There’s been plenty of day-to-day volatility lately, with seemingly every global headline moving the markets up or down. More importantly, the Fed is laying out the ground game for future interest-rate policy, and we can expect limited increases to likely begin in June 2015 at the earliest.
The good news for high-yield seekers is that plenty of stocks out there aren’t planning to wait that long to start boosting their yields. The best time to buy is ahead of the dividend increase because your position has only one way to go from there…up.
The stock I’ll tell you about today has already announced plans to raise its payout by 28 times, which should ramp the price up higher. So, I recommend you get in well before the payout rise.
Cheniere Energy Partners L.P. Holdings (CQH)
Cheniere Energy Partners L.P. Holdings (CQH) went public less than a year ago, and since then, it’s been attracting more and more attention on the rising prospects of exporting liquefied natural gas (LNG) to foreign markets in early 2015. You may have already heard of parent company Cheniere Energy (LNG) and its nearly completed Sabine Pass, Louisiana terminal.
Most investors are unaware that Cheniere is building a second LNG terminal in Corpus Christi, Texas that will be activated closer to 2020 and leverages on the company’s first-to-market position as the leading exporter of LNG in the U.S. CQH is not just a play on the current Sabine Pass LNG terminal but also has a majority interest in the Corpus Christi plant.
In Cash Machine, we made a 135% total return on Cheniere Energy Partners L.P. (CQP) before pivoting to CQH, and some of my subscribers wondered why I decided to make such a move. Well, CQH also stands to benefit from that second Cheniere LNG terminal in Texas — unlike CQP, which just has the Sabine Pass terminal. As such, I believe that CQH has considerably more upside from current levels than CQP. (Another difference is that it’s structured as a C-corporation rather than an MLP. So, retirement accounts can own CQH shares.)
CQH intends to grow its annual dividend to $2.20 per share within the next year, which should take CQH stock much higher from its current $24.75 price. That $2.20 projected annual dividend implies a yield of about 9%, and in my view, CQH stock itself has over 50% upside potential appreciation to be realized over the next two years.
The most recent payout was 1.9 cents per share in late August, but you can expect quarterly dividends to increase sequentially going forward and for CQH stock to come out from under the radar to many broker buy lists. Therefore, investors who get in on CQH ahead of the dividend growth should make significant profit potential.
Bryan Perry is the editor of Cash Machine, a newsletter focused on high-yield income investing with the goal of maintaining a blended total yield of 10% across two portfolios. And most recently, Bryan introduced Cash Machine Trader. With this service, he’s increasing the income stream potential even further by using covered call writing strategies to generate yield in the form of option premium — on top of capital appreciation income from well-known stocks.
