I rarely write about my income plays, as they're about as exciting as going to the doctor for some painful medical exam. However, just as doing a dreaded medical test can be vital to your physical health, so too can having a good dollop of income stocks in your portfolio be a key to your financial health.
Indeed, after a recent sharp drop in biotech stocks, I sure was glad that I had a decent portion of my personal portfolio in boring, low-beta income plays.
With that in mind, let me highlight a couple of names that serve as core income plays in my own portfolio:
Chatham Lodging Trust (CLDT)
This real estate investment trust owns upscale extended-stay hotels and premium hotels throughout much of America, and its rock-solid management team has been leading Chatham effectively since the mid-1990s.
I've owned CLDT since early 2012, and the stock has doubled in price since then, while management has raised the dividend by more than 120%. As a result, Chatham currently yields about 6.2%, and the firm makes monthly rather than quarterly dividend payouts.
That's not bad for a boring income play. In fact, I rarely even have to think about what Chatham stock is doing even though it's one of my larger holdings.
Macquarie Infrastructure Corp. (MIC)
Macquarie operates a myriad of boring infrastructure assets that facilitate the movement of clean water, natural gas and electricity. This collection of assets provides a reliable revenue stream and allows the company to pay out a sizable dividend.
The stock is down by a third from where it began the year after the previous management made some capital-allocation errors that forced a 31% dividend cut:
However, Macquarie's new management seems to be righting the ship. The firm recently made what I think is the right decision to sell off some non-core assets and pare down debt. For example, MIC recently announced plans to sell its in Bayonne, N.J., power plant for about $900 million in cash and assumed debt.
Macquarie intends to use the proceeds to reduce overall debt, including $150 million that's outstanding on a revolving credit facility. That should drop the firm's debt-to-EBITDA ratio below 4.5, which is solidly manageable.
The stock currently yields around 8.5%, which more than enough of a payout for me as I wait for the new team to continue making MIC's underlying businesses more efficient.
(This article was originally sent Sept. 7 to subscribers of TheStreet's Income Seeker, a product presenting the world of opportunities in fixed income and dividend stocks. Click here to learn more about Income Seeker and to receive articles like this each day from Nick McCullum, Hale Stewart, Jonathan Heller and others.)