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EDITOR'S NOTE: This will be the last edition of Taking Stock. Malcolm Berko's family announced his death this week. A former stockbroker, Berko began writing his union column in 1982. He left a doctor son, a daughter who practices law and four grandchildren.
Dear Mr. Berko, Last year, I had a hard time buying a variety of high yielding stocks that you and my two best brokers recommended. Brokers have lost more than 70% and have done worse than you. According to my wife, who is my business partner and my bookkeeping, I have had a net return of less than 3.6% in 2018, including interest and dividends.
A friend of mine has found an action called Washington Prime that is worth $ 5.50 a share and earns close to 18%. I would like to buy 5,000 shares and would appreciate your opinion. – E.Y., Erie, Pennsylvania
Dear E.Y .: You must be masochistic and come back to me for more punishment. Your parents have surely let you down on your head shortly after you were born or they fed you too much Dum-Dums during your formative years.
Washington Prime Group (WPG – $ 4.50) is an unrestrained speculation that could burn your intestines and fry your occipital lobes. At first I thought you needed a psychiatrist, but after reviewing WPG, I think you need a discount broker. Your two major brokers will charge you large portions of your body to buy 5,000 WPG shares, while discount brokers like Vanguard or Schwab will charge $ 4.95 for the complete kit and kaboodle.
WPG is a mephitic speculation, abominable and stupid, but given its 17.7% dividend, it could be an incredibly clever, clever and ingenious speculation. While WPG has my imprimatur (if you can afford the risk), let it be known that this is not a stock for widows and orphans or sons and daughters of widows and orphans. And – surprise, surprise – CFRA, the largest institutional research firm in the world, which acquired Standard & Poor's Equity and Fund Research in 2016, subscribes to this review and gets a WPG purchase rating . On the other hand, Charlie Schwab suggests that WPG should be sold, believing it will significantly underperform the market in the next 12 months.
This self-managed REIT operates and develops shopping centers – 108 58 million square foot shopping centers – primarily community shopping centers located along highways, roads and busy thoroughfares in several major cities across the country. Most of WPG's community centers and shopping centers are located in Texas, Florida, Ohio, Illinois, and Indiana.
WPG's revenue comes from renting space for shoe stores, clothing manufacturers, restaurants, entertainment venues, department stores, and so on. The investor sentiment for most things related to the retail business has been extremely negative. Nevertheless, I think that WPG has made impressive progress in repositioning its portfolio, which suggests to me a 60% to 70% probability of maintaining the $ 1.00 dividend. However, the bears, 22% of the shares, rely on a reduction of the dividend. I think the market has created a unique opportunity at a reduced price.
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