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Pullback And 15% Yield Create Unique Buying Opportunity For ECC

Published Thu, 03 Oct 2019 08:35:00 -0400 on Seeking Alpha

Co-produced with Treading Softly and Beyond Saving
At High Dividend Opportunities, we are used to investing in securities that are often misunderstood and thus mispriced. Today we want to talk about a "super high dividend stock" we have highlighted in in the past and that has taken a beating lately. The investment is Eagle Point Credit Company (ECC), a Collateralized Loan Obligation closed-end fund, or CLO CEF, has taken a beating probably from shorts and speculators who play on the fears we've actively tried to dispel when we first highlighted CLOs as a recession-resistant pick that has a proven track record. Recent negative news have focused on sentiment and appealed to natural fears of investors to scare them away from powerful income-generating securities. We will clarify why we are bullish on this investment and why the recent pullback of 20% has created a great buying opportunity for this 15% yielder!
Cash Flow is King
Let's first talk about ECC's cashflows before delving into the new angle of attack - ECC's Net Asset Value changes.
Recently we've seen reports touting GAAP as the only acceptable means to determine distribution coverage.
GAAP works wonderfully for C-corporations like Gamestop (GME) or Facebook (FB) but is readily accepted as completely unhelpful for determining dividend coverage for REITs like Realty Income (O) or Spirit Realty (SRC). Furthermore, Master Limited Partnerships or Midstream Corps are also frequent cases where... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
GAMESTOP 4.58   0.0 -10.70 0.00 33.12
OXFORD LANE CAPITAL 9.73   0.0 0.00 1.62 16.65
REALTY INCOME 74.49   56.9 1.31 2.72 3.69


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