10 per unit
• 2015 distributions of $3.11 per unit
• 2016 distributions of $1.93 per unit
• 2017 distributions of $2.23 per unit
• 2018 distributions of $3.35 per unit
• 2019 distributions of $3.02 per unit
• 2020 distributions of $2.40 per unit
• 2021 distributions of $3.97 per unit
• 2022 distributions of $8.65 per unit
• 2023 distributions of $6.38 per unit
• 2024 distributions of $5.45 per unit

Sabine distributed approximately $8.65 per unit to investors in 2022, more than double the distribution in 2021, thanks to the tailwind from the Ukrainian crisis and the resultant rally in oil and gas prices.

Sabine distributed $1.69 per unit in the first four months of 2025. On an annualized basis, this represents a full-year payout of roughly $5.08 per unit. Using the current share price of $65, this equates to a distribution yield of 7.8%. Of course, the company could distribute more or less than this, depending on where oil and gas prices are headed over the remainder of the year.

On the bright side for the trust, the war between Russia and Ukraine continues and hence the price of oil may remain elevated in the upcoming months. On the other hand, whenever this war comes to an end, it will probably cause a sharp correction in the price of oil.

It is also important to note that most countries have been severely hurt by the exceptionally high oil and gas prices in the last 24 months. As a result, they are doing their best to diversify away from fossil fuels, and thus, they are currently investing in renewable energy projects at a record pace. When all these clean energy projects begin to come online, in 2 to 4 years, they will take their toll on global oil and gas consumption.

In fact, as the market is always a forward-looking mechanism, whenever the market focuses on the potential impact of these projects on the energy market, the price of oil will probably plunge from its current level.

Final Thoughts

Royalty trusts like Sabine are essentially a bet on commodity prices. From an operational standpoint, the trust’s fundamentals look strong. Sabine has high-quality oil and gas properties that have kept the trust going for four decades, much longer than originally expected.

If oil and gas prices remain around their current levels for years, the trust’s assets could potentially be undervalued. However, we believe that oil and gas prices will enter another downcycle at some point in the future, just like they always have. Whenever the next downturn of the energy sector shows up, Sabine will have significant downside risk and reduce its distributions. Overall, investors should carefully review the risks and unique considerations that go along with investing in volatile royalty trusts.

Don’t miss the resources below for more monthly dividend stock investing research.

And see the resources below for more compelling investment ideas for dividend growth stocks and/or high-yield investment securities.

President Trump may have announced a 90-day pause on reciprocal tariffs, but the ongoing trade war between the U.S. and China still has markets unnerved. 

With China confronting a potential 245% tariff on imports to America, the uncertainty roiling Wall Street continues. After initially rallying in response to last week’s pause, stocks have begun sliding once again. The S&P 500 is down more than 1% over the past two trading days, while the Nasdaq has fallen nearly 2%. 

Markets are in turmoil; there’s blood in the streets, as they say. But in the middle of all this chaos – the economic fear and geopolitical noise – something remarkable is happening…

America’s AI Boom has begun.

And it may end up being the greatest silver lining of this entire trade war saga.

A Billion-Dollar American AI Bet

While politicians posture and stock prices buckle, the most important companies in the world are making some of the biggest bets in modern economic history. And it’s not happening overseas but right here in the USA. 

They’re building factories, forging partnerships, and investing hundreds of billions of dollars in the reshoring of America’s AI infrastructure.

It may be a tactical response to global instability or a strategic play for long-term control.

Either way, it looks like a sensational investment opportunity to us.

Let’s start with the kingmaker.

Nvidia (NVDA), leader of today’s AI Boom, just announced plans to invest up to $500 billion – half a trillion dollars – into American AI infrastructure over the next four years.

This is already in the works.

• Production of Nvidia’s latest chip – the Blackwell AI chip – has officially begun in Phoenix, Ariz., at Taiwan Semiconductor Manufacturing’s (TSM) new U.S. plant. That’s right; Taiwan’s silicon giant is making its crown jewel chip for Nvidia on American soil.
• Nvidia is also building supercomputer manufacturing facilities in Texas through partnerships with Foxconn and Wistron –  the first time ever it will make these machines in the U.S.
• The firm is also teaming up with Amkor Technology (AMKR) and Siliconware Precision Industries to develop packaging and testing operations, all based in Arizona.

And here’s the kicker:

This has all been announced after the White House exempted electronics components from its reciprocal tariffs on China.

In other words, despite sourcing many components from China, Nvidia still decided to go big on American soil. 

Whether tariffs persist or evaporate, whether trade deals are signed or supply chains snap, Nvidia has concluded that the future of AI infrastructure is American.

And it’s not the only tech titan to do so.

Updated on April 11th, 2025 by Nathan Parsh

San Juan Basin Royalty Trust (SJT) has a dividend yield of more than 6%, based on its annualized distributions for 2024.

San Juan Basin has a very enticing payout, considering the S&P 500 Index currently has a ~1.4% dividend yield. That means San Juan Basin offers about four times as much dividend income as the average stock in the S&P 500.

Like most other stocks, San Juan Basin also pays its dividend each month, rather than each quarter. This gives investors the benefit of more frequent dividend payouts.

San Juan Basin is one of only 76 monthly dividend stocks we currently track. You can download our full list of monthly dividend stocks (along with important financial metrics like dividend yields and payout ratios) by clicking on the link below:

 

However, San Juan Basin’s dividend may not be as attractive as it seems. The payout has been slashed repeatedly in recent years, and the trust hasn’t paid a distribution since April 2024, highlighting that royalty trusts are a highly risky type of security.

This article will discuss why investors should be skeptical of royalty trusts like San Juan Basin.

Business Overview

San Juan Basin is a royalty trust established in November 1980. The trust is entitled to a 75% royalty interest in various oil and gas properties across over 150,000 gross acres, in the San Juan Basin of northwestern New Mexico.

On July 31st, 2017, Hilcorp San Juan LP completed its purchase of San Juan Basin assets from Burlington Resources Oil & Gas Company LP, a subsidiary of ConocoPhillips (COP).

More than 90% of the trust’s production is gas, with the remainder oil. The trust does not have a specified termination date. It will terminate if royalty income falls below $1,000,000 annually over two years.

The past four years have been difficult for the San Juan Basin. Not surprisingly, this was due to lower oil and gas prices. Things became even more challenging in 2020, as the coronavirus pandemic resulted in a steep decline in oil and gas prices.

The average realized price of natural gas for the San Juan Basin decreased from $1.79 in 2019 to $1.51 in 2020. The average realized oil price decreased from $45.11 per barrel in 2019 to $31.47 per barrel in 2020. As a result, its distributable income per unit dipped 9%, from $0.174 in 2019 to $0.159 in 2020. Due to poor cash flows, the trust suspended its distribution for 6 months in 2019 and another 4 months in 2020.

Fortunately, the San Juan Basin recovered strongly in 2021 and 2022 thanks to the recovery of the energy market from the pandemic. Thanks to the impressive rally of the price of natural gas, which resulted from pent-up demand after the pandemic and tight supply, distributable income per unit nearly quintupled, from $0.159 in 2020 to $0.77 in 2021. In 2022,  the total distributable income was $1.66.

Even better, the price of natural gas has rallied to new highs following European countries’ sanctions on Russia for its invasion of Ukraine. Europe generates 31% of its electricity from natural gas provided by Russia, but it is doing its best to reduce its reliance on Russia. As a result, there has been a huge increase in LNG exports from the U.S. to Europe. Consequently, the U.S. natural gas market surged during this period.

However, 2024 was a rough year for the trust as total distributable income fell from $1.11 in 2023 to just $0.11 last year.

Growth Prospects

There are two significant growth catalysts for the San Juan Basin moving forward. The first is higher commodity prices, which would help the San Juan Basin generate higher cash flows. Specifically, higher gas prices would be a huge boost for the San Juan Basin since gas accounts for the vast majority of production.

The other major growth catalyst for San Juan Basin will be if the trust’s oil and gas properties are produced for longer than expected. San Juan Basin is not exactly sure of the trust’s lifespan. It has hired independent petroleum engineers, who conservatively estimated that the trust is likely to continue to produce for at least another 10-15 years, but this was in 2011.

These two factors determine whether the San Juan Basin is a good investment. The trust is not permitted to engage in any business activity, which includes using any portion of the trust estate to acquire additional properties.

In the fourth quarter of 2024, the trust reported that gas production fell 5% while the price of gas plunged 33% compared to the prior year’s quarter due to a warmer winter. As a result, the trust did not pay any distributions. In fact, San Juan Basin suspended its distributions since May 2024 due to excess operating costs and low gas prices.

Production costs totaled $21.7 million ($16.3 million net to the trust) as of March 21st, 2025. San Juan Basin will not resume distributions until costs moderate and gas prices recover. The trust could resume distributions in the upcoming months, but this is not guaranteed, especially if costs remain high and prices remain subdued.

If the trust does not have gross revenue of at least $1 million in 2025 and 2026, termination provisions will be triggered.

Dividend Analysis

San Juan Basin’s distributions are classified as royalty income as a trust. Distributions are considered ordinary income and are taxed at the individual’s marginal tax rate. Since gas prices are so important to royalty trusts’ cash flow, it is no surprise that San Juan Basin’s dividends have declined when gas prices have declined, such as from 2014 to 2016 and again in 2020.

San Juan Basin has made the following distributions since the previous oil and gas industry downturn:

• 2014 distributions-per-share of $1.2846
• 2015 distributions-per-share of $0.3647
• 2016 distributions-per-share of $0.2989
• 2017 distributions-per-share of $0.8395
• 2018 distributions-per-share of $0.3859
• 2019 distributions-per-share of $0.1737
• 2020 distributions-per-share of $0.159
• 2021 distributions-per-share of $0.77
• 2022 distributions-per-share of $1.57
• 2023 distributions-per-share of $1.11
• 2024 distributions-per-share of $0.11

Despite an uptick in distributions in 2017, declining commodity prices have caused San Juan Basin’s fundamentals to deteriorate steadily since 2014. This, in turn, led to lower distribution payments.

On the bright side, the San Juan Basin recovered strongly from the pandemic year and last year. However, in the first four months of 2024, it offered distributions per unit of $0.11. San Juan Basin would pay approximately $0.33 per unit for the full year at this rate. This payout level would represent a yield of 6.4% based on the current unit price of $5.18.

If oil and gas prices can increase, San Juan Basin’s distributions could increase to a level that makes the stock attractive. For example, if the trust lasts another 10 years, investors will want a dividend yield well in excess of 10% annually to make San Juan Basin a successful investment.

Of course, there is no guarantee of a longer life span nor that oil and gas prices will return to their highs. As a result, royalty trusts are a particularly risky way to invest in the energy sector.

Final Thoughts

Investing in the San Juan Basin right now is essentially betting on two things: high oil and gas prices and a longer-than-expected lifespan of the trust.

Royalty trusts can be a good source of dividend income thanks to their high yields. However, investors must ensure the trust’s assets do not run out before the initial investment is paid back. San Juan Basin investors will need the extremely high prices of natural gas and oil to remain in place for years to make the stock a good investment.

We view this favorable scenario as highly unlikely. As such, investors looking for less risk from a dividend stock are encouraged to avoid royalty trusts like San Juan Basin.

Don’t miss the resources below for more monthly dividend stock investing research.

And see the resources below for more compelling investment ideas for dividend growth stocks and/or high-yield investment securities.

Published on April 11th, 2025 by Nathan Parsh

Companies that pay monthly dividends can help investors secure consistent cash flows, providing income more regularly than those that pay quarterly or annual payments.

That said, just 76 companies currently offer monthly dividend payments, which can severely limit an investor’s options. You can see all 76 monthly dividend-paying names here.

You can download our full Excel spreadsheet of all monthly dividend stocks (along with metrics that matter, like dividend yield and payout ratio) by clicking on the link below:

 

One name that we have not yet reviewed is Savaria Corporation (SISXF), a Canadian-based company that operates in the accessibility industry. Shares currently yield more than 3.6%, which is more than twice the average yield of the S&P 500 Index.

This article will evaluate the company, its business model, and its dividend to determine whether Savaria Corporation is a good candidate for purchase.

Business Overview

Savaria Corporation is a specialty industrial machinery company that provides accessibility solutions for the elderly and disabled. Though the company has a market capitalization of just $789 million, Savaria Corporation has a solid global footprint.

The company operates in Canada, the U.S., the U.K., Germany, China, and Italy. Savaria Corporation has more than 1 million square feet of production space, 30 direct sales offices, and 17 product and distribution centers.

Savaria Corporation comprises several business segments, including Accessibility, Patient Care, and Adapted Vehicles.

Accessibility manufactures products such as stairlifts for straight and curved staircases and wheelchair platform lifts. This segment contributes ~70% of revenue. Patient Care, which accounts for 21% of revenue, manufactures and markets therapeutic support surfaces for medical beds and other medical equipment. Adapted Vehicles produces vehicles for use by patients with mobility difficulties. This segment is the smallest within the company, making up less than 10% of total revenue. The company was founded in 1979 and is based in Laval, Quebec, Canada.

The company reported solid financial results for the fourth quarter of 2024.

Source: Fourth Quarter Earnings Results

Revenue reached $223.3 million, an increase of 3.0% compared to Q4 2023. This growth was driven by 0.9% organic growth and a 2.1% positive foreign exchange impact. The company’s Accessibility segment had 3.4% organic growth during the quarter, while the Patient Care segment improved 4.5%. Gross profit rose by 12.5%, and operating income improved by 16.6%, reflecting higher margins and increased efficiency.

Savaria’s adjusted EBITDA for the quarter was $42.87 million, up 22.1% from the previous year, with an adjusted EBITDA margin of 19.2%. The Accessibility segment had a particularly strong performance, with an adjusted EBITDA margin of 19.8%. Patient Care maintained a healthy 19.1% margin. Additionally, Savaria reduced its net debt ratio to 1.63, signaling improved financial health and liquidity, with available funds of $242.8 million for future investments and growth.

Growth Prospects

Savaria Corporation has a number of tailwinds that should help the company continue to grow. First, the company’s main markets are seeing elderly people make up a higher percentage of the total population. In the U.S. alone, those over 65 are projected to make up more than 20% of the population by 2030. People in this age group tend to require more assistance with mobility.

Next, the vast majority of older people wish to remain in their homes. According to AARP, nearly 80% of people over 50 want to stay in their homes as they age. More than two-thirds say that their properties have accessibility issues inside and outside the home. Savaria should be able to capitalize on this trend as it buys up smaller players in the industry.

Source: Investor Presentation

Savaria Corporation estimates that the global long-term market will grow at 6% annually through 2030, a solid, if not spectacular, growth rate. By the end of this decade, the U.S. is forecasted to have more than 20 million people requiring long-term care.

Given that people live longer, want to remain in their homes, and have accessibility challenges, a company like Savaria Corporation is poised to benefit from product demand.

The company offers a variety of products, from chair lifts to vehicles to beds, that can greatly improve the quality of life for customers. This can also help people remain in their homes instead of entering an adult care center, which can be much more expensive than the products that Savaria Corporation markets. People wishing to remain in their home could very well be willing to purchase a product if it means that they can continue to live as they have.

Dividend Analysis

Savaria Corporation began paying an annual dividend before switching to a quarterly dividend in 2013. By late 2017, the company converted to its current monthly payment schedule.

Payments have fluctuated for U.S. investors due to currency exchange, but the size of the dividend has gradually increased over the years. U.S. investors received $0.37 in annual dividends in 2024 and are expected to receive $0.39 in 2025. For the most part, dividend growth has been very low over the last five years. We do not anticipate that this will change.

The dividend hasn’t increased materially in the past and is not forecasted to do so in the near future due to the high payout ratio. Last year, Savaria Corporation’s payout ratio was 79%. It should be noted that the company has raised its dividend for 12 consecutive years in local currency.

With results showing signs of growth, the dividend is likely safe. A downturn in the business could call that into question, especially considering the debt on the company’s balance sheet.

The annualized rate of $0.39 for U.S. investors results in a 3.6% yield.

Final Thoughts

Savaria Corporation is a small, monthly dividend-paying company that is well-positioned to take advantage of people who are living longer. With most people wanting to remain in their homes, tackling accessibility and mobility challenges will likely be a significant industry in the coming decade.

This positions the company in an advantageous spot. A growing business should help defend its dividends and provide the capital needed to pay down debt to a much more manageable level. Lower debt would also help to protect the dividend. Investors looking for monthly income and access to a growing population might find Savaria Corporation an attractive investment option.

Don’t miss the resources below for more monthly dividend stock investing research.

And see the resources below for more compelling investment ideas for dividend growth stocks and/or high-yield investment securities.

Updated on April 11th, 2025 by Nathan Parsh

As the saying goes, if something looks too good to be true, it usually is just that. This can often be applied to unusually high-yielding dividend stocks, many of which have to cut their dividends in a recession.

For example, Stellus Capital Investment Corp. (SCM) has a dividend yield of more than 13%, which is very attractive on the surface. The S&P 500 Index, on average, has a dividend yield of just 1.4%.

Not only that, but Stellus pays its dividend each month rather than each quarter, like most companies. This helps to make Stellus stand out, as we currently cover 76 monthly dividend stocks.

You can download the full list of monthly dividend stocks (along with important financial metrics such as dividend yields and payout ratios) by clicking on the link below:

 

However, while high dividend stocks appeal in a relatively low-rate environment, investors must ensure the dividend is sustainable.

Stellus has a very high expected payout ratio of more than 100%. As a BDC, Stellus is required to distribute essentially all of its income, so its payout ratio will always be high. However, it is in investors’ best interests to carefully monitor the company’s earnings performance for signs that a cut in the distribution may be coming.

This article will discuss Stellus’ fundamentals as they pertain to supporting its high dividend yield.

Business Overview

Stellus is a Business Development Company (BDC) that invests in small, predominantly private companies that are usually at an early stage in their growth cycles.

Stellus is a middle-market investment firm that makes equity and debt investments in private middle-market companies. The company provides capital solutions to companies with $5 million to $50 million of EBITDA and does so with various instruments, the majority of which are debt.

Stellus provides first lien, second lien, mezzanine, convertible debt, and equity investments to a diverse group of customers, generally at high yields, in the US and Canada.

Source: Investor Presentation

It also has a highly diversified investment portfolio, both geographically and in terms of industry concentration. Stellus will make various debt investments, including first lien, second lien, uni-tranche, and mezzanine financing.

The investments are placed in various industries, including business services, industrial, healthcare, technology, energy, consumer products, and finance. Invested capital is used for a wide range of purposes, including acquisitions, growth investments, and more. Stellus is externally managed by Stellus Capital Management LLC, a registered investment advisor.

The company follows a disciplined investment strategy. In prior years, it closed only about 2% of deals reviewed. Its relative selectiveness allows the company to focus on the highest-quality investments.

It also means the company has far more investment opportunities than it needs, enhancing its ability to select only the best investments. Stellus generates particularly high yields from its first lien, second lien, and unsecured debt investments.

Next, we’ll take a look at the company’s growth prospects.

Growth Prospects

A strong catalyst for Stellus is its growing investment portfolio. Over the past five years, Stellus has seen its portfolio rise rapidly, allowing the company to earn higher investment income.

However, this all stopped in 2020 as the coronavirus pandemic sent the U.S. economy into a deep recession, negatively impacting many of Stellus’ investments.

The company reported its financial results for the fourth quarter of 2024 on March 4th, 2025. Net investment income was $9.6 million, or $0.35 per share, down from $11.9 million, or $0.49 per share, in the prior year. The company’s loan portfolio had a 10.3% yield, and investors have received the equivalent of $16.95 per share in distributions since inception.

The company funded $109 million of investments during the quarter and received $65 million of repayments, ending the year with a total portfolio fair value of $953 million.

Dividend Analysis

As far as dividend stocks go, Stellus is not a typical choice. Its dividend history is fewer than 10 years, which means it has not yet developed a long track record of consistency.

You can see an image of the company’s distribution history below:

Source: Investor Presentation

Stellus currently pays a monthly dividend of $0.1333 per share, equating to an annualized payout of $1.5996. The company cut its dividend in mid-2020 due to the pandemic. On a positive note, Stellus has paid out special distributions in the past to supplement its attractive monthly dividend further, but this last occurred in 2022.

Net investment income is expected to come in at $1.50 per share for 2025. With the current annualized dividend of $1.5996, Stellus currently has a payout ratio of 107%. This means the current dividend payout is exceeding what the company brings in at this point. Remember that BDCs are required to distribute nearly all of their income, so Stellus’ payout ratio will always be high.

Even a modest decline in investment income could cause the payout ratio to rise even higher than already projected, which signals a potentially unsustainable dividend.

As its recent results indicate, Stellus must continue to increase its investments. Stellus is a high-risk, high-reward dividend stock. If the company’s growth stays on track, investors will receive a ~13.4% return from the dividend, plus any capital appreciation from a rising share price.

Even if the company maintains its dividend, investors should not expect much dividend growth going forward. Net investment growth has been sluggish, and given the high payout ratio, we don’t see any catalysts for a higher payout in the near future.

Final Thoughts

Stellus could be an attractive pick as it has a 13%+ dividend yield and some measure of growth potential.

Plus, Stellus pays its dividend each month, which helps boost the compounding effect of reinvested dividends and enhances the stock’s attractiveness to those who rely on dividends for living expenses.

Of course, there is no guarantee the company’s growth plans will be successful and with a payout ratio above 100%, there is not much room for error. As a result, investors must accept the risk of a future dividend cut if financial results deteriorate. Only investors willing to take this risk should consider buying the stock.

Don’t miss the resources below for more monthly dividend stock investing research.

And see the resources below for more compelling investment ideas for dividend growth stocks and/or high-yield investment securities.