ANA BARAULIA/iStock via Getty Images
Co-Produced With Treading Softly
Building wealth has been a long-term goal of countless millions of Americans throughout the ages. Once your basic needs are met – food, safety, shelter – you can start to focus beyond the immediate realm into building success for the long term.
The simple method to building wealth, in my humble opinion, is tied to being able to see beyond the noise and fear and see into the reality of a company or opportunity.
Today, I want to examine such a situation, look at the massive impact of immediate sentiment, and see how real wealth can be developed by being level-headed and determined not to be an emotional trader.
A Little Backstory
We need to understand a little more of the backstory to understand the situation.
First, we need to understand the type of investors that High Dividend Opportunities members are. We are income investors, and we are value investors as well. This means we demand a high level of current income from our investments while we examine a firm’s fundamentals – attempting to look beyond short-term swings and shifts in sentiment, beyond perceived risks to look at fundamental ones.
Often, this lands us in the realm of contrarian investing. We invest against the grain of sentiment when yields are unusually elevated, and others are crying blood in the streets. When others panic, we look for opportunities to buy income for pennies on the dollar.
Our Case Study
We will look into Global Partners LP (GLP), which currently yields 8.5% and just recently raised its distribution again by 1.7%. GLP has been a long-term HDO pick for our members, which means we keep a very close eye on their financial health and the outlook of the firm. Since our last direct coverage a year ago, GLP has strongly outperformed the market:
This period of outperformance was not without periods of concern for many. Before we dive deeper into this, let’s look into a brief understanding of what GLP does as a company.
GLP is a midstream/downstream MLP. A Midstream firm operates as a middleman between Oil and Gas producers and companies that interact directly with the public consumer. GLP is a midstream via its terminaling and fuel distribution businesses. It is downstream – interacting directly with consumers via its owned and operated convenience store and gas station operations.
Note: GLP does issue a K-1 at tax time as a master …….