Chatter Around the World – 144

Chatter Around the World is a curated weekly update of articles related to economics, investing, dividends and personal finance. In these weekly updates, I also capture my blog updates and news related to my portfolio holdings.

Top 50 Billionaires by industry

Top 50 Billionaires by industry

Let’s dive into the links that caught my attention this week.

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Why I Chose Dividend Growth Investing

Hi all,

I was invited to guest post at dividendgrowthinvestor.com. DGI is one of the first bloggers I followed about a decade ago that convinced me on following the path to dividend growth investing to achieve financial independence; and it was an honor to be invited. Thanks again for the opportunity, DGI! 🙂

In this article, I introduce readers to some of the mistakes I made early in my investing career and how I discovered dividend growth investing. I also highlight a few advantages that come with this investing model. Be sure to check it out.

You can find the post here >

cheers

R2R

Omega Healthcare Dividend Increase

Omega Healthcare Investors Inc (OHI) announced a 1.75% increase in its cash dividend. The quarterly cash dividend will increase from $0.57 to $0.58 per share and payable on May 16, 2016 to shareholders on record as of May 02, 2016.

This is the 15th consecutive dividend increase from Omega Healthcare, and the company has been known to raise dividends each quarter. The annual dividend rate goes up from $2.28 to $2.32. Yield going forward based on yesterday’s closing stock price is 6.63%.

Our portfolio consists of 106 shares of Omega Healthcare, which increases our annual dividends from $241.68 to $245.92, an increase of $4.24.

How do Trust Deeds Work?

This is a guest post by Deets LaMoss at freedom595.com.  His blog documents the methods and strategies he is using to generate passive income to replace his salary and become financially free by November 15, 2017.

One of the core investments that I use in my passive income machine are trust deeds (aka notes or mortgages).  If this is a new topic to you, then please read on as I will share the mechanics of how this works and why I like them.

A trust deed is like mailbox money

Trust deeds or mortgages are one of the best passive income investments I have found.  These short term loans, secured by real property, are made to contractor/investors who purchase undervalued homes in desirable areas, rehab them, and then quickly resell them.  By acting as the private lender or “banker” you get to participate in the real estate market and earn high returns without worrying about tenants who don’t pay their rent or fixing their leaky toilets. Also, it is really cool to get checks in the mail every month for doing nothing!

How they work

These contractor/investors do not have time to wait on a bank to approve and fund a loan. When they find a property they have to move quickly before someone else gets it.  That is why they use private lenders who can fund the project in less than two weeks.  They pay a higher interest rate for the convenience of this service because they are borrowing the money for a short period of time (6-18 months) and their anticipated resale price will offset the rehab costs and interest payments yet still produce a handsome profit.

One of the things I really like about this business is the transparency. I work with a team of licensed brokers, attorneys, and title and escrow companies to make sure the paper work is complete and everyone is protected.  It’s clean, easy, and secured by real estate.

The other thing I really like is the fact that everybody wins. The borrower is able to close more deals and make more profit.  The private lender makes a spread on the interest and sometimes a share of the borrower’s profit.  The trust deed investor earns excellent interest (8-10%) and sometimes a back end profit. The service providers (broker, loan servicing, escrow, title, etc.) all benefit from the transaction too. It’s a great business model!

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Recent Sell – Care Capital Properties

This will be a quick post about a sale of one of our holdings last week. Normally we do not trade in and out of our holdings, but occasionally a security sale is warranted.

Last week, we sold our position in Care Capital Properties Inc (CCP). Most people may not be aware of this company. The company was a spin-off from Ventas Inc (VTR) last year. Ventas decided to spin-off the skilled nursing facilities (SNF) business segment (except for a few specific properties, so Ventas still runs a few SNFs). We already own another company in the SNF space in the healthcare REIT sector: Omega Healthcare Investors Inc (OHI) and did not want another company overlapping the investment space. In order to simplify our portfolio, we sold our tiny position in CCP.

Full Disclosure: Long OHI, VTR. Our full list of holdings is available here.