The broad market strengthened further this week, and I’m putting Equifax (EFX) back on Buy today for investors with cash to put to work.
ECB President Mario Draghi provided the latest bullish catalyst last Thursday, announcing new stimuli including cutting the bank’s main policy rate to zero and lowering its deposit rate further into negative territory to -0.4% from -0.3%.
The central bank announcements continue today, with the Fed’s policy announcement this afternoon. Market watchers are looking to see whether the Fed has changed its expectations about inflation, which has increased more quickly than expected since their last meeting. If the Fed suggests that inflation is strong enough to push up its next rate hike, interest-rate sensitive investments could take a beating—but it would be good news for financials.
Outside of the central banking sector it’s been a fairly quiet week, but updates on all our portfolio holdings follow.
HIGH YIELD TIER
BUY – General Motors (GM 31 – yield 4.9%) – General Motors continues to make investments in future automotive technology, including self-driving cars and ride sharing. Last week, GM acquired Silicon Valley-based Cruise, which makes a $10,000 device that can add auto-pilot features to existing cars. Fortune reports that GM paid over $1 billion for the company. And this week, GM and Lyft announced a partnership to rent GM cars to Lyft drivers for free or cheap. Trading at a P/E just over 5, GM is a Buy for high yield investors.
Next ex-div date: June 8, 2016 est.
BUY – Mattel (MAT 32 – yield 4.7%) – Mattel hit new closing highs last week, but is now pulling back, albeit on light volume. So far the pullback looks normal and the toy company remains a Buy for high yield investors.
Next ex-div date: May 16, 2016 est.
DIVIDEND GROWTH TIER
HOLD – Costco (COST 154 – yield 1.0%) – Costco has spent the last four days largely above its 50-day moving average—a first in 2016—despite reporting earnings that missed estimates two weeks ago. Analysts may be looking forward to an end to the strong dollar’s pressure on Costco’s results after some currencies began strengthening against the dollar last week. COST remains a Hold.
Next ex-div date: May 11, 2016 est.
BUY – CVS Health (CVS 101 – yield 1.7%) – CVS broke through the century level and its 200-day moving average late last week. The company also announced a $50 million anti-smoking initiative, generating some good press. CVS is a Buy for dividend growth.
Next ex-div date: April 22, 2016
BUY – Equifax (EFX 110 – yield 1.2%) – EFX demonstrated good strength this week, pushing toward its all-time highs from December. It’s not there yet, but the push could turn the 50-day moving average upward this week. I’m putting EFX back on Buy today for risk-tolerant dividend growth investors.
Next ex-div date: May 20, 2016 est.
BUY – Reynolds American (RAI 51 – yield 3.3%) – RAI is pulling back from its 52-week highs, in what looks like a normal cooling off so far. The stock could pause for a while to let its 50-day moving average catch up here, which would be a good buying opportunity.
Next ex-div date: June 6, 2016 est.
HOLD – U.S. Bancorp (USB 41 – yield 2.5%) – Financials continued to behave this week, as analysts move up their timelines for the next rate hike. USB remains a Hold for risk-tolerant investors.
Next ex-div date: March 29, 2016
SAFE INCOME TIER
BUY – Consolidated Edison (ED 74 – yield 3.6%) – After bouncing energetically off its 50-day moving average earlier this month, ED is back near its 52-week highs from February—when market panic drove investors into safe and boring utilities. Now the market is firming up, the New York-area gas and electric utility remains strong. ED is a long-term Buy on pullbacks for Safe Income investors.
Next ex-div date: May 9, 2016 est.
BUY – Guggenheim BulletShares 2016 High Yield Corporate Bond ETF (BSJG 26 – yield 3.2%)
BUY – Guggenheim BulletShares 2017 Corporate Bond ETF (BSCH 23 – yield 1.4%)
BUY – Guggenheim BulletShares 2018 High Yield Corporate Bond ETF (BSJI 24 – yield 4.9%)
BUY – Guggenheim BulletShares 2019 Corporate Bond ETF (BSCJ 21 – yield 2.0%)
No news.
Next ex-div dates: all April 1, 2016, est.
BUY – Home Depot (HD 130 – yield 2.1%) – HD has nearly made it back to its 2016 highs from the very first days of January before the broad market break-down. The home improvement retailer remains a buy for all investors, ideally on pullbacks.
Next ex-div date: June 7, 2016 est.
HOLD – PowerShares Preferred Portfolio (PGX 15 – yield 5.9%) – No news.
Next ex-div date: April 15, 2016 est.
BUY – J.M. Smucker (SJM 128 – yield 2.1%) – SJM is still just a hair below its 52-week high at 130. SJM is a Buy for all investors.
Next ex-div date: May 11, 2016 est.
BUY – Target (TGT 82 – yield 2.7%) – After rocketing 16% in just over a month, TGT could stand to take a breather while its moving averages catch up. But the dramatic return of buying power is a great sign, and TGT is a Buy for safe income and dividend growth investors.
Next ex-div date: May 16, 2016
BUY – Xcel Energy (XEL 41 – yield 3.4%) – After reaching another new 52-week high last Wednesday, XEL is pulling back slightly, but the stock looks quite strong, especially considering the firming market and increased expectations of rate hikes this year. XEL is a long-term buy on pullbacks for safe income investors.
Next ex-div date: June 14, 2016 est.
Closing prices as of March 15, 2016.
