The major indexes have moved pretty much straight up since our last update, and many of the troubling divergences we’d been watching have disappeared. Financials and industrial stocks remain strong, while tech stocks have managed to get back on the horse. The only S&P 500 sector that is lower over the past 30 days is real estate, ahead of today’s widely-expected interest rate hike.
Given the improvement in the overall market, I’m putting ONEOK (OKE) back on Buy today for high-yield investors. And if you’re looking to add a stock with great short-term momentum, CME Group (CME) is looking indestructible today; the stock just broke out to a new all-time high for the first time since before the financial crisis. Other good buys in our portfolio include Pembina Pipeline (PBA) for high income, General Motors (GM), BB&T Corp (BBT), Broadridge Financial (BR) and Wynn Resorts (WYNN) for growth, and 3M (MMM) and United Health (UNH) for long-term growth and safe income.
HIGH YIELD TIER
BUY – General Motors (GM 42 – yield 3.7%) – GM is trading in a tight range around its lows from November, continuing to consolidate its gains from early October. This looks like a good buy point; the stock is likely to remain between 41 and 47 for the time being.
Next ex-div date: March 7, 2018 est.
BUY – ONEOK (OKE 53 – yield 5.6%) – OKE’s rebound continues. The stock’s second bounce at 50 strengthens that support level, so I’ll put the stock back on Buy today for risk-tolerant high yield investors.
Next ex-div date: February 2, 2018 est.
BUY – Pembina Pipeline (PBA 35 – yield 4.9%) – PBA remains in good shape, trending up via a series of higher highs and higher lows. High yield investors looking to add monthly income to their portfolios can buy a little here.
Next ex-div date: December 28, 2017
HOLD – Welltower (HCN 66 – yield 5.3%) – Trendless HCN is trading near its lows form October again. Long term, the stock is stuck in a wide range between about 60 and 80. High yield investors can hold the health care REIT; I’ll put it back on Buy once it starts a new uptrend.
Next ex-div date: February 2, 2018 est.
DIVIDEND GROWTH TIER
BUY – BB&T Corp (BBT 50 – yield 2.6%) – Financial stocks have been the best-performing sector of the past 30 days, and BBT remains near all-time highs. Dividend growth investors can buy a little here.
Next ex-div date: February 14, 2018 est.
BUY – Broadridge Financial Solutions (BR 89 – yield 1.5%) – BR continues to consolidate its gains from its early-November earnings gap up. Dividend growth investors can buy a little here or try to wait for the stock’s 50-day moving average, currently around 87, to catch up. BR trades ex-dividend tomorrow.
Next ex-div date: December 14, 2017
HOLD – Carnival (CCL 67 – yield 2.7%) – CCL’s range has tightened up around 66, a good sign. Morgan Stanley upgraded the stock to equal-weight last week, noting that demand has bounced back faster than they expected after hurricane season. We’ll continue to hold.
Next ex-div date: February 21, 2018 est.
BUY – CME Group (CME 153 – yield 1.7%) – The past few weeks have been great for CME. The stock just broke out to a new all-time high for the first time since 2007, finally surpassing its pre-financial crisis peak. The company also declared a special end-of-year dividend of $3.50 per share, payable to investors who own the stock before December 28. And the company has been in the news thanks to its decision to start offering bitcoin futures next week. (Cboe Group, which is smaller, introduced its own bitcoin futures contract on Sunday.) CME is a Buy. A pullback toward the 50-day, currently around 141, would be a low-risk entry point, but the recent breakout is likely to be followed by more upside, so I think aggressive investors can nibble here.
Next ex-div date: December 28, 2017 (special dividend)
HOLD – Cummins (CMI 169 – yield 2.6%) – CMI has now fully recovered from its post-Tesla-truck drop, and is trading right around its 50-day moving average. CMI has struggled since reporting earnings on October 31, but the stock’s long-term uptrend remains intact, so for now it’s a Hold.
Next ex-div date: February 15, 2018 est.
BUY – Wynn Resorts (WYNN 162 – yield 1.2%) – WYNN gapped up to another new 52-week high on Monday after being featured on Cramer’s “lightning round.” The same day, analysts at Bernstein said that, based on the first 10 days of the month, they think Macau’s gaming revenues will grow over 20% this month, which represents further acceleration from this year’s already-strong growth rate. WYNN has run a long way—we’re sitting on an unrealized gain of over 60% in our remaining half position—but there’s no reason to think the party will end any time soon. Dividend growth investors should try to buy WYNN on pullbacks.
Next ex-div date: February 13, 2018 est.
SAFE INCOME TIER
BUY – 3M (MMM 237 – yield 2.0%) – MMM continues to consolidate near all-time highs after issuing solid earnings growth estimates of 6% to 10% (and 5% to 7% sales growth) for next year. Investors continue to rotate into the industrial sector, anticipating tailwinds from tax cuts and strong economic growth. Safe income investors who don’t own MMM yet can buy some here.
Next ex-div date: February 21, 2018 est.
HOLD – Consolidated Edison (ED 88 – yield 3.1%) – Utilities tanked yesterday, probably in relation to (slightly) dimmer prospects for the Republicans’ tax cut plan. As I’ve noted multiple times over the past month, the tax plan is likely to continue to create unusual volatility in utility stocks until it passes (or doesn’t) but long-term, ED is a solid Hold for safe income.
Next ex-div date: February 12, 2018 est.
HOLD – Ecolab (ECL 135 – yield 1.1%) – ECL’s breakout of its six-month trading rage was short-lived; the stock has pulled back to the top of the range this week. Safe income investors can continue to hold the Dividend Aristocrat.
Next ex-div date: December 18, 2017
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 January 2, 2018 est.
BUY – PowerShares Preferred Portfolio (PGX 15 – yield 5.6%) – PGX is another good option for the very conservative portion of your portfolio. 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 just a hair above 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.
BUY – UnitedHealth Group (UNH 222 – yield 1.3%) – UNH is consolidating its gains from two weeks ago, which followed the release of new 2017 and 2018 guidance. Last week, the company announced a deal to buy DaVita medical group, a network of over 300 clinics and surgical centers. The deal will strengthen and enlarge UNH’s network of health care providers, helping them to remain competitive as the health care and insurance industries consolidate. UNH is in a long-term uptrend and is a Buy for safe income.
Next ex-div date: March 8, 2018 est.
HOLD – Xcel Energy (XEL 51 – yield 2.8%) –XEL held up well to yesterday’s utility selloff and remains well within its month-long consolidation range. XEL is near all-time highs and is a good long-term Hold for safe income investors, just be aware of the potential for tax bill-related volatility in the short-term.
Next ex-div date: December 19, 2017 est.
Closing prices as of December 12, 2017
