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Dividend Investor
Safe Income and Dividend Growth

Cabot Dividend Investor Weekly Update

Trading remained muted this week, with markets closed Monday for New Year’s Day. Wall Street began to return to work yesterday, and got the New Year off to a good start with solid gains in all the major indexes. On the flip side, some conservative high yield investments, like utilities and preferred shares, declined.

Trading remained muted this week, with markets closed Monday for New Year’s Day. Wall Street began to return to work yesterday, and got the New Year off to a good start with solid gains in all the major indexes. On the flip side, some conservative high yield investments, like utilities and preferred shares, declined.

I have no rating changes today, but read on for updates on all our holdings.


BUY – General Motors (GM 42 – yield 3.6%) – GM continues to chop sideways in a two-and-a-half-month-long consolidation range, with support at 41. Anywhere in the low 40s looks like a decent buy point; the stock is likely to remain between 41 and 47 for the time being. GM is increasingly seen as a play on the future of mobility, as the company invests heavily in self-driving and electric cars.

Next ex-div date: March 7, 2018 est.

BUY – ONEOK (OKE 55 – yield 5.5%) – Energy stocks continue to beat the market, and OKE is up 3% over the past five days, versus the S&P 500’s half-percent gain. That brings OKE back to the middle of its trading range. The stock is still range-bound and can be sensitive to industry news, but the nearly 6% makes it an attractive option for risk-tolerant high yield investors. The company is a large U.S. natural gas and natural gas liquids pipeline operator that has increased its dividend by an average of 18% per year since 2012.

Next ex-div date: February 5, 2018 est.

BUY – Pembina Pipeline (PBA 37 – yield 4.6%) – Supported by the energy stock rally of the past two weeks, PBA broke out to a new 52-week high yesterday. High yield investors looking to add monthly income to their portfolio can buy a little here. Pembina is a Canadian company (that pays monthly dividends in Canadian dollars) with an extensive network of oil and gas processing and transportation infrastructure. The company has been growing steadily through acquisitions and capital investment and analysts expect EPS to grow by double-digits this year and next.

Next ex-div date: January 23, 2018 est.

HOLD – Welltower (HCN 64– yield 5.4%) – Welltower is acquiring four retirement communities from Senior Housing Properties (SNH), the healthcare REIT announced yesterday. The communities offer a full range of care, from independent living to memory care, and are located in desirable urban markets—Washington, D.C., Miami and Charlottesville. However, the stock remains below 65, after breaking through the previous support level to the downside as inflation expectations rose two weeks ago. We sold half our shares last Wednesday at the day’s average price of 63.44, for a loss (price-only) of 16%. The stock has traded sideways since, so we’ll hold the rest of our shares for now. But we remain concerned about the lack of technical support and the recent deterioration of 2018 earnings growth expectations.

Next ex-div date: February 2, 2018 est.


BUY – American Express (AXP 99 – yield 1.4%) – American Express is the latest addition to our Dividend Growth Tier. Analysts expect the credit card company to deliver 4% revenue growth this year and 6% growth next year. Earnings growth is also accelerating: analysts expect EPS to rise 4% this year and 11% next year. The company has paid dividends since 1977 and has kept the payout steady through numerous financial panics and times of economic turmoil, earning the stock a perfect Dividend Safety Rating of 10 out of 10. The company’s history of dividend growth is shorter but American Express has increased the payout by an average of 12% in each of the past five years, earning AXP a Dividend Growth Rating of 6.9 out of 10. Technically, AXP is at all-time highs and in a steady uptrend backed by high and rising growth expectations. Investors who like dividends and growth can buy some here. The stock trades ex-dividend tomorrow (meaning today is the last day to buy to be eligible to receive the next dividend.)

Next ex-div date: January 4, 2018

BUY – BB&T Corp (BBT 50 – yield 2.6%) – BBT continues to consolidate its late November gains. The stock is near all-time highs and in an uptrend, and dividend growth investors can buy here. BB&T Corp is a regional bank with branches in 15 states and Washington, D.C. Growth comes mostly from corporate loans, recreational vehicle loans, commercial mortgages and wealth management.

Next ex-div date: February 14, 2018 est.

BUY – Broadridge Financial Solutions (BR 91 – yield 1.6%) – After a four-month advance, BR is consolidating just above 90, but looks ready to start a new uptrend any day now. Dividend growth investors can buy a little here. Broadridge provides technology and services, like portfolio management tools and proxy vote processing, to financial firms. The company has increased its dividend in each of the past nine years, with the last five increases averaging 16% each.

Next ex-div date: March 14, 2018 est.

HOLD – Carnival (CCL 67 – yield 2.7%) – CCL remains firmly in the middle of its four-month trading range. The cruise company’s fourth-quarter results were much stronger than expected, and 2018 bookings are strong, helping to dispel some worries about the impact of the strong hurricane season. But we’ll wait for more technical strength from the stock before putting CCL back on Buy.

Next ex-div date: February 21, 2018 est.

BUY – CME Group (CME 145 – yield 1.8%) – CME has pulled back to its 50-day moving average, offering a low-risk entry point for investors who don’t own it yet. The stock has now retraced the ground it covered in late November, when excitement over bitcoin futures, plus CME’s special end-of-year dividend of $3.50 per share, pushed the stock to its highest level since before the financial crisis. If all is well, CME will resume its uptrend in the next couple of days.

Next ex-div date: March 8, 2018 est.

HOLD – Cummins (CMI 177 – yield 2.4%) – CMI’s renewed uptrend continues, though the stock remains below its high from late October. The company makes heavy-duty engines used in trucks, construction equipment and other industrial and transport applications. The company is in the late stages of a recovery from the 2014-2015 industry downturn, and analysts expect EPS to expand 24% this year, followed by 15% growth next year. The stock is rated Hold because of its two big selloffs in July and October, but is looking healthier today.

Next ex-div date: February 15, 2018 est.

BUY – Wynn Resorts (WYNN 164 – yield 1.2%) – WYNN hit a new 52-week high in the middle of last week but pulled back to start the New Year after December gaming revenue from Macau disappointed. Analysts were expecting a 20% gain and gaming revenues rose only 15%. The pullback looks normal though, and dividend growth investors who don’t own WYNN yet can use it as a buying opportunity. The stock is in a strong uptrend, and earnings are expected to growth by double-digits this year and next. Wynn owns two casino resorts in Macau, China, two in Las Vegas and is building the first large casino resort in the Boston, Massachusetts, area.

Next ex-div date: February 13, 2018 est.


BUY – 3M (MMM 236 – yield 2.0%) – MMM has gradually pulled back to its 50-day moving average over the past month; this looks like a good buy point for safe income investors who don’t own the stock yet. Long-term, the stock is in a steady uptrend and earnings estimates have been moving up. 3M is a diversified industrial conglomerate that makes products used in transportation, energy, health care and numerous other industries.

Next ex-div date: February 21, 2018 est.

HOLD – Consolidated Edison (ED 84 – yield 3.3%) – ED’s correction continues, fueled by rising inflation expectations. If you haven’t taken any profits in ED yet, do so now. We already sold a third of our shares, so we won’t take any action for now. ED is still a long-term Hold for safe income, but if it looks like utilities are starting a prolonged downturn—like if ED breaks through 80—we could take some more profits at some point.

Next ex-div date: February 12, 2018 est.

HOLD – Ecolab (ECL 135 – yield 1.2%) – After a short-lived breakout in early December, ECL has pulled back to the top of its trading range. The stock could establish a new range here, between about 133 and 138, which would represent some progress. Safe income investors can continue to hold. Ecolab is a cleaning products and services company, with mostly recurring revenues and a 31-year history of dividend growth.

Next ex-div date: March 16, 2018 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%)

These four funds make up our bond ladder, which is a conservative strategy for generating income. The funds pay distributions monthly, and mature at the end of the year in their name, at which point Guggenheim disburses the net asset value of the ETF back to investors. That makes the bond ladder a good store of value and source of reliable income for the most conservative portion of your portfolio. If you’d like to construct your own bond ladder, you can use a mix of investment-grade and high yield funds, as we have, or pick one or the other. The high yield funds own junk-rated debt and yield more, of course, but are also more likely to see some of their holdings default (and to be volatile when credit conditions get dicey). If you roll the proceeds into a longer-dated fund every time a fund matures, you’ll create a reliable income stream that can rise with interest rates over time.

Next ex-div dates: all January 2, 2018 est.

BUY – PowerShares Preferred Portfolio (PGX 15 – yield 5.7%) – Some conservative high-yield investments declined sharply to start the New Year, providing a buying opportunity in PGX. The preferred share ETF is another good option for the most conservative portion of your portfolio. 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 now trading below 15 again, so PGX is a Buy for investors who want to add a source of reliable monthly income to their portfolios.

Next ex-div date: January 12, 2018 est.

BUY – UnitedHealth Group (UNH 221 – yield 1.4%) – UNH continues to consolidate around 220. The stock’s 50-day moving average, currently around 216, is slowly catching up. UnitedHealth is a major health insurer and, increasingly, provider of health services. The stock 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 48 – yield 3.0%) – Utilities continue to struggle against higher interest rate expectations. XEL’s long-term uptrend remains intact, so we’ll continue to hold, but if you haven’t taken any profits yet, you might want to do so now. Xcel Energy is a Minnesota-based electric utility that has invested heavily in renewable energy, making the company the largest generator of wind power in the U.S. XEL trades ex-dividend today.

Next ex-div date: March 20, 2018 est.

Closing prices as of January 2, 2018