January 20, 2013 in Business

Textainer’s consistent growth makes for smart investment

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If you’re looking for a solid dividend payer for your portfolio, look at Textainer (NYSE: TGH), which leases intermodal containers worldwide. Its dividend yield was recently 5.6 percent, and the payout has more than doubled over the past five years, with more room to grow.

Intermodal containers are those metal boxes stacked on top of one another in shipyards and railyards. They’re advantageous because they can be transported on trains, ships and trucks with relative ease.

About 95 percent of all global trade travels by ship. And Textainer, though a small company, is one of the biggest players in helping companies move stuff around the world, leasing containers to more than 400 shippers.

Having such a wide variety of clients is crucial, as it leads to fewer empty berths. Items dropped off at one location can be replaced by other items going elsewhere. Textainer’s containers are utilized – and monetized – almost everywhere they travel.

Textainer has 23 years of consecutive dividend increases, management that has been with the company for an average of 19 years, and is, at this point, relatively fairly valued with a P/E ratio near 8. A global economic recovery should boost Textainer’s growth rate, and there are signs that it’s under way. If you’re intrigued, learn more about the company. (The Motley Fool’s Income Investor newsletter has recommended Textainer.)

Ask the Fool

Q: If I open a brokerage account and the brokerage goes bankrupt or closes, what happens to my account? – M.W., Lafayette, Ind.

A: Most brokerages carry Securities Investor Protection Corp. (SIPC) insurance, protecting your account for up to $500,000, including up to $250,000 in cash claims. (Many carry additional insurance, too.)

This doesn’t protect you against a loss in value of your holdings. Instead, it protects against the financial failure of broker-dealers. To ensure that a brokerage is SIPC-protected, check its website for assurance or call it up and ask.

Learn more about brokerages and how to choose a good one at broker.fool.com and more about the SIPC at sipc.org.

Q: I know that the market goes up and down with the buying and selling of stocks. But exactly who’s doing all the buying and selling? – T.L., Bremerton.

A: Many buyers and sellers are individual investors like us, placing small trade orders through our brokerages. There are also big institutional investors, such as mutual funds, pension funds, banks and insurance companies. And in the last few years, high-frequency trading firms that place gobs of automated orders are accounting for a lot of the market’s activity.

Stock prices fluctuate due to supply and demand. If a stock is in great demand, its price will rise. If it falls out of favor, there will be lots of sellers, and the price will keep falling until it hits levels at which others will buy.

One advantage we small investors have is that we can discover a small gem and invest in it early. When institutions eventually start buying (they often can’t get too involved with very small companies), they’ll drive up its price, benefiting the smaller, earlier investors.

My smartest investment

One of the smartest things I’ve done with my investing is to start using stop-loss orders, saving myself a fortune. I use them when I take chances on speculative stocks, and they keep me from getting burned. And even on my solid, long-term investments, they spare me big drops and I can always buy back in later. The trick is just believing in why you bought it in the first place and not hesitating to jump back in while it’s down. – Z., online

The Fool responds: Placing stop-loss orders when you buy a stock can indeed be helpful. They direct your brokerage to sell the shares immediately if they fall below a price you specify, such as 10 percent below your purchase price. That way, you can avoid losing more than 10 percent.

Be careful, though, because many people end up ejected out of good stocks that temporarily swoon and soon recover. And frequent buying and selling generates trading costs. Some brokerages allow you to set trailing stop-loss orders that reset at a certain percent below the current price whenever the current price changes.


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