3 Income Ideas For Contrarians

It’s only a matter of time before the stock retakes its old high and, once it breaks through, rises from there. The time between now and then is, in my view, short.

STAG Industrial (STAG)

STAG isn’t a tech stock, but it gives us a piece of a corner of the tech market that will grow no matter how many more lockdowns we see: e-commerce.

The real estate investment trust owns warehouses, and Amazon (AMZN) is its top tenant. Other e-commerce beneficiaries, like FedEx (FDX) and XPO Logistics (XPO), also rent space from STAG, as do other firms that will benefit from an economic bounce-back, like Ford Motor Company (F) and Costco Wholesale (COST).

STAG is known for paying dividends monthly, as opposed to quarterly. And while it’s not known for dividend growth—the payout has only risen about 20% in the last eight years—you do get an attractive 4.5% yield, triple what the average S&P 500 stock pays. Three other strengths make STAG a nice play for this bull run:

  1. Its payout accounts for 76% of funds from operations (FFO, the best measure of REIT profitability), which is very sustainable for STAG, with its steady rental income and 97% occupancy rate.
  2. It’s attractively priced, at 16.8-times FFO.
  3. While the stock has climbed back its pre-pandemic high, that happened very recently, and you need to go by STAG’s total return—including its big dividend—to get it over the line.

stag

The bottom line? We’ve got a nice setup for STAG, as its warehouses supply the badly-needed retail therapy consumers are about to embark on.

Allstate Corp. (ALL)

Long-term interest rates took a breather after the 10-year Treasury yield broke through 1.5%, up sharply from 0.9% in January. But now that it’s well above the psychological 1% barrier, I expect it to soar further yet. That’s good news for Allstate Corp., which saw its costs drop in 2020 as lockdowns parked cars across the country, slashing claims at its auto-insurance business.

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