Please ensure Javascript is enabled for purposes of website accessibility
Dividend Investor
Safe Income and Dividend Growth

Cabot Dividend Investor Issue: April 10, 2024

While the financial news obsesses over what the Fed might have vaguely implied in the latest statement, the world is morphing into a different place. The demographic of humanity is rapidly transforming in a way that will massively affect the flow of money for the rest of our lives. The world is currently undergoing a technological revolution that is transforming society and everyday life.

The aging population and the technological revolution are megatrends that will dominate the investment landscape for years to come regardless of what the Fed does, or GDP in the next few quarters, or whoever gets elected president. It’s not an accident that the best performing stocks in the Cabot Dividend Investor portfolio are in healthcare and technology. Nor will it be an accident that these same stocks continue to dominate from this point forward.

In this issue, I highlight the massive opportunity to position yourself in front of a tsunami that could provide the best investments of your lifetime.

Download PDF

Forget the Fed, Get in Front of a Profit Tsunami

One of the few constants in life is change. Change is such an integral part of living that we take it for granted. Our lives change week to week, month to month, and year to year.

Then, there are certain times when the ever-unfolding sea of small changes gives way to something far more transformative and impactful. For example, our lives change far more profoundly when we get married, or have children, or retire. These events reshape the general course of your life. It’s not a different haircut or a more adventurous summer. Some changes are life-altering.

As in most cases, many real-life circumstances can be related to investing. The market changes every day. Sometimes it’s up and sometimes it’s down. Every year, the market has sustained rallies and selloffs, and different sectors go in and out of favor. On a longer-term time horizon, there are bull and bear markets. This is the normal ebb and flow of the market.

But as in life, there can be a rarer once-in-a-lifetime profound change in the market. Such deeper shifts can alter the market and certain stocks in a massive way. But unlike in life, these transformative changes in the market can be hard to spot. Yet, identifying such things can make successful investing infinitely easier, almost unfair.

We can get so consumed with the incessant financial news and short-term gyrations that we become blinded to bigger and generational shifts taking place outside the fray. What will the Fed do? Does this rally have legs? It’s easy to become consumed with such things. Meanwhile, there are massive tectonic shifts going on beneath the surface that dwarf these short-term obsessions.

While the financial news obsesses with what the Fed might have vaguely implied in the latest statement, the world is morphing into a different place. The demographics of humanity are rapidly transforming in a way that will massively affect the flow of money for the rest of our lives. The world is currently undergoing a technological revolution that is transforming society and everyday life.

The aging population and the technological revolution are megatrends that will dominate the investment landscape for years to come regardless of what the Fed does, or GDP in the next few quarters, or whoever gets elected president. It’s not an accident that the best-performing stocks in the Cabot Dividend Investor portfolio are in healthcare and technology. Nor will it be an accident that these same stocks continue to dominate from this point forward.

In this issue, I highlight the massive opportunity to position yourself in front of a tsunami that could provide the best investments of your lifetime.

What to Do Now

The market has been terrific for the last five months. But the S&P has been in a sideways funk since the middle of March.

Recent stronger-than-expected economic news is giving investors pause. March manufacturing numbers were the highest in about two years and the Fed upgraded its 2024 GDP forecast from 1.4% to 2.4%. But sometimes good news is bad news.

The market has rallied on the prospect of falling interest rates and a soft landing. But the strong economy is increasing the chances of no landing and continued high interest rates. One would think that a stronger economy would offset a fall in rates. But the market wants a falling rate environment and has priced it in already.

Despite having indicated that it intended to cut rates three times this year, the Fed is recently making noises like that might not happen after all. We’ll see what happens. But worse-than-expected news on the interest rate front may well end this rally, which was already getting long in the tooth.

That’s okay. A pullback or consolidation after the run the market has had is normal and healthy. I’m still bullish on the market over the remainder of the year but I am reluctant to recommend a new stock when the rally is getting wobbly. I just don’t like the timing. I don’t want to chase stocks doing well. And the cheaper stocks are interest rate-sensitive and could face turbulence with more bad interest rate news.

That’s why the timing is right to reiterate the massive trends going on that will have a dramatic effect on certain stocks in the years ahead regardless of what the market decides to do over the next few months. Below I highlight four currently “BUY”-rated stocks in healthcare and technology. The best-performing stocks in these sectors, Eli Lilly (LLY) and Broadcom (AVGO), have run beyond the ideal buy range.

It’s worth pointing out that these megatrends are having a huge impact on the performance of these stocks. Since being added to the portfolio LLY has provided an average annual return of 58% and AVGO has an average annual 44% return.

Recent Activity

March 13
Purchased Main Street Capital Corporation (MAIN) – $46.18

April 3
Marathon Petroleum Corporation (MPC) – Rating change “BUY” to “HOLD”

April 10
Intel Corporation (INTC) – Rating change “BUY” to “SELL”

Current Allocation

Fixed Income19.5%

Featured Actions

The Artificial Intelligence Revolution

Artificial intelligence is human intelligence deployed by machines (computers, robots, drones, etc.). AI provides these machines with the ability to “think” and act in a way that previously only humans could. It allows them to interpret the world around them, digest and learn from information, make decisions based on what they’ve learned, and then take appropriate action – often without human intervention.

Sure, there is a lot of cool stuff that AI can bring, actual human-like robots and self-driving cars just to name a few things. If that doesn’t capture your imagination, consider the massive cost savings and efficiency gains it will have on businesses.

Missing out on the efficiencies and cost savings offered by AI will not only hurt businesses in terms of competitors, but it could also mean failing to survive. Businesses are scrambling to adopt the technology as if their lives depend on it. Consider these facts about the growth in AI that lies ahead.

The AI market in the U.S. is expected to grow from $86.9 billion in 2022 to $407 billion by 2030. Global estimates for the industry have it around $500 billion in 2022 growing to over $2 trillion by 2030. Research firm Grand View Research estimates the AI market will grow by a staggering 37.3% per year from 2023 to 2030. Another study estimates that the AI industry’s value will grow by 13 times over the next seven years.

Buy Qualcomm Incorporated (QCOM)

Yield: 1.9%

Portfolio return since 11/26/19 – 127%
Average annual return – 21%

Qualcomm (QCOM) is the world’s largest supplier of chips for mobile devices. It also holds the patents for the key technology systems that are the backbone of all 3G and 4G networks. Chips account for roughly 75% of revenues while licensing from patents accounted for 25%.

Qualcomm has an enormous advantage going for it right now. It is the undisputed king of chips for smartphones and ones that enable mobile 5G technology. Analysts estimate that the 5G chipset market will grow from $2.1 billion in 2020 to over $23 billion by 2026. That was a good track. Then the huge catalyst of AI emerged to power the potential earnings and stock upside far higher.

The stock has strong momentum and has been up 60% since late October. But you probably haven’t missed the boat because QCOM still trades about 14% below the 2022 high.

QCOM lagged the tech sector for much of the last two years. Device sales are cyclical and last year’s smartphone sales struggled because of excess inventory. Semiconductors are a cyclical industry subsector as well. But things are turning around. The Semiconductor Industry Association is forecasting 13% growth in worldwide chip sales this year after a decline of 8.2% last year.

The first wave of AI beneficiaries has been mostly core companies associated with technology infrastructure, networking, and data centers. It was a similar thing with the internet. The first stocks to soar were internet providers and search engines. Then came companies like Amazon (AMZN) and Netflix (NFLX). The greatest opportunities are in the companies that are next to benefit.

Mobil devices will ultimately deliver AI. Self-driving cars, robots, and the Internet of Things are about mobile devices. Qualcomm is the leader by far in AI for mobile devices. AI-enabled smartphone demand is expected to grow by an average of 83% annually through 2027. The stock is poised ahead of the next great wave.

Buy Digital Realty Trust, Inc. (DLR)

Yield: 3.4%

Portfolio return since 7/12/23 – 25%
Average annual return – 34%

Digital Realty is a Real Estate Investment Trust (REIT) specializing in data center properties. It is the second largest data center REIT by market cap and the largest owner of data center space globally with 314 properties serving 5,000 customers in more than 50 metropolitan areas on five continents.

A data center is a specialized facility used to house computer systems and related components, servers and network equipment. It has sophisticated temperature control systems and integrated fire suppression. It also has redundant data communications connections and multiple backup power systems. Large data centers are industrial-scale operations that can use as much electricity as a small town.

But performance stumbled recently. DLR returned -17% for the two-year period of 2022 and 2023 as the stock struggled in a very tough market for REITs as interest rates rose to multi-decade highs. But interest rates have likely peaked and DLR has already turned around. It’s up a whopping 60% in the last year.

It’s not just the REIT recovery. The data center business is getting a huge growth catalyst from AI as companies expand their equipment to accommodate the new technology. Research firm Allied Market Research estimates that the data center market will grow from $187.4 billion in 2020 to over $500 billion in 2030. But the growth projections above don’t include the burgeoning AI phenomenon.

Businesses desperately scrambling to not fall behind in the game-changing technology will necessitate much more space and equipment that needs to be housed. According to one recent estimate, the global economy will need to invest $1 trillion over the next five years to upgrade data infrastructure.

The Transformation of the Human Population

I’ve often written about the aging population. The population both in this country and internationally is older than it has ever been in the history of humanity and is getting older still at warp speed. That changes things. And we are seeing the results already.

In this county one-third of the population is already over 50, and the fastest-growing segment of the population is 65 and older as an average of 10,000 baby boomers are turning 65 every single day. Those aging baby boomers control 70% of the wealth in this country. About 70% of U.S. GDP is driven by consumption.

In 2012, total healthcare expenditures in the United States were $2.8 trillion. Centers for Medicare and Medicaid estimates that total U.S. national healthcare expenditures were $4.3 trillion in 2021. That number is projected to grow to $6.2 trillion by 2028 and $12 trillion by 2040. Those are trillions with a T. Deloitte estimates healthcare spending to grow from 16.8% of total GDP in 2019 to 26% in 2024.

Buy McKesson Corporation (MCK)

Yield: 0.50%

Portfolio return since 11/8/23 – 16%
Average annual return – 38%

The pandemic aftermath made us acutely aware of the importance of supply chains, as disruptions caused short supplies and skyrocketing prices. Efficient distribution is what makes this whole consumer economy work.

McKesson Corporation (MCK) is a leading domestic wholesaler of branded, generic, and specialty pharmaceutical products. The company operates a supply chain that delivers products from 1,300 drug manufacturers to over 180,000 points of dispensation throughout the country. It supplies about one-third of the U.S. drug distribution market.

McKesson buys drugs from manufacturers, delivers them, and resells them to retailers at a profit. Established in 1833, the company has been honing the process for nearly two centuries. Naturally, it has strategic partnerships with companies like CVS (CVS), Walmart (WMT), and Rite Aid (RAD).

High performance has certainly been the case with this stock. Here’s how McKesson’s business has translated into stock total returns over the past several years compared to the overall market.

S&P 500 (SPY)28%33%95%

There are reasons to believe the stock can continue to deliver market-beating performance going forward. The company plans to buy back $3.9 billion worth of those shares in fiscal 2024. McKesson is also focusing on high-growth areas in oncology and biopharmaceutical services. Management knows the business and where the best opportunities are to deliver pharmaceuticals and services. The company also has plenty of free cash flow it can use to expand and make acquisitions.

But generating growth is easy when pharmaceutical demand continues to rise every year at a solid pace because of the aging population. It has a huge share of a business that grows all by itself every year in any economy.

Buy AbbVie Inc. (ABBV)

Yield: 4.0%

Portfolio return since 11/28/19 – 133%
Average annual return – 21%

AbbVie is a U.S.-based biopharmaceutical company formed in 2013 as a spinoff from Abbott Laboratories (ABT). AbbVie is a research-based pharmaceutical company specializing in small-molecule drugs.

AbbVie became an industry giant because of its mega-blockbuster drug Humira. It’s an autoimmune drug that became the world’s best-selling drug by far with a peak of $21 billion in annual sales. But the tremendous success of that drug is now a problem because it lost its patent overseas of couple of years ago and it lost its U.S. patent in 2023. Because of shrinking Humira sales AbbVie posted lower year-over-year revenues in 2023 and the shrinkage will likely continue for more quarters.

Losing patent exclusivity on the best-selling drug ever is a bummer. AbbVie is still in the midst of the revenue disruption. But the market has seen this coming. And ABBV has still outperformed the market since it was added to the portfolio, 142% compared to 103%. That’s what the stock did during the hard times when everyone knew a revenue crash was coming. Now, the company is moving beyond that.

The company is expected to resume modest earnings growth this year and robust growth next year. And the market tends to anticipate six to nine months into the future. AbbVie’s new immunology drugs, Skyrizi and Rinvoq, are expected to replace Humira’s peak revenues in a short period of time. Sales of the drugs grew 52% and 63% in the fourth quarter respectively. In fact, management estimates that combined revenue of the two drugs will be $16 billion this year and $27 billion by 2027, far exceeding Humira’s peak sales.

AbbVie is turning the corner. Imagine how the stock could perform without a patent cliff and with strongly growing sales.

Portfolio Recap

High Yield Tier

Security (Symbol)Date AddedPrice AddedDiv Freq.Indicated Annual DividendYield On CostPrice on Close 04/08/24Total ReturnCurrent YieldCDI OpinionPos. Size
Brookfield Infrastructure Ptnrs. (BIP)3/29/1924Qtr.1.626.75%2943%5.50%BUY2/3
Enterprise Product Partners (EPD)2/25/1928Qtr.2.017.14%2953%7.00%BUY1
Main Street Capital Corp. (MAIN)3/13/2446Monthly2.886.24%484%6.10%BUY1
ONEOK Inc. (OKE)5/12/2153Qtr.3.967.47%8079%5.00%BUY1
Realty Income (O)11/11/2062Monthly3.085.00%543%5.75%BUY1
The Williams Companies, Inc. (WMB)8/10/2233Qtr.1.95.80%3930%4.88%BUY1
Current High Yield Tier Totals:6.30%33.80%5.70%

Dividend Growth Tier

AbbVie (ABBV)1/28/1978Qtr.6.27.90%170177%3.44%BUY1
American Tower Corporation (AMT)1/10/24209Qtr.6.83.30%188-10%3.40%BUY1
Broadcom Inc. (AVGO)1/14/21455Qtr.214.60%1336223%1.60%HOLD1/2
Digital Realty Trust, Inc. (DLR)7/12/23118Qtr.4.884.10%14325%3.40%BUY1
Eli Lilly and Company (LLY)8/12/20152Qtr.5.23.40%777436%0.70%HOLD1/2
Intel Corporation (INTC)3/9/2248Qtr.0.51.00%39-16%1.30%SELL1
McKesson Corporation (MCK)10/11/23457Qtr.2.480.50%53217%0.50%BUY1
Marathon Petroleum Corp. (MPC)11/8/23143Qtr.3.32.30%21753%1.70%HOLD1
Qualcomm (QCOM)11/26/1985Qtr.3.23.80%174127%1.80%BUY1/3
UnitedHealth Group Inc. (UNH)4/12/23521Qtr.7.521.40%456-11%1.50%HOLD1
Visa Inc. (V)12/8/21209Qtr.2.081.00%27835%0.75%HOLD1
Current Dividend Growth Tier Totals:3.00%64.10%1.80%

Safe Income Tier

Alexandria Real Estate Equities (ARE)12/13/23126Qtr.5.084.00%1273%4.00%BUY1
NextEra Energy (NEE)11/29/1844Qtr.1.873.80%6566%3.20%BUY1
U.S. Bancorp Depository Shares (USB-PS)10/12/2219Qtr.1.136.10%2119%5.50%BUY1
Vanguard LT Corp. Bd. Fd. (VCLT)1/11/2380Monthly3.64.50%761%4.80%BUY1
Xcel Energy (XEL)10/1/1431Qtr.2.086.70%54139%4.10%HOLD1
Current Safe Income Tier Totals:5.30%56.30%4.40%

Screenshot 2022-11-08 at 3.51.52 PM.png

Brookfield Infrastructure Partners (BIP – yield 5.5%) – This is a great company with a great business that has a long track record of outperforming the market. But it has floundered the past two years as interest rates rose to multi-decade highs. However, it appears that interest rates have likely peaked and BIP has been doing much better than most of its peers so far this year. It didn’t pull back after interest rate-sensitive stock surged in November and December. It just kind of went sideways instead. Brookfield has some of the most defensive revenues possible. It’s also been expanding into cell towers, data centers and foundries. Meanwhile, Brookfield continues to deliver strong operational results and can well endure a slowing economy. (This security generates a K-1 form at tax time). BUY


Brookfield Infrastructure Partners (BIP)
Next ex-div date: May 30, 2024, est.

Enterprise Product Partners (EPD – yield 7.0%) – These are good times for midstream energy stocks. Oil and gas demand remains strong while the high dividends separate them from the more interest rate-sensitive, lower-yielding stocks. EPD just hit yet another 52-week high and is already up about 14% YTD. Looking forward, the company should deliver solid growth this year with anticipated steady hydrocarbons demand and recent acquisitions coming online. That massive distribution is extremely well supported, and the stock is still well below the all-time high despite much higher earnings. (This security generates a K-1 form at tax time). BUY


Enterprise Product Partners (EPD)
Next ex-div date: April 29, 2024

Main Street Capital Corporation (MAIN – yield 6.1%) – Although this newest portfolio addition is currently selling near the 52-week high, it is still reasonably priced at less than 1.6 times book value and with most other valuation measures below the five-year average. It also pays that safe and high dividend every single month with a strong possibility of supplemental dividends over the course of the year as well. MAIN should also provide strong total returns over time generated by its largely successful small business portfolio. BUY


Main Street Capital Corp. (MAIN)
Next ex-div date: May 7, 2024

ONEOK Inc. (OKE – yield 5.0%) – Paying fat yields. Delivering on the stock price too. It’s been a glorious year so far for these midstream energy companies. This one has been trending higher since last May. Unlike most energy companies, OKE has eclipsed the pre-pandemic high. The price is up over 47% since last May and 14% YTD. Meanwhile, the company is justifying the strong stock performance operationally. ONEOK reported a 42% increase in profits over last year’s quarter on higher LNG volumes and the contributions of the recent Magellan Midstream acquisition. The company also set ambitious guidance for this year. BUY


Next ex-div date: April 30, 2024, est.

Realty Income (O – yield 5.8%) This legendary income stock is still floundering. It just hasn’t perked up in the past couple of months like many of its peers have. It’s just moved sideways instead. It is looking like O will be stuck in the mud until interest rates really move lower, which may or may not happen later this year. But the monthly dividend has been raised every year since 1969. The last two years have been among the worst in this stock’s history, which makes it dirt cheap ahead of an environment that will get better eventually. BUY


Realty Income (O)
Next ex-div date: April 30, 2024, est.

The Williams Companies, Inc. (WMB – yield 4.9%) It’s a new high for this midstream company stock too. After going sideways for many months, WMB has broken out since the middle of February. Energy stocks are hot and midstream companies are mostly selling near multi-year highs. It’s a stable, high-yield stock and the company should deliver solid and dependable earnings in just about any economy. Business remains solid and not dependent on commodity prices. It pays a well-supported dividend, and recent acquisitions and expansions ensure more solid growth going forward all the way out to 2028. BUY


Williams Companies, Inc. (WMB)
Next ex-div date: June 7, 2024, est.

Screenshot 2022-11-08 at 3.53.26 PM.png

AbbVie (ABBV – yield 3.6%) This biopharmaceutical company stock has fallen 6% in the last week, showing weakness for the first time since last October. The primary reason is that the Biden administration announced last week that it is targeting 10 high-cost drugs from several companies for Medicare’s first-ever pricing negotiations. It included AbbVie and several other companies, all of which had a price decline to some degree since. It could be a minor crimp in profits with an unfavorable outcome and the stock appears to have recovered after the initial news.

ABBV has outperformed the market ahead of the Humira expiration. Now, it is turning the corner as the company expects a return to moderate earnings growth this year and robust growth next year. The corner turn being within sight vastly outweighs this issue of Medicare price negotiations. BUY


AbbVie Inc. (ABBV)
Next ex-div date: April 12, 2024

American Tower Corporation (AMT – yield 3.4%) AMT had been rallying after a bad start to the year until recently. It has been turning south for a couple of weeks. The reason is because the company cut the dividend by 4.7% to focus on debt reduction. It sounds worse than it is. It just lowered the dividend to the third-quarter level, which was the third quarterly increase for 2023. It’s dumb to negate the fourth-quarter increase, but the current dividend is still higher on a year-over-year basis. The reversal of the fourth-quarter hike is a headscratcher that shouldn’t affect the stock’s trajectory over the course of the year, and AMT is recovering already. It’s still one of the best REITs on the market that deals in very high-quality properties. BUY


American Tower Corporation (AMT)
Next ex-div date: April 11, 2024

Broadcom Inc. (AVGO – yield 1.6%) – It’s back in business. The superstar AI beneficiary had flirted briefly with a pullback last month after earnings failed to blow people away. But it has quickly reversed course and made up most of the dip. The turnaround came after Broadcom announced it secured a new, large customer for its AI chips. AI revenue quadrupled in the last quarter, and it is being speculated that the new customer is Amazon (AMZN) or Apple (AAPL). The price has certainly stopped rising over the past month, but AVGO has established a pattern of once again moving to new levels after this kind of consolidation. HOLD


Broadcom Inc. (AVGO)
Next ex-div date: June 20, 2024, est.

Digital Realty Trust, Inc. (DLR – yield 3.4%) The data center REIT stumbled briefly in late February but has regained its footing and is not far from the high. DLR can get knocked around in the short term with the technology sector or the interest rate prognosis, but the outlook is still very good. The data centers will benefit from increasing AI spending, providing Digital with an additional growth catalyst that could last for years. DLR is still well below the all-time high made at the end of 2021 before the inflation bear market. Earnings and prospects a much better now and the stock has been trending mostly higher for a year. BUY


Digital Realty Trust, Inc. (DLR)
Next ex-div date: June 15, 2024, est.

Eli Lilly and Company (LLY – yield 0.7%) – LLY had fallen about 4.5% after the announcement that the FDA decision regarding approval of its high-potential Alzheimer’s drug Donanemab will be delayed but has since recovered. Lilly is also being targeted for drug price negotiation, but the stock barely budged. LLY has leveled off for nearly two months but has done that several times over the last few years where it has precipitated another price surge. Lilly again killed on earnings and guided higher for 2024. The weight loss drug is a monster and looks like a mega-blockbuster and the Alzheimer’s drug should get the nod in the next few months. HOLD


Eli Lilly and Company (LLY)
Next ex-div date: May 15, 2024, est.

Rating change – “BUY” to “SELL”

Intel Corporation (INTC – yield 1.2%) – The chipmaker stock had a bad week in what has become a bad year. INTC fell 13% since April 2 and is now down 20% YTD. The stock was driven lower when the company recast its financials to reflect that its foundry business had a nearly $7 billion loss in 2023. It also revealed the division won’t be profitable until 2026 or beyond. This combined with Intel’s disappointing earnings that guided below investor expectations for this year.

I do believe Intel will eventually turn things around, and probably in a huge way. That notion propelled the stock to a 90% gain in 2023. However, there does not appear to be enough on the near-term horizon to turn things around and propel the stock significantly higher for the rest of the year. INTC should still be a good investment over a three- or four-year period. But AI is driving too many other stocks higher in the meantime. Therefore, the portfolio is selling INTC in favor of more timely investments and will likely revisit the stock in later years. SELL


Intel Corporation (INTC)
Next ex-div date: May 6, 2024, est.

McKesson Corporation (MCK – yield 0.5%) – There’s nothing new to say about this stock. And that’s the beauty of it. MCK mostly continues to forge quietly higher while no one seems to notice, although it has pulled back slightly this month. It’s been making a series of new all-time highs for the last year. It’s already up over 12% YTD while investors focus elsewhere. Earnings were stellar with 15% revenue growth and 12% earnings growth, and McKesson raised guidance for 2024. The company dominates a market that grows all by itself because of the aging population. MCK continues to roll forward. It’s been in an uptrend since the pandemic. BUY


McKesson Corporation (MCK)
Next ex-div date: May 31, 2024, est.

Marathon Petroleum Corporation (MPC – yield 1.7%) – The good times just keep getting better for this refiner company stock. Energy is hot and MPC has a long track record of significantly outperforming the sector. It’s now up 53% since being added to the portfolio in November and 43% YTD. While no one is looking, energy is by far the top-performing S&P sector over the last month and the second-best-performing sector YTD. But the upside has more limitations than an AI company or a drug company with new mega-blockbuster potential drugs. It has moved past the ideal buy range but still has momentum. HOLD


Marathon Petroleum Corporation (MPC)
Next ex-div date: May 20, 2024, est.

Qualcomm Inc. (QCOM – yield 1.9%) Qualcomm is secretly one of the best semiconductor and AI stocks to own. It had been held back by cyclicality, both in semiconductors and smartphones. But those negative cycles are reversing this year and AI is coming to mobile devices. QCOM cooled off over the past month after a huge rally in which it had 65% between late October and the first week of March. But the rest of the year looks strong as Qualcomm is also introducing new AI chips for PCs and smartphones and is well positioned for the next phase of the AI craze. The company is already benefiting from AI smartphones and that market is expected to grow an average of 83% per year from 2024 through 2027. BUY


Qualcomm Inc. (QCOM)
Next ex-div date: May 31, 2024, est.

UnitedHealth Group Inc. (UNH – yield 1.5%) While the hacking issue is in the process of being resolved, another problem befell the stock last week. The Biden administration announced that Medicare Advantage rates will increase far below what insurance companies were demanding to keep pace with costs. The administration announced rates will increase by 3.7% in 2025. It will put a dent in earnings as companies struggle to make up for the cost increases. But this is a risk of healthcare insurance. The government has enormous sway and can make decisions companies don’t like. It’s another hit to the stock whose longer-term trajectory should be solid. HOLD


UnitedHealth Group Inc. (UNH)
Next ex-div date: June 8, 2024, est.

Visa Inc. (V – yield 0.7%) This payment processing global goliath has cooled off after about a five-month rally. V had been making a series of new highs all year but has pulled back 5% since late March. A consolidation had to happen eventually and it’s still in an uptrend that began in the fall of 2022. The recent better-than-expected economic news bodes well for Visa. V was slow to recover from the pandemic because the global economy lagged. But now it’s making up for lost time. V will likely continue rising slowly unless and until the economy tanks. The company reported upbeat guidance through 2024. HOLD


Visa Inc. (V)
Next ex-div date: May 8, 2024, est.

Screenshot 2022-11-08 at 3.55.40 PM.png

Alexandria Real Estate Equities, Inc. (ARE – yield 4.0%) – This one-of-a-kind life science property REIT is back in business. It was hot late last year. Then it pulled back in the early part of this year. But it has been moving back up since the middle of February and has made up just about all of the earlier year losses. It is likely that interest rates have peaked and may even trend lower throughout the year. ARE is a great income stock selling at the low end of historical valuations while the company is consistently growing revenues and profits from its niche properties. I’m expecting a good year for ARE and a solid income. BUY


Alexandria Real Estate Equities, Inc. (ARE)
Next ex-div date: June 27, 2024, est.

NextEra Energy (NEE – yield 3.2%) – The strong recovery is continuing. While it did pull back along with most utilities in the earlier part of this year, it started moving higher again at the beginning of March and is now higher than it was at the start of this year. NEE had been a superstar performer before inflation and rising interest rates. It provides both safety from its best-in-class regulated utility business and growth from its considerable clean energy business. The utility reported strong earnings that exceeded expectations again last month and reiterated its growth projections for this year, near the top of the estimated range. BUY


NextEra Energy Inc. (NEE)
Next ex-div date: May 25, 2024, est

USB Depository Shares (USB-PS – yield 5.5%) – The party may not be over for fixed income. Rates have still likely peaked and may trend lower for the year. The price has soared from the low of late October and has provided a 19% total return since being added to the portfolio in October of 2022. After the worst two years ever for fixed income, this preferred issue is well positioned for a further rebound. BUY

U.S. Bancorp Depository Shares (USB-PS)
Next ex-div date: April 15, 2024

Vanguard Long-Term Corp. Bd. Index Fund (VCLT – yield 4.8%) – Ditto for VCLT, as evidenced by the 13% price appreciation since last October. This long-term bond fund is very sensitive to interest rates. It held up relatively well in the rising rate environment and now rates may continue to trend lower. If the economic strength lasts, VCLT should remain stable and deliver a strong income. If the economy weakens, and/or rates move lower, there should be more upside for the price. BUY


Vanguard Long-Term Corp. Bd. Index Fd. (VCLT)
Next ex-div date: May 1, 2024, est.

Xcel Energy (XEL – yield 4.0%) – The alternative energy utility has been slowly recovering from the price shock last month after it was reported that Xcel could be held liable for damages for the raging Texas wildfire, which is the worst in the state’s history and encompasses a land mass larger than the state of Rhode Island. Xcel has admitted that its equipment was likely involved in igniting the blaze. This weird development is also ongoing, and the scope of the damage is still not known. NEE was downgraded to a HOLD until there is more clarity on the matter. The stock has certainly stabilized but the liability is still unknown. HOLD


Xcel Energy Inc. (XEL)
Next ed-div date: June 14, 2023, est.

Dividend Calendar

Ex-Dividend Dates are in RED and italics. Dividend Payments Dates are in GREEN. Confirmed dates are in bold, all other dates are estimated. See the Guide to Cabot Dividend Investor for an explanation of how dates are estimated.

Screenshot 2024-03-12 at 3.28.01 PM.png

Screenshot 2024-04-09 at 3.13.23 PM.png

The next Cabot Dividend Investor issue will be published on May 8, 2024.

Copyright © 2024. All rights reserved. Copying or electronic transmission of this information without permission is a violation of copyright law. For the protection of our subscribers, copyright violations will result in immediate termination of all subscriptions without refund. Disclosures: Cabot Wealth Network exists to serve you, our readers. We derive 100% of our revenue, or close to it, from selling subscriptions to our publications. Neither Cabot Wealth Network nor our employees are compensated in any way by the companies whose stocks we recommend or providers of associated financial services. Employees of Cabot Wealth Network may own some of the stocks recommended by our advisory services. Disclaimer: Sources of information are believed to be reliable but they are not guaranteed to be complete or error-free. Recommendations, opinions or suggestions are given with the understanding that subscribers acting on information assume all risks involved. Buy/Sell Recommendations: are made in regular issues, updates, or alerts by email and on the private subscriber website. Subscribers agree to adhere to all terms and conditions which can be found on and are subject to change. Violations will result in termination of all subscriptions without refund in addition to any civil and criminal penalties available under the law.

Tom Hutchinson is the Chief Analyst of Cabot Dividend Investor, Cabot Income Advisor and Cabot Retirement Club. He is a Wall Street veteran with extensive experience in multiple areas of investing and finance.