Two High Yield Plays: Unit Corporation and Albemarle Preferred Shares
Investing in high yield plays can be an effective strategy for generating income in today’s low-interest-rate environment. This thesis focuses on two such investments: Unit Corporation, a small-cap contract driller and gas play, and Albemarle Preferred Shares. Both of these investments offer attractive yields without being overly reliant on fund management.
Unit Corporation: A Small-Cap Contract Driller and Gas Play
Unit Corporation (UNC) is a leading contract driller and gas producer based in the United States. The company operates in the Permian Basin, one of the most active and productive regions for oil and gas exploration in the world. With a market capitalization of around $1.2 billion, UNC is a small-cap stock that offers an impressive yield of over 18%.
The company’s high yield is primarily due to its generous dividend policy. UNC has a long history of paying dividends to its shareholders, with a dividend yield that has consistently exceeded 10% over the past decade. The company’s strong cash flows from operations, supported by its position in the active Permian Basin, enable it to maintain this dividend policy.
Moreover, UNC is well-positioned to benefit from the ongoing energy transition. The company’s focus on natural gas production makes it an attractive investment for those seeking exposure to the cleaner-burning fuel. Natural gas is expected to play an increasingly important role in the global energy mix as countries move towards reducing their carbon emissions.
Albemarle Preferred Shares: High Yield from a Leading Specialty Chemicals Company
Albemarle Corporation (ALB) is a leading global specialty chemicals company that operates in various end markets, including electronics, transportation, industrial, and consumer applications. Albemarle’s preferred shares (ALB.PA) currently offer a yield of around 9.15%.
The high yield on Albemarle’s preferred shares is due to their status as preferred stock. Preferred stockholders have priority over common stockholders when it comes to dividend payments, making preferred shares a more stable and predictable investment than common stock. Albemarle’s strong financial position, with a debt-to-equity ratio of around 1.5, further enhances the appeal of its preferred shares.
Moreover, Albemarle’s diverse end markets provide a degree of resilience to economic downturns. The company’s electronics segment, which accounts for around 40% of its revenue, benefits from the ongoing growth of the technology sector. Meanwhile, the industrial segment, which includes lithium and bromine products, is expected to benefit from the increasing demand for electric vehicles and their batteries.
Impact on Individuals
For individual investors seeking to generate income from their investments, these high yield plays offer an attractive alternative to traditional savings accounts or bonds. The high yields on offer can help investors to build a steady income stream, particularly in a low-interest-rate environment.
Impact on the World
The investments in Unit Corporation and Albemarle Preferred Shares have wider implications for the global economy. The demand for energy, particularly natural gas, is expected to remain strong, driven by the ongoing energy transition. Investments in companies like Unit Corporation can help to meet this demand, supporting economic growth and job creation in the energy sector.
Additionally, the demand for specialty chemicals, particularly those used in the technology sector, is expected to continue to grow. Companies like Albemarle are well-positioned to benefit from this trend, contributing to economic growth and innovation in the technology sector.
Conclusion
In conclusion, Unit Corporation and Albemarle Preferred Shares offer attractive high yields for investors seeking income-generating investments. These investments are not reliant on fund management and offer a degree of stability and predictability, making them attractive alternatives to traditional savings accounts or bonds. Moreover, they have wider implications for the global economy, supporting economic growth and innovation in the energy and technology sectors.
It is important to note that all investments carry risks, and investors should carefully consider their individual financial circumstances and investment objectives before making any investment decisions. Diversification and careful research are essential components of a successful investment strategy.
- Unit Corporation: A small-cap contract driller and gas play with a yield of over 18%
- Albemarle Preferred Shares: A high yield investment from a leading specialty chemicals company
- Both investments offer attractive yields without being overly reliant on fund management
- Unit Corporation is well-positioned to benefit from the ongoing energy transition
- Albemarle’s preferred shares offer a stable and predictable investment
- Both investments have wider implications for the global economy
