The stock market finally experienced a big shakeout last Wednesday, and the S&P 500 closed down more than half a percent for the first time in 50 days. But the major indexes bounced Thursday to end the week about flat, and yesterday saw another big rally.
There are still cracks in the market: an elevated number of stocks are hitting new lows every day, and small- and mid-cap stocks are lagging their large-cap peers. But the trend remains up, so it’s time to be making money.
In our portfolio, I’m putting ONEOK (OKE) on Hold today due to weakness in pipeline stocks, but most of our positions are still rated Buy.
The stock market will be closed tomorrow for Thanksgiving and only open for a half day Friday; our office will be closed both days. Your December issue of Cabot Dividend Investor will be published next Wednesday, as usual.
HIGH YIELD TIER
BUY – General Motors (GM 45 – yield 3.4%) – GM’s nice neat rebound from its 50-day moving average continues. At the Barclays Global Automotive Conference last Wednesday, the company gave investors more details of planned line of electric vehicles as well as its plans to become a leader in other mobility technologies. GM is also holding a webcast on autonomous vehicles on November 30, which will likely add to investors’ excitement. Risk-tolerant investors can uy GM right here.
Next ex-div date: December 7, 2017
HOLD – ONEOK (OKE 50 – yield 6.0%) – Pipeline stocks have declined even more than the rest of the energy sector this week, despite booming North American production. A major oil spill on the Keystone Pipeline may be adding to investors’ concerns, although the sector has been struggling since late October. The S&P energy sector ETF, XLE, has fallen 1.0% over the past five days, making it the second-worst performing sector. OKE has declined 2.3%. For now, the stock remains above support at 50, where it bounced back in August. It’s still within its multi-month trading range, but barely, so I’m going to put OKE on Hold for high yield investors today.
Next ex-div date: January 2018
BUY – Pembina Pipeline (PBA 35 – yield 5.0%) – PBA has pulled back to its 50-day moving average as energy stocks have corrected over the past two weeks, bringing it back to the middle of its trading range. The stock looks like it found support around this level yesterday, although it also has strong support at 32 if the downtrend persists. High yield investors looking to add monthly income to their portfolio can buy a little here. PBA trades ex-dividend today.
Next ex-div date: November 22, 2017
HOLD – Welltower (HCN 68 – yield 5.1%) – HCN continues to trade sideways with a slight downward bias. The health care REIT remains on Hold until it displays some momentum.
Next ex-div date: February 2, 2018 est.
DIVIDEND GROWTH TIER
BUY – BB&T Corp (BBT 47 – yield 2.8%) – BBT has traded sideways since our last update. The bank and financial services company remains stymied by upside resistance at 50, with persistently low long-term interest rates a challenge. But a breakdown looks unlikely, so I’ll keep it on Buy for dividend growth investors.
Next ex-div date: February 2018
BUY – Broadridge Financial Solutions (BR 91 – yield 1.5%) – BR has been trading near all-time highs since reporting earnings two weeks ago. Dividend growth investors can buy a little here, or try to wait for a pullback to the stock’s 50-day moving average, currently around 83.
Next ex-div date: December 12, 2017 est.
HOLD – Carnival (CCL 67 – yield 2.7%) – CCL has been quiet since our last update. Current- and next-year earnings estimates for the cruise company have come down slightly since Hurricane Maria damaged numerous Caribbean ports, which could put a damper on CCL for the next few months. But the long-term uptrend in demand for cruises is intact, so we’re holding on to CCL for now to see if the stock has a second act. (We took profits back in September, selling half our shares for a 38% return.) CCL trades ex-dividend today.
Next ex-div date: November 22, 2017
BUY – CME Group (CME 143 – yield 1.9%) – CME is trending up nicely, and I think dividend growth investors can buy here or on pullbacks toward the 50-day, currently around 135.
Next ex-div date: December 7, 2017
HOLD – Cummins (CMI 161 – yield 2.7%) – CMI got hit hard by Tesla’s Friday reveal of an electric semi-truck, as I wrote in Monday’s Special Bulletin. The stock dropped about 4% on the day, but hasn’t fallen any further, which is a good sign. Still, CMI has struggled since reporting earnings on October 31, and Friday’s move brings the stock’s total return this month to -9%. This is the stock’s second concerning pullback in four months, following a 10% correction in August. CMI’s long-term uptrend remains intact, but I’ll keep it on Hold until it reverses course. To the downside, we’ll be watching the 40-week moving average and the 150 level, where the stock bottomed in August.
Next ex-div date: February 2018
BUY – Wynn Resorts (WYNN 159 – yield 1.3%) – For a second week in a row, WYNN hit a new 52-week high on Monday. The stock is in a strong uptrend and earnings estimates are excellent. Wynn hasn’t increased its dividend since VIPs started to return to Macau, so investors likely still have a big hike or two to look forward to. Dividend growth investors can buy here.
Next ex-div date: February 2018
SAFE INCOME TIER
BUY – 3M (MMM 234 – yield 2.0%) – I wrote last week that “MMM’s pullback from its post-earnings gap-up should be wrapping up soon,” and that’s just what happened. The industrial stock is now trending back up toward the all-time high hit at the end of October. Safe income investors can buy some here. MMM trades ex-dividend today.
Next ex-div date: November 22, 2017
HOLD – Consolidated Edison (ED 86 – yield 3.2%) – ED is pulling back normally after its relentless six-week run-up. Safe income investors can hold; be aware of the potential for tax cut-related rumors to affect utilities.
Next ex-div date: February 2018
HOLD – Ecolab (ECL 132 – yield 1.1%) – ECL continues to go nowhere… it’s boring, but the Dividend Aristocrat remains a good Hold for long-term safe income investors. This year’s results will be impacted somewhat by the unusually fierce hurricane season (Ecolab is based in Houston) but longer-term growth estimates remain strong.
Next ex-div date: December 15, 2017 est.
BUY – Guggenheim BulletShares 2018 High Yield Corporate Bond ETF (BSJI 25 – yield 4.0%)BUY – Guggenheim BulletShares 2019 Corporate Bond ETF (BSCJ 21 – yield 1.8%)
BUY – Guggenheim BulletShares 2020 High Yield Corporate Bond ETF (BSJK 25 – yield 4.8%)
BUY – Guggenheim BulletShares 2021 Corporate Bond ETF (BSCL 21 – yield 2.3%)
Next ex-div dates: all December 1, 2017 est.
BUY – PowerShares Preferred Portfolio (PGX 15 – yield 5.6%) – PGX is an ETF that holds preferred shares. It doesn’t have capital appreciation potential, but trades in a low-volatility range between 14 and 16 and pays monthly dividends of about seven cents per share. It’s currently trading slightly under 15, so I’ll keep it on Buy for investors who want to add a source of reliable monthly income to their portfolios.
Next ex-div date: December 15, 2017 est.
HOLD – Xcel Energy (XEL 51 – yield 2.8%) – XEL is pulling back from all-time highs. Hold for long-term gains and safe income.
Next ex-div date: December 19, 2017 est.
Closing prices as of November 21, 2017.
