In our last update, I noted that the market was set to open sharply lower following China’s announcement of a raft of retaliatory 25% tariffs. The market did open lower, but then—along with tariff-affected stocks like GM and MMM—steadily climbed throughout the day to close nicely higher.
And although Friday brought more tariff talk and even rockier trading, markets again rebounded strongly Monday. For many of the major indexes, the bounce happened right around their 200-day moving averages, which are now providing support.
So although the volatility has increased anxiety, the consistent bounces are a good sign.
In other news, oil prices are bouncing back, interest rates remain subdued, and earnings season begins this week.
I don’t have any rating changes today, and continue to recommend you stay fairly conservative, while keeping an eye out for good opportunities to pounce on once the market confirms a new uptrend.
HIGH YIELD TIER
BUY – AllianceBernstein (AB 27 – yield 8.5%) – AB continues to trade sideways right around its 50-day line. The company reported March assets under management this morning; fixed income and equity AUM both declined slightly month-over-month. That could cause a pullback in the stock, but unless AB breaks through its March lows around 26, the stock’s uptrend is intact. Remember that AB’s distributions vary based on cash flow and don’t qualify for the lower dividend tax rate; the partnership issues a K-1 at tax time.
Next ex-div date: May 3, 2018 est.
HOLD – General Motors (GM 39 – yield 3.9%) – GM’s impressive rebound continues. The stock closed above its 50-day moving average yesterday for the first time since January after Chinese President Xi Jinping said in a speech that he hopes to “significantly” lower import tariffs on cars and improve the investment environment for foreign companies in China. Hold.
Next ex-div date: June 7, 2018 est.
HOLD – ONEOK (OKE 58 – yield 5.1%) – OKE is back above its 50-day moving average and looks healthy. The stock’s trend is mostly sideways, but it’s a solid holding for investors whose priority is high yield. The company owns 38,000 miles of natural gas and natural gas liquids (NGL) pipelines, as well as natural gas and NGL storage, processing and fractionation facilities (fractionation is the breaking down of NGLs into component liquids like ethane and propane0. ONEOK has increased its dividend every year since 2003, and last year’s dividend coverage ratio was a very comfortable 1.3 times.
Next ex-div date: May 3, 2018 est.
BUY – STAG Industrial (STAG 24 – yield 6.0%) – STAG has been below its 50-day line all year, but its sideways (slightly up) move in recent weeks has allowed it to nudge above that line in recent days. This REIT continues to benefit from money flows toward income investments and counter-cyclical options, which are being driven by rising market volatility. STAG is an industrial REIT that mostly owns warehouses and has increased funds from operations (or FFO, a widely-used measure of REIT cash flow) every year since coming public in 2011. Distributions are paid monthly and payments are steady (though they don’t qualify for the lower dividend tax rate); the company just reaffirmed its payout levels for the second quarter. Investors with a high risk tolerance looking for high monthly income can Buy some STAG here.
Next ex-div date: April 27, 2018
DIVIDEND GROWTH TIER
HOLD – American Express (AXP 93 – yield 1.5%) – AXP is trending slightly upward above its 200-day moving average. Earnings estimates remain strong, and Amex has paid dividends without interruption since 1977. While the short-term is a little murky, I’ll continue to Hold for medium- and long-term gains. AXP trades ex-dividend tomorrow.
Next ex-div date: July 5, 2018 est.
HOLD – BB&T Corp (BBT 53 – yield 2.5%) – BBT remains below its 50-day and above its 200-day, around where it bottomed in February. Financials remain under pressure due to the flattening yield curve, and BBT is trading in line with the sector. On the plus side, analyst estimates are moving up and the consensus estimate now predicts 41% EPS growth this year (that’s including a nice tailwind from the tax break). BB&T bought Regions Financial’s insurance business last week, expanding their reach in retail insurance. I’ll keep BBT on Hold.
Next ex-div date: May 9, 2018 est.
HOLD – Broadridge Financial Solutions (BR 108 – yield 1.3%) – BR continues to consolidate just under 110, while its 50-day line, currently at 103, starts to catch up. BR is a solid Hold for dividend growth.
Next ex-div date: June 14, 2018 est.
HOLD – Carnival (CCL 63 – yield 2.9%) – Cruise stocks sold off yesterday in reaction to higher oil prices, which are up 8% over the past month. The selloff brought CCL to its lowest point since September. Also concerning is the fact that CCL has closed below its 200-day almost for nearly three weeks straight. Business remains good, but cruise stocks are highly cyclical, and if higher gas prices trigger an underperformance phase for the sector, we won’t hesitate to take the rest of our profits and move on.
Next ex-div date: May 23, 2018 est.
BUY – CME Group (CME 164 – yield 1.7%) – CME has popped back above its 50-day and I’ll keep it tentatively on Buy for dividend growth investors. The company own exchanges where futures and derivatives are traded, so market volatility is good for business. In the first quarter, average daily volume on CME exchanges rose 30% year-over-year!
Next ex-div date: June 7, 2018 est.
HOLD – Cummins (CMI 162 – yield 2.7%) – CMI continues to trade in a very flat range between 155 and 165. That’s better than going down, especially since the engine maker could be a loser in the tit-for-tat tariff war with China. On the plus side, earnings estimates have been rising, and remain strong. We’ll Hold for now.
Next ex-div date: May 18, 2018 est.
BUY – Intel (INTC 51 – yield 2.3%) – Intel has recovered from the report that Apple plans phase Intel chips out of Mac computers, bouncing off its 50-day last week. The stock is still in an uptrend, and earnings growth is accelerating, so I’ll keep it on Buy.
Next ex-div date: May 4, 2018
SAFE INCOME TIER
HOLD – 3M (MMM 217 – yield 2.5%) – We sold a third of our MMM shares in a Special Bulletin last Thursday, at the day’s average price of 218.44. I still hope to hold the rest of our shares for the long term—3M is a 100-year dividend payer and its long-term trend remains up. But the stock had fallen 15% over the past 10 weeks—including several big one-day drops on high volume—and is at its lowest level since October. We’ll Hold the rest of our shares for now.
Next ex-div date: May 16, 2018 est.
HOLD – Consolidated Edison (ED 78 – yield 3.7%) – ConEd is a New York-area electric utility with slowly rising earnings and a very reliable dividend. Increased volatility has driven some investors back into utilities and other conservative income assets, and ED is back above its 50-day for the first time since December. Hold for slowly rising income.
Next ex-div date: May 14, 2018 est.
HOLD – Ecolab (ECL 142 – yield 1.2%) – ECL surged to a new all-time high last week, on no news and fairly average volume. I’ll keep it on Hold for now, but if the strength persists, ECL will be moving back to Buy shortly. EPS estimates for the chemical company are rising, and ECL is a good safe income holding in this environment.
Next ex-div date: June 15, 2018 est.
HOLD – 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 24 – yield 4.9%)
BUY – Guggenheim BulletShares 2021 Corporate Bond ETF (BSCL 21 – yield 2.4%)
Next ex-div dates: est. May 1, 2018 est.
BUY – PowerShares Preferred Portfolio (PGX 15 – yield 5.8%) – PGX is an ETF that holds preferred shares and pays dividends monthly, making it a good conservative holding for investors looking for regular income. The fund has low volatility but no capital appreciation potential; it generally trades between 14 and 16. Currently trading around 14.50, PGX is buyable now for investors looking for a good store of value and regular income.
Next ex-div date: April 13, 2018 est.
HOLD – UnitedHealth Group (UNH 227 – yield 1.3%) – UNH is trading near its 50-day line after finding support near its 200-day moving average two weeks ago. The company has an eight-year history of dividend growth, funded by a massive health insurance business and a growing medical services business, and is a Hold for long-term safe income investors.
Next ex-div date: June 14, 2018 est.
HOLD – Xcel Energy (XEL 45 – yield 3.2%) – XEL remains above its 50-day line, thanks to the rebound in utilities. Investors whose primary goal is income can continue to Hold. XEL is a Minnesota-based utility, the largest producer of wind energy in the U.S. and has a highly reliable income stream. The utility recently increased its dividend by 5.6%, the 14th consecutive annual increase in a row.
Next ex-div date: June 12, 2018 est.
Closing prices as of April 10, 2018
