Suburban Propane at 7.65%, Bobby?

"For comfort, warmth and convenience, your family, your farm, or your business can depend on the experience of Suburban Propane."

We owned SPH a few year ago, until it's p/e started to look upsidedown and generally TGTBT for our taste, and we blow out for a better deal (I believe it was a certain bulk shipping company and Seth Glickenhaus selection). Today, as we applied hoe to earth, we've uncovered it again. Whether or not it's a case of a bad penny is an open questions. SPH just raised it's dividend, and now yields 7.65%, and has reported a good quarter. They also announced that they'll be buying out their general partner's incentive shares for a big chunck of ordinary shares.

Smartmoney places SPH in odd company, with a group of stocks that draw earnings from consumers in various ways (from selling dog bones to boats) such as Petsmart, MarineMax, Tractor Supply Cp., Petco, and the massively shorted Overstock.com (the beat down website trying to buy household name status with the super tacky TV commercials). In that neighborhood, it turns out SPH looks good. Net margins are 4.40, with a five year growth rate estimate of almost 20%, a modest looking forward P/E of 13ish, and a PEG ration below the bogey, 1. It's beta appears freakishly low, blow .05, which is nice tonic to the motion of the S&P. It's price to cash flow comes in 4th in this group of 2 pet stores, a boat dealer, a tractor company for ping dingers, and a website that sells leftovers. But does that make this company's dividend safe? As Dustin Hoffman was once asked by a man holding a drill to Dusty's teeth: "is it safe?".

If so, it's 7.65% yield looks tempting in relation to the alternatives. But maybe it's a better to wait for a dip than rush right in and be one. A quick look at the site shows them set up to deal on the east and south west coast, but not many places in between; and they are selling franchises, which is a good way to generate ongoing earnings. Room to grow, perhaps.

The SPH chart looks fairly in the middle, about half way between Mr. Bollinger's bands, and its 70 day moving average is around 32, so to lock in a better deal, it needs to come down a few points from the 34 level, where it trades today. Wait for a dip (which will increase your yield) and keep a close watch on it (ie, a tight stop loss order) and it should offer a better than average return with regular compounding interest in an age of buybacks when Warren talks to Bill and Bill thinks it over, announces it, and actually feels like buying his company's stock.

Wating for the Other Shoe? Wait in Style: IHG, and RNHDA

The Yield Hoe enters the world with this first posting, the start of an ongoing search for outsized yield and greater risk adjusted returns, using screens, calculations, fact checking and questions with respect to that other way of extracting cash from the world's securities markets-- via the coupon, dividend, and compounding interest payments. The goal is simple enough, so the process should remain simple too: find an use the best way to find them, do the math on them, check the facts of the issuer's situation as best we realistically can, and keep an eye on them. Watch for news, trends and industry developements that can take an investor down to China Town.

Hence, the mission of The Yield Hoe is to attach question marks to higher yielding investment ideas that one can find floating around the markets, put there by companies promising regular outsized payoffs, while asking ourselves what every investor should ask themselves where and when they find terms of a deal that appear too good to be true (hereafter: "TGTBT": why?

This is not to say we have the answers.

On the one hand, we tend to agree with the wisdom of the old timers who trained us in the bond selling business (many years ago): "the greater the yield verses the treasuries, the more worts to be found on the thing" Yet, on the other hand, we've seen the greater risk adjusted rewards harvested by High Yield investment managers who appear to do a better job of compounding returns, while taking on even less risk than some of the best asset mangers who limit themselves to other areas. And in between, there are these opportunities that arise, as companies change and modify their capitalization, sell divisions, exit markets, try to gain investor awareness the old fashioned way, redistribute cash and increase their standing. A good credit rating means a company lives to play another day.

For example, we've run a screen, and here's what popped up today:

29.90%, IHG, or Intercontinental Hotels, the largest hotel chain in the world by number of rooms, with outsized revenue growth this past quarter. The dividend looks like a regular hog leg strapped on to each ADR share. What gives? This is a real company, with nothing to hang its head about. But investors on Yahoo's boards are asking the same thing. Who knows? And so, that is how an inquiry begins.

Yield Hoe ("YH") Rating: Maybe, with a tight stop and in a small way.

15.30%, RNHDA, Reinhold Industries, Inc., which "manufactures custom composite components and sheet molding compounds for various applications in the United States and Europe". Cryptic enough, unless you dig a little to find that they upgrade old ICBMs. Scratch it more (on a recent 8k), and you'll find it recently sold "its NP Aerospace Limited subsidiary to TCG Guardian 2 Limited ("TCG"), an affiliate of The Carlyle Group, for approximately $53,400,000 in cash," and paid a special dividend of 6 dollars back in December of 2005. So a very real company takes them real seriously. Okay. RNHDA is trading near a 10 week average, which makes it look like a square in the trading area. The question: will the supersized dividend remain in place? If so, why? Again, who knows? What does it say about the company's Investor Relations?

YH Rating: TGTBT, and I'm thinking it's not the best place for a squirrel to store his nuts.