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New Addition to My Model Portfolios -- Tsakos Energy (TNP) |
Published: March 23, 2005
My monthly High-Yield
Investing
newsletter is devoted exclusively to income-oriented investments. In
each issue I not only introduce my readers to a variety of new high
yielding investing ideas, but I also provide continued guidance on
several dozen of the market's best and brightest income-generating
opportunities. I organize these various picks into the following four
model portfolios...
Income Anchors
Portfolio -- This portfolio
contains dividend-paying stocks with above-average yields (versus the
S&P 500) at the time of purchase. And since dividend payments are by
no means guaranteed, this portfolio focuses on financially sound
companies that should have the ability to continue paying sizable
dividends in the years ahead.
Ultra-High Yield Portfolio
-- This portfolio focuses on quality investment opportunities that offer
above-average dividend yields. These include real estate investment
trusts (REITs), royalty trusts, master limited partnerships (MLPs),
preferred shares and income deposit securities, among others.
Double-Barrelled Growth
Portfolio -- Stocks in this portfolio offer investors the best of
both worlds -- a steady income stream and strong capital gains. Although
some of the stocks in this portfolio may have average or below-average
dividend yields (versus the S&P 500) at the time of purchase, all
are expected to deliver above-average returns over the long term.
Dividend-Focused Funds Portfolio -- This portfolio includes a
mixture of income-oriented-ETFs (exchange-traded funds) and a variety of
outperforming mutual funds. These funds should provide both steady
income and much-needed diversification to any income portfolio.
In the analysis below I'll
provide you with a closer look at a shipping company that I'm now
considering adding to my Double-Barrelled Growth Portfolio. In addition,
I'd encourage you to stay tuned for further updates throughout the next
several weeks. In those updates I'll introduce you to a variety of
additional stocks and funds that I'm now considering adding to my other
model income portfolios.
Tsakos Energy Navigation
(TNP, $37.74) -- It may not be too late to profit from the energy
boom. Trading at just six times earnings and offering a solid 5.0%
dividend yield, Greek oil tanker firm Tsakos Energy Navigation appears
to be in excellent shape.
Although it is by no means the biggest shipper, Tsakos boasts a fleet of
30 of the most modern tankers in the world. Almost all are
double-hulled, giving the company a leg up on the competition, which
will be required by law to replace their single-hulled ships with safer
double-hulled ones by 2010.
More than half of the company's fleet is currently under medium or
long-term contracts with major producers like Lyondell (LYO), Sunoco
(SUN) and Exxon/Mobil (XOM). As a result, Tsakos boasts a fairly stable
earnings stream. Earnings more than doubled last year, in line with
historically high shipping freight rates. Although the company's growth
could slow as rates come off their peak, Tsakos is still expected to
generate double-digit profit growth over the next five years. The firm
also boasts a healthy balance sheet, with debt less than one times
equity. That gives Tsakos the financial flexibility to profit from
growing global oil demand and the shortage of tankers to ship this oil.
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The latest U.S. government
forecast sees global oil demand growing a robust +2.6% through 2006.
Meanwhile, an estimated one-third of the world's oil tankers are being
removed from service, as single-hulled tankers no longer meet the United
Nations International Maritime Organization requirements. And given that
steel prices are near record highs and that it takes at least two years
to build a new vessel, these tankers will not be easy to replace.
Growing demand and short supply should keep freight rates stable and
provide a positive environment for well-positioned tanker firms like
TNP. Of course, there are risks. Tanker stocks are not for the faint of
heart, and share values can move quickly in either direction depending
on changes in oil prices. Wall Street has a generally cautious view of
this sector, which likely accounts for the stock's low P/E of just 5
times earnings. Over the long term, however, I expect TNP to deliver
above-average returns.
Important
Note: The above article was merely a small excerpt from a
recent issue of our premium, income-oriented investing newsletter -- High-Yield
Investing. In each issue of that newsletter, editor Carla
Pasternak delivers a host of other investing ideas and tips designed to
help you earn steady gains and above-average income from your portfolio.
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Please Note: The above article was merely a
small excerpt from an issue of our premium income newsletter -- High-Yield
Investing. In each issue Carla Pasternak presents
a wealth of information and timely investment ideas to help you earn a
steady income stream from your investments. To receive a
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