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Which Of These 15%-Plus Yielders Should I Buy: SMHD Or SMHB?

Published Fri, 22 Mar 2019 09:30:00 -0400 on Seeking Alpha

Co-produced with PendragonY for High Dividend Opportunities.

UBS ETRACS Monthly Pay 2xLeveraged US Small Cap High Dividend (SMHD) is a UBS Leveraged Exchange Traded Product that provides exposure to high-yielding stocks with a smaller market cap. By using the Solactive US Small Cap High Dividend Index that tracks 100 individual high yielding small cap stocks, the ETN mitigates the risks from holding any single company. SMHD currently yields 15.2%.
SMHD has the advantage of providing an instant diversification with exposure to 100 of the highest-yielding small cap stocks. We have been long SMHD for a while now and it has been a strong out-performer, returning 86% since we introduced it to our model high-dividend portfolio and recommended it to our investors exactly three years ago.

SMHD Yields 15.2% based on its recent closing price of $16.25 and a distribution of $0.6157 over the last three months.

Source: Company website
UBS Bank, the issuer of SMHD, announced in October of last year that it was discontinuing the issuance of new SMHD shares. This means that the number of SMHD shares available on the markets will not grow anymore (and could shrink), while demand for the shares has not diminished. This has resulted in SMHD trading at a huge premium to its underlying assets of $2.53, or 18.4%.
With SMHD trading at such a high premium, there can be a significant loss if UBS decides to redeem the shares, since the bank can redeem them at their... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
ARMOUR RESIDENTIAL REIT 17.26   0.0 -9.30 2.04 12.03
PROSPECT CAPITAL 6.71   16.8 0.40 0.72 10.76
GEO GROUP 18.35   14.1 1.30 1.92 10.56
TCP CAPITAL 13.75   29.3 0.47 1.44 10.48
B&G FOODS 19.58   7.2 2.72 1.90 9.75
HERCULES TECH GROWTH CAP 13.26   10.0 1.32 1.28 9.55
TANGER FACTORY OUTLET CENTERS 16.50   21.4 0.77 1.42 8.35
LADDER CAPITAL 17.14   12.1 1.42 1.36 7.96
CVR ENERGY 41.02   10.5 3.92 3.00 7.06
UBS 11.53   9.8 1.18 0.00 5.93
COVANTA HOLDING 17.42   0.0 -0.27 1.00 5.85
MAIN STREET CAPITAL 43.18   16.8 2.57 2.46 5.69
PITNEY BOWES 4.49   5.8 0.77 0.20 4.51
LEXINGTON REALTY TRUST 10.09   8.4 1.20 0.41 4.10
ENLINK MIDSTREAM PARTNERS L.P. 12.05   0.0 0.00 0.00 0.00


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