FTAI Stock: Earn a 7.32% High Dividend from This Diversified Business
Income Investors Shouldn’t Ignore FTAI Stock’s High Dividend Yield
Looking for investment ideas is difficult when the markets are trading near all-time highs. This is a unique situation to be in, because you may be thinking “if the market falls, I’ll start to invest more heavily into the markets.” On the other hand, you don’t want to miss the next leg up in the performance of the stock market. This could be described as a mental tug-of-war.
Rather than wasting time wondering what to do, and missing out on the upside of the markets, I would recommend looking at high dividend-paying stocks. This strategy involves owning shares of a company that pays a portion of its revenue to investors for being part-owners. Regardless of the performance of the stock, there will be a dividend paid out. Also, there is the potential to participate in the upside of the business, which only adds to your bottom line as an investor, through the stock price seeing a capital gain.
One company that should be considered as an investment opportunity is Fortress Transportation and Infrastructure Investors LLC (NYSE:FTAI). As of this writing, FTAI is offering a dividend yield of 7.31%, which is paid on a quarterly basis. Based on historical trends, the payments occur in February, May, August, and November.
Here is how this investment strategy works: let’s say you purchase $10,000 worth of FTAI stock. Simply by buying and holding the shares, a quarterly dividend of almost $183.00 would be directly put into your brokerage account or mailed to you as a check. This would amount to an annual dividend payment of $731.00. You would receive this dividend whether the markets fell or continued to trade higher.
This is the beauty of this investment strategy; there is never a need to time the market. Rather, more time spent holding the shares results in more returns.
At first, this investment strategy of finding high dividend-yielding stocks may seem unreal, but the history of the company does show evidence that this is quite possible. In 2015, FTAI stock began trading as a public company and paid a dividend to its investors in the same year. Since then, there hasn’t been one missed dividend payment, nor any reduction in the payments. This signals to the markets that rewarding shareholders is a high priority for the company.
Of course, as an investor, I would always want to know what the company does in order to be able to pay out a high dividend yield.
Business Overview and Operations
Fortress Transportation and Infrastructure owns and acquires high-quality infrastructure and equipment assets, which are used to transport goods and people globally. The equipment side of the business—including aviation assets and platforms, offshore energy, and intermodal transport assets—accounts for approximately 66% of the total equity value of the company. This side of the business has long-term contracts that are in place for assets that are leased by other companies. (Source: “Portfolio Overview,.” Fortress Transportation and Infrastructure Investors LLC, last accessed August 4, 2017.)
The other side of the business—ownership in terminals, railway lines, and ports across North America—accounts for about 33% of the total equity of the company. (Source: Ibid.)
The largest asset owned under the equipment segment is the aviation division, which accounts for 54% of the total equity within FTAI. There are 140 aviation assets, including 39 commercial aircraft and 101 commercial jet engines. The average remaining lease term is 32 months for the aircraft and 11 months for the jet engines. The client base includes various types of companies, such as passenger airlines and cargo shipping companies. (Source: “Aviation.,” Fortress Transportation and Infrastructure Investors LLC, last accessed August 4, 2017.)
The management team ensures that the company works closely with existing customers to extend the current leases, which reduces the risk to cash flows. When the terms are renewed, there tends to be a boost in the amount paid to Fortress Transportation and Infrastructure. This would be one method of increasing cash flow without the need of acquiring new assets. (Source: Ibid.)
Another division within the business is the Jefferson refinery terminal, which amounts to about 25% of the total equity of FTAI. The company owns 60% of the equity of the refinery, which is the largest in North America. The refinery can store 230,000 barrels of oil, which will eventually get transported within the U.S. and Canada. This business division only requires storing of oil, and does not need to taking on drilling risk. Many companies use this service until the oil is moved to its final destination. (Source: “Jefferson Terminal,.” Fortress Transportation and Infrastructure Investors LLC, last accessed August 4, 2017.)
This is a very steady income source for the business in good and bad oil markets. There is always the possibility that FTAI acquires the remaining 40% of the terminal to have full ownership. All this diversification helps generate a steady and predictable revenue stream for the entire business. (Source: Ibid.)
Since the initial public offering (IPO), the management team has ensured that the company is only holding assets which generate steady and growing cash flow for investors. Over a two-year period, the quarterly earnings have increased by 46%. (Source: “Fortress Transportation & Infrastructure Investors LLC,.” MarketWatch, last accessed August 4, 2017.)
There is a possibility that the company continues to grow well into the future. Below is a table of the projected forecasted annual earnings per share in the coming years.
|Year||Forecasted Earnings Per Share|
Final Thoughts About FTAI Stock
Normally when the markets are trading near a high, alternative investments are looked at, such as the bond market or savings investments. The problem is that, with interest rates at a record low, those aren’t ideal investments. In the case of savings accounts, there is very little return offered. In the case of bonds, when interest rates increase, bond prices decrease, which results in lower returns.
With a stake in FTAI stock, you would own part of a very diversified business, one that has the cash flow to support its high dividend payment. Fortress Transportation and Infrastructure Investors’ history of not reducing or missing a dividend payment shows that the company is friendly to shareholders.