Stop trading health for wealth and buy income instead

Collaboration with Trading Softly

There is a saying:

You trade your health for wealth, and your wealth for health. ”

Sounds like a conundrum.

The reality of it is that so many work infinitely Pour out your time, heart and soul, drain your health and neglect relationships to get rich.

As one famous rapper, 50 Cent, puts it:

Get rich or die

Same concept. As young people, we have plenty of health and life ahead of us, which we are often willing to trade in exchange for work in order to become rich.

But often, once you achieve that wealth, you have to start using it just as quickly to cover the medical bills of your life. It is also related to the lifestyle of wanting to be rich.

The average age of millionaires is 57. For most people, this means decades of sacrificing health at the altar of getting rich. That’s quite a sacrifice. You may give up time for relationships and hobbies, and give up on your dreams. All to fulfill the vague idea of ​​getting rich.

This is where I have long objected. Getting rich doesn’t seem like a legitimate goal in life. It’s the same as thinking that the goal of “being alive” in 5 years is also not a real goal. both are in existence.

I believe that being wealthy is a means to an end. what to do with your wealth Can you do it without getting rich or getting rich? Perhaps you don’t need to get rich endlessly. Having billions is definitely nice, but what most of us really want is financial stability. We know you can maintain a comfortable lifestyle forever.

what do i do? I buy income-generating assets. Essentially, I buy income. I buy the income I need to reach my goals and pay the bills. My goal is to have the income I need now and at least 25% extra income that I can reinvest to make more. As such, I have a specific goal outside of the goal of “being there” and the market is simply the tool I use to achieve it. , we can measure how close we are to it.

Today I’d like to introduce you to two options that can help you do just that. They focus on healthcare and entertainment. Two things we often give up on the road to wealth. Instead, they profit from everyone who owns them and ignores both.

Let’s dive in.

Pick #1: HQH – Yield 9.2%

Closed-end funds tend to amplify market movements. While this can be disconcerting for some investors, it creates an opportunity for income investors.let’s see Investor in Tekla Healthcare (HQH). HQH invests in the healthcare sector. Biotech and pharmaceuticals are the biggest, but HQH exposes every corner of healthcare.

Like any sector, healthcare has had its ups and downs, but over the long term, HQH has significantly outperformed the S&P 500.

It’s easy to see why. Over the last 40 years, the healthcare industry has undergone dramatic changes. Advances in medicine have created numerous drugs and treatments for previously untreatable ailments.

With an aging population, the demand for all healthcare is increasing. It is used in both life-sustaining treatments, such as heart surgery, and elective quality-of-life treatments, such as knee replacement surgery. Baby boomers are huge, wealthy, and need more medical care every day.

While the healthcare sector continues to decline and has to constantly deal with an above-average amount of government regulation, the long-term outlook is clearly a long-term uptrend.

HQH is a proven option for investors to gain exposure to the sector. Currently HQH is trading at a discount of over 10% on his NAV. One reason closed-end funds (“CEFs”) are more volatile is that market prices can be decoupled from his NAV. It can fall faster, often rushing to catch up with the rise. The current 11% discount is the biggest discount since early 2021.

For income investors, HQH has a variable dividend policy. Divide 2% of NAV quarterly. This means our income changes quarter to quarter. This policy ensures that funds are neither over- or under-distributed. We always pay a reasonable amount in relation to NAV.

This type of policy creates a very durable CEF that can stand the test of time. However, investors should be prepared for some discrepancies. Over the past year, this policy has reduced dividends. Dividends increase when stocks bottom out and NAV recovers.

The long-term dynamics of the healthcare sector are structural and will continue for decades. This is a sector we always want to maintain exposure to and HQH is a great durable option to gain that exposure with his 30+ year track record.

Pick #2: EPR – Yield 9%

EPR properties (EPR) prices have fallen dramatically from recent highs. It was actually up year-to-date in August, but since then, like most of the market, it’s down 25% year-to-date. But for EPR, Cineworld Group’s (OTCPK:CNNWQ) bankruptcy filing could play a big role. Cineworld owns one of EPR’s largest tenants, Regal Cinemas in the US.

Looking at Cineworld’s second quarter earnings, it’s clear where the problem lies. Revenues of $1.5 billion, EBITDA of $364 million and a meager operating income, all blown away by a staggering financial cost of $409 million.

Regal is Cineworld’s biggest revenue driver, and Canada-based Cineplex is reportedly considering a merger with Regal. Cineworld had previously agreed to acquire Cineplex, but walked away from the deal early in COVID. That move sparked a lawsuit that awarded Cineplex a $1 billion award in a case that is now on appeal.

Such a merger could benefit EPR as Cineplex would take over substantially all of Regal’s leases. A lease with an EPR is one of the assets Cineplex is looking to purchase. A cinema company without cinemas is not worth much.

Meanwhile, Cineworld is seeking a speedy resolution of its bankruptcy. Here is the current proposed schedule:

For EPR, this is great news. The uncertainty about what will happen is likely much worse than what the news will be: So far, Cineworld has “rejected” 20 of his leases. However, they are all locations that have ceased operations, and according to our research, none were owned by EPR. This is not surprising, as EPR has long focused on high-end locations that generate above-average revenues. Cineworld aims to move away from leasing in sub-par locations.

Cineworld seems to have started negotiations with EPR. What’s unclear is whether EPR is willing to negotiate with Cineworld. In March, CEO Greg Silvers predicted that some stores would close.

I’m sure the closure will reveal a few things about our portfolio so that everyone can understand. They are in the top third by income and 99% are in the top half. So I feel I’m in a much better position compared to when I have closures. I think there’s been a big discussion about relocating theater assets, and a lot of discussion about what to do with the theater building, but I think that dismisses the idea of ​​where the real value lies. That’s most of our land plot, 15 to 20 acres.

So how do we repurpose the theater building?

We’re doing well, but I think people are stuck with the idea of ​​how this building should be transformed. I think people need to realize what they wanted from us. But on a cash flow basis, he sold for a sixth of the cash flow he was enjoying.

Indeed, since March 2022, interest rates have risen and the world has changed. Still, there’s no doubt that EPR could sell some Regal locations for a much bigger profit than their current rent value. EPR is not afraid to empty these places back and lease them to other tenants or sell them to whoever has the bulldozer.

EPR is not desperate. It has over $168 million in cash and no balance on the $1 billion revolver. The EPR dividend is well covered by cash flow, providing a good cushion for FFO reduction. EPR dividends are not in jeopardy as AFFO payout percentage is less than 70%. These realities give EPR an edge in any negotiation. Perhaps it makes sense for EPR to waive some of the deferred rent. Depending on your location, it may make sense for EPR to lower your rent. Maybe not. EPR approaches these negotiations with the luxury of flexibility and cash to back management decisions. At the negotiating table, it’s powerful and a luxury that Cineworld lacks.

Given the timeline, you can expect management to look very good by the third quarter earnings. It’s unclear if they have the liberty to disclose it, or if the negotiations are covered by a confidentiality agreement.At the very least, the guidance on administrative issues should be accurate. Three to four months will give us a lot of certainty as to how this will work out.

The EPR is trading at a very attractive price today and we are very confident about the dividend. While waiting for bankruptcy proceedings to be completed, you can receive payments and hold out until the market comes back up again. If you are a more conservative investor, consider EPR convertible preferred stock.

Conclusion

With HQH and EPR, you can make an unusually large income from two sources that many people often ignore in their march for wealth. For a long time I have tried to teach others that worshiping the “Universal Dollar” is a horrible religion. I have. Take the dollar off the pedestal and let it work. Through my years of banking and investing, I have learned one simple truth.

Will you be able to achieve your goals and maintain your health and relationships when you retire? I hope that Move from ‘exists’ to ‘do’ or attainment type goals. Leverage your dollars and income into tools to achieve it.

Retirement can be a relaxing time and we hope it will be! We also hope that you use the time after retirement to spend more time achieving your life goals. Travel the world, help the less fortunate, and get closer to your family. Money can make them easier, but you can’t do it alone.

You need health for that, so don’t give it away for a few more shekels. Buy income and pay it your way.