HASI has a history of increasing their dividend payout with the December payment that is usually paid first week of January Their current dividend is $0.30 quarterly and I’m expecting an increase to $0.34 a quarter. Last year the HASI distribution was about 65% tax deferred. When i started buying HASI in Feb 2015 the market cap was about $350 M With this secondary the market cap will reach a little over $1 B at the current depressed price of $20.56 All of these are wealth building criteria that I look for to grow my portfolio. There is still plenty of room for it to grow and bulk up a portfolio.
One thing I’m confused about. You say that the distribution is 65% tax deferred. Normally, the dividends that REITs pay are taxed more heavily at the shareholder level because the REIT structure grants the corporation significant tax benefits. More specifically, the dividend on most REITs never becomes “qualified”, so it is taxed at marginal income rates rather than at marginal capital gains tax rates.
How does HASI achieve a tax deferred status? Tax loss carryforwards? Return of capital? Something else?
Thanks for your help in aiding my understanding.
Thanks also for posting and for your willingness to share your unique approach. I add my “welcome” to the chorus.
Thanks and best wishes,
TMFDatabaseBob (no position in HASI; REITs and companies that directly support the real estate industry make up about 8% of my portfolio)
See my holdings here: http://my.fool.com/profile/TMFDatabasebob/info.aspx
Peace on Earth
HASI revenue is going to be up like 50% in 2016 vs 2014…certainly no shopify, but not bad…however, in those same 2 years share count has almost doubled. Looks like a ponzi scheme to me.
I have held shares since the IPO in 2013. HASI regularly does secondaries and uses that money to grow it’s loan portfolio, like BOFI used to before it’s SP became grossly undervalued. They were in business 20 years prior to their IPO. Insiders own a lot of shares. Can’t get the total at the moment.
If you go to the HASI page on Seeking Alpha there are some good writers covering it. Tom Konrad, Brad Thomas and Dividend Sleuth. Lot of bad writers on SA so be selective.
One thing I’m confused about. You say that the distribution is 65% tax deferred
I said— last year it was about 65% tax deferred. The tax deferral is slowly coming down and is reported by the company in a press release after the new year. My 1099 for the Oct 2015 payment listed the following information
Numbers For illustration purposes (Oct 2015 payment)
1}$34 Non Qualified Dividend
2)$114 Non Dividend Distribution
and I had received $360 IN CASH for that payment
similar figures were listed for each quarter based upon how many shares I owned at each X-div date
To sum up Items #1 and #2 are taken from the 1099 by my accountant and put on my Tax return to get taxed.
NO 3 is the important wealth builder because that $360 is what I received and was either spent or if excess cash was reinvested to buy more shares at the next quarter X-div date (About 59% tax deferred)
So yes—WASH RINSE and REPEAT then
WASH RINSE and REPEAT again and again and again
I don’t have to sell anything to raise cash- I don’t have to keep looking for new investments I just have to watch to see that management keeps doing what they have been doing for the past 35 year without screwing up.
I JUST HAVE TO WAIT and most important I don’t need the share price to go up. All I need is for the partially tax deferred dividend to be paid and periodically raised. In fact stable prices allow me to buy more income for the same cash investment.
I talked about the tax advantages (to the corporation) of being a REIT. The cost to the company is that the regulations require that 90% of “earnings” be distributed to shareholders annually. Since a REIT has little in the way of retained earnings, they must either issue debt or equity to raise capital to expand their business. Issuing shares is rather common in the REIT industry, although you want to make sure that the people running the show are smart capital allocators and know when to use debt vs. equity.
That doesn’t make sense. Their revenue can be used to run and expand their business. It never becomes “earnings” so they never have to pay it out. Why would they need to borrow? They only need to borrow if they’re trying to pay out more. That’s why it’s a ponzi scheme – the business only seems to be growing because they’re “paying” 2 dollars (in dilution) for every dollar of new revenue.
I was glad to see you mention HASI. It is about 8% of my port. I got interested in it reading Tom Konrad on SA. He has a focus on dividend paying stocks that are involved in green investing. A couple other recs of his that I have are PEGI and BEP. I feel a little more confident in HASI so I have quite a bit more of it. I was reassured to see someone else has a large allocation in it, quite a bit more in your case. Good luck,
The point of this board is to discuss companies and what makes them good investments or not. I think it would make a more interesting discussion if you would address my concerns rather than “agreeing to disagree.”
HASI continues to be a good one for me. I just added more this morning at $19.8499 Hasi is down over $5 from it’s recent all time high of over $25 is a compelling buy to me. Especially when I expect the MOSTLY TAX DEFERRED distribution to be raised about $o.04 per quarter starting with the payment that will be paid in early January 2017.
I believe most people don’t understand what they do or care. They follow everyone else without thinking their might be an easier and better way. Their attitudes allow these companies to remain under priced for long periods of time and allow those involved to accumulate huge amounts of stock that generate even bigger portfolio growth under the radar. Everyone is all excited about AMZN AAPL BRK etc.
I walk down the side road picking up shares as best I can, and as cheaply as they will sell them to me.
I am SAUL’S guest here on this board and it’s not my intention to get into an argument with another poster.
I believe your statement is out of line, because I don’t believe you know anything about the company other than looking at it for maybe one fleeting minute and then making a serious unfounded charge that a company that has successfully been in business for about 35 years is not legitamate because of your off the cuff opinion.
That doesn’t make sense. Their revenue can be used to run and expand their business. It never becomes “earnings” so they never have to pay it out. Why would they need to borrow? They only need to borrow if they’re trying to pay out more. That’s why it’s a ponzi scheme – the business only seems to be growing because they’re “paying” 2 dollars (in dilution) for every dollar of new revenue.
Bear
I don’t think this is what is happening but I don’t know this company specifically. Look at something like BIP, it is my longest holding to date and uses most of their free cash flow for dividend. I think also somewhere like 60-70%. But they are also expanding and buying other assets to grow future cash flows. They do this by issuing additional “units” (the are an Limited Partnership) to raise the cash. As long as they are buying assets wisely, the addition cash flow over time outweighs the additional dilution.
Since HASI is a REIT, they have to pay out a large amount of their FCF as a dividend to get the tax benefit I believe. So if they want to expend, they wouldn’t be able to do it from current revenue
That doesn’t make sense. Their revenue can be used to run and expand their business.
You mean their profits (at least I hope you do). But since they’re a REIT, by law they must distribute at least 90% of their taxable income to shareholders, as others here have noted. (You may want to educate yourself about REITs before going much further about them.)
HASI is a special kind of REIT, since it doesn’t invest in real estate. (It “provides debt and equity financing to the energy efficiency and renewable energy markets.”) These oddball REITs should be out of bounds for typical individual investors, and that goes double for small ones such as HASI. It’s great that some folks have made money in it. But step carefully: the bones of many of these sorts of REITs litter the trail.
You mean their profits (at least I hope you do). But since they’re a REIT, by law they must distribute at least 90% of their taxable income to shareholders, as others here have noted. (You may want to educate yourself about REITs before going much further about them.)
No, I meant revenue. Revenue minus Expenses = Profit. If the company is spending to expand, expenses go up. Profit does not have to be paid out at 90% (or at any rate), because profit never happens. What am I missing?
These oddball REITs should be out of bounds for typical individual investors, and that goes double for small ones such as HASI. It’s great that some folks have made money in it. But step carefully: the bones of many of these sorts of REITs litter the trail.