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Forget Treasuries At 1.7%: We Like 10% Yield Government Exposure (GEO Group 2026 Bonds)

Published Tue, 15 Oct 2019 09:00:00 -0400 on Seeking Alpha

The political attacks against The GEO Group (GEO) have been ferocious and relentless. Yet the company's business and long-term financial strengths continue to grow. And while the 12.5% yield on shares of this "for-profit prison" REIT is tempting, it's actually the 10.5% yield to maturity on the company's 2026 bonds that are unusually attractive in terms of risk versus rewards. This article reviews the business, why the bonds sold off so dramatically (e.g. headlines risks, such as the company's ICE contracts pertaining to the US-Mexico "border crisis," and California's latest initiative to ban for-profit prisons), why the bonds are attractive (such as the company's financial strength and many long-term contracts with government entities), and concludes with our opinion about investing in these bonds.
Overview:
The GEO Group (formerly known as Wackenhut Corrections Corporation) was founded by George C. Zoley in 1984 and is headquartered in Boca Raton, FL. The company is a Real Estate Investment Trust ("REIT") which specializes in the ownership, lease, and management of correctional, detention, and reentry facilities. It's a provider of enhanced offender rehabilitation, post release support, electronic monitoring, and community-based programs.
GEO has three main business segments: GEO Secure Services (64.0% of FY18 Revenue); GEO Care (24.9%); International Services (10.9%) and Facility Construction and Design (0.2%). It has a total of 133 facilities (of which 78 are owned,... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
CORECIVIC 18.06   12.0 1.51 1.76 9.83

CORECIVIC - CXW
CORECIVIC - CXW  


Older articles featuring Corecivic (CXW):
Dividend Cuts And Overdue Rent: Previewing REIT Earnings Season
GEO Group: 11%+ Yield-To-Maturity Bond, A Steal At This Price
Dividends By The Numbers In June 2020 And 2020-Q2
The Dangers Of High-Yield Investing
GEO Group: Considering Whether A Dividend Cut Is On The Horizon
REITs Hit By 'Second Wave' Of Dividend Cuts
5 'Battleground' REITs Yielding 10% Or Higher That We're Buying
Our High Yield REIT Portfolio - Optimizing Rebound Potential
50 Top U.S. REITs By Gains And Yield Based On February Broker Forecasts
The Chase For Yield Is On

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