Bottom of the Barrel: Investigating the Income Stocks

Over the past couple of years, the Bottom of the Barrel portfolio has profiled nearly 40 companies that, for the most part, provide small-cap growth potential for your portfolio. However, in an attempt to diversify the offerings, I've also occasionally looked for small-cap companies that not only have a good niche market and growth potential but also provide a meaningful income stream in the form of dividends.

Not surprisingly -- given the overall tenor of the market over the same time period -- the dividend-producing stocks have performed well. To conclude my comprehensive review of the Bottom of the Barrel portfolio, I'll review the income stocks featured in the group as well as their future prospects.

Reaping Dividends Here's an update on the Barrel income portfolio
Rating	Company	Date of Mention	Current Price	Mention Price	Price Change	Current Yield
	Ameron (AMN:NYSE)*	11/6/2002	$34.35	$25.30	35.8%	2.32%
	Hawaiian Electric (HE:NYSE)	7/31/2002	43.55	41.86	4.0	5.83
	UGI Corp. (UGI:NYSE)*	6/26/2002	29.96	21.94	36.6	3.71
	Acadia Realty (AKR:NYSE)	6/5/2002	10.70	7.03	52.2	5.50
	Capital Automotive (CARS:Nasdaq)	4/3/2002	28.94	22.95	26.1	5.67
	Alexandria Real Estate (ARE:NYSE)	2/13/2002	47.28	40.25	17.5	4.50
	Empire District (EDE:NYSE)	1/16/2002	21.78	21.23	2.6	5.79
	Integra Bank (IBNK:Nasdaq)	1/2/2002	19.66	20.75	-5.3	4.75
*Adjusted for stock split Source: TSC research

REITs Yield Right

Three of the best income plays have been real estate investment trusts, or REITs. Healthy REITs will always pay decent dividends, because they're required by law to pay out most of their net income. Although the real estate cycle is near a bottom, the three REITs in the Bottom of the Barrel portfolio have weathered the storm well and should continue to provide solid dividends and returns for patient investors.

Acadia Realty (AKR Quote) owns community centers -- typically open-air shopping centers with grocery anchors -- in the Northeast and Midwest. The company has focused on core markets with a bias toward infill locations. (Infill means that few opportunities for new developments exist around their properties, so there's less risk of a new Wal-Mart (WMT Quote) coming in and creating unnerving competition for the anchor tenant.

Although Acadia has a bit of exposure to challenged retailers such as Kmart (KMRT Quote), it has done an overall good job with tenant quality. The stock has appreciated nicely since last June, but the 5.5% yield makes it attractive for income-oriented investors.