Tariff Turmoil Creates Opportunity
It’s been a tough market. The S&P started this week down about 6% for the month of April, over 10% YTD, and over 14% from the high. And that was before Monday’s selloff. It is entirely possible that the market falls back to a new low and an official bear market.
The tariff uncertainty is continuing, and it could get worse. A bad headline could roil the market any day. We’re not out of the woods yet. The market could get worse before it gets better. But it will get better at some point.
Investing for dividends and income is a longer-term proposition. Investors typically don’t jump in and out of these stocks in a short time. You have to hold the stock long enough for the dividend to make a difference. Although the market remains troubling in the near term, there are some great opportunities for longer-term investors.
From the perspective of a year or six months out, there are some great bargains in the market. Sure, any given stock might go lower before it goes higher. But if you’re comfortable holding onto a stock for a longer period, it doesn’t really matter that much. Historically, markets like this are a great time to buy and make the likelihood of high returns down the road much more likely than buying into a normal market.
It’s tough to invest in markets like this. It’s like an earthquake. You worry that this market selloff could be “the big one.” This could be the bear market that ruins stocks forever. But it won’t be. Stocks always come back.
Bear markets are quite common. Since 1928, there have been 22 bear markets, according to Standard & Poor’s Corporation. That’s about one every four and a half years. Despite these periodic drops, stocks have trended overwhelmingly higher. In fact, over the last 50 years, the average annual return for the S&P 500 is roughly 11.95% (assuming dividends are reinvested). At that rate, the value of an investment doubles in a little over six years. That’s why we put up with bear markets.
According to First Trust/Bloomberg, since 1942, the average bear market has lasted 11.1 months with a -31.7% decline, while the average bull market has lasted 4.3 years with an average gain of 150%. History shows clearly that investing into a decline is a highly successful strategy. It could be some of the easiest money you’ll ever make over time. Yet few investors seem to want any. Let’s not make that mistake this time.
It’s also true that the market may not get worse. It could get better in a hurry. On April 9 the S&P rose 9.5% in one day. That’s when the Trump administration announced a 90-day pause on tariffs while negotiations take place. There could be a tariff breakthrough tomorrow. The market could soar and never look back. While that is certainly a possibility, even assuming more trouble ahead, this should be a good time to invest if you have a longer-term perspective.
In this issue, I highlight one of the very best stocks on the market. It outperformed most “Magnificent 7” stocks when they were riding high. Yet this stock has a beta of just 0.50, meaning it achieves high returns with half the volatility of the overall market. This stock is rarely cheap, but the recent turmoil is creating an opportunity.
What to Do Now
I could probably rate every stock in the portfolio a “BUY.” And it is likely that six months from now, most of the stocks will be selling at a significantly higher price than they are now. But most stocks are still rated “HOLD.” In fact, the ratings have been downgraded recently. What gives?
The market could potentially decline for a while still. Instead of risking investing into the market at a less-than-optimal time, we can periodically average back into the stocks and take less downside risk in the near term. I’m also a realist. Even those with the courage to invest into a market this volatile are not likely to jump in with both feet all at once.
The “BUY” rating is reserved for the very best opportunities. These are the stocks I deem most likely to be higher by the end of the year. Right now, that only includes three stocks, AbbVie (ABBV), Broadcom (AVGO), and NextEra Energy (NEE). These are stocks that are being dragged down by the temporary external environment and are highly likely to resume trending higher when the market stabilizes.
AbbVie has removed the biggest obstacle that was holding the stock back, the Humira patent expiration. The company has turned the corner, and new drugs have already replaced the peak Humira revenue. Broadcom got clobbered because it was riding so high. But it was higher for a good reason: soaring revenues. It should come back and make up for lost time quickly. If you suffer through the stock going lower first, you should be well rewarded for the inconvenience several months down the road.
Recent Activity
April 1
Sold ABBV June 20th $210 call at $9.50 or better
April 8
AGNC Investment Corp. (AGNC) – Rating change “BUY” to “HOLD”
Ally Financial Inc. (ALLY) – Rating change “BUY” to “HOLD”
Cheniere Energy Inc. (LNG) – Rating change “BUY” to “HOLD”
ONEOK, Inc. (OKE) – Rating change “BUY” to “HOLD”
Qualcomm Corp. (QCOM) – Rating change “BUY” to “HOLD”
April 22
Buy Eli Lilly and Company (LLY)
Featured Action
Eli Lilly and Company (LLY)
Eli Lilly and Co. (LLY) is a pharmaceutical giant that has delivered staggering returns. Look at the performance of LLY versus the overall market in various periods over the last ten years.
| 1-year | 3-years | 5-years | 10-years | |
| Eli Lilly (LLY) | 14% | 193% | 474% | 1300% |
| S&P 500 | -4% | 17% | 89% | 199% |
LLY has delivered an average annual return of 44% over the last three years and 42% over the last five. And there are good reasons to believe that LLY will continue its phenomenal performance going forward.
Indiana-based Eli Lilly is a global pharmaceutical company with over $45 billion in annual revenue, 41,000 employees, and sales in 110 countries. Founded in 1876, Lilly is noteworthy for its unusually high focus on research and development (R&D), where it allocates over 25% of sales compared to an average of high teens for the industry.
The R&D focus pays off, as Lilly has arguably the very best pipeline and lineup of recently launched drugs in the industry. The catalyst for the stock recently has been potential mega-blockbuster weight-loss drugs. Its new weight-loss drug Zepbound and its other diabetes drug combined to deliver over $5 billion in revenue last quarter. And the drug is new. Plus, Alzheimer’s disease drug donanemab also has mega-blockbuster potential.
In the fourth quarter, Zepbound and Mounjaro generated a whopping $5.4 billion. The company reported revenue growth of 45% for the quarter and EPS growth of 102%. For the full year, revenue grew 32% and earnings grew 101%. The company is expected to generate 80% earnings growth in 2025. But there is another huge catalyst in the works.
It has a weight-loss drug in late-stage trials that is taken orally. The current drugs on the market require an injection. It could be a game-changer in the white-hot weight-loss drug arena. Drugs taken orally are more desirable and cheaper to manufacture. The weight-loss drug market is expected to reach $130 billion by 2030. The first oral drug could give Lilly a huge further boost in this massive market.
Last week, Lilly reported successful results of a late-stage (stage III) trial for the oral weight-loss drug Orforglipron. LLY soared over 14% in one day last Friday on the news. The company expects to submit the drug for FDA approval later this year. And the huge earnings growth projections don’t include this drug.
But prior to last Friday’s surge, LLY had been flat over the last year. The stock also remains about 16% below the high made last September. LLY had outperformed most of the “Magnificent 7” stocks while they were riding high. The stock needed somewhat of a breather. It’s also true that Lilly could be negatively affected by tariffs, although it hasn’t been so far. But that risk is priced into the stock.
It’s a tough market that may still fall to new lows. Things could certainly get worse before they get better. But this stock is rarely cheap. The troubled market has created the opportunity to get into one of the best stocks on the market at a great price but still following good news.
The population is aging at warp speed and Lilly delivers some of the very best drugs and treatments in the world. It is highly likely the stock price is a lot higher in the months ahead. It’s also worth noting that because of the stellar past performance cited above, LLY can generate huge call premiums.
Portfolio Recap
| Open Recommendations | Ticker Symbol | Entry Date | Entry Price | Recent Price | Buy at or Under Price | Yield | Total Return |
| AbbVie Inc. | ABBV | 12/17/24 | $175.38 | $172.99 | $200.00 | 3.79% | 0.51% |
| AGNC Investment Corp | AGNC | 9/24/24 | $10.47 | $8.34 | NA | 17.27% | -13.25% |
| Ally Financial Inc. | ALLY | 11/26/24 | $39.42 | $31.63 | NA | 3.79% | -19.14% |
| Broadcom Inc. | AVGO | 1/28/25 | $207.36 | $170.99 | $200.00 | 1.38% | -17.28% |
| Cheniere Energy, Inc. | LNG | 2/25/25 | $216.04 | $231.45 | NA | 0.86% | 7.13% |
| Constellation Energy Corp. | CEG | 8/27/24 | $196.14 | $206.88 | NA | 0.75% | 5.73% |
| Eli Lilly and Company | LLY | 4/22/25 | $816.04 | $900.00 | 0.71% | ||
| NextEra Energy, Inc. | NEE | 4/25/23 | $77.50 | $66.31 | $70.00 | 3.42% | -9.67% |
| ONEOK, Inc. | OKE | 2/25/25 | $95.77 | $86.23 | NA | 4.78% | -9.96% |
| Qualcomm Inc. | QCOM | 5/5/21 | $134.65 | $136.65 | NA | 2.49% | 10.61% |
| Realty Income Corp. | O | 6/27/23 | $60.19 | $58.32 | NA | 5.52% | 7.41% |
| Toll Brothers, Inc. | TOL | 10/22/24 | $148.02 | $93.92 | NA | 1.06% | -36.26% |
| Open Recommendations | Ticker Symbol | Intial Action | Entry Date | Entry Price | Recent Price | Sell To Price or better | Total Return |
| ABBV June 20th $210 call | ABBV250620C00210000 | Sell | 4/1/25 | $9.50 | $0.70 | $9.50 | 5.42% |
| as of close on 4/18/2025 | |||||||
| SOLD STOCKS | |||||||
| x | Ticker Symbol | Action | Entry Date | Entry Price | Sale Date | Sale Price | Total Return |
| Innovative Industrial Props. | IIPR | Called | 6/2/20 | $87.82 | 9/18/20 | $100.00 | 15.08% |
| Qualcomm | QCOM | Called | 6/24/20 | $89.14 | 9/18/20 | $95.00 | 7.30% |
| U.S. Bancorp | USB | Called | 7/22/20 | $36.26 | 9/18/20 | $38 | 3.42% |
| Brookfield Infras. Ptnrs. | BIP | Called | 6/24/20 | $41.92 | 10/16/20 | $45 | 8.49% |
| Starbucks Corp. | SBUX | Called | 8/26/20 | $82.41 | 10/16/20 | $88 | 6.18% |
| Visa Corporation | V | Called | 9/22/20 | $200.56 | 11/20/20 | $200 | 0.00% |
| AbbVie Inc. | ABBV | Called | 6/2/20 | $91.04 | 12/31/20 | $100 | 12.43% |
| Enterprise Prod. Prtnrs. | EPD | Called | 6/24/20 | $18.14 | 1/15/21 | $20 | 15.16% |
| Altria Group | MO | Called | 6/2/20 | $39.66 | 1/15/21 | $40 | 7.31% |
| U.S. Bancorp | USB | Called | 11/25/20 | $44.68 | 1/15/21 | $45 | 1.66% |
| B&G Foods Inc, | BGS | Called | 10/28/20 | $26.79 | 2/19/21 | $28 | 4.42% |
| Valero Energy Inc. | VLO | Called | 8/26/20 | $53.70 | 3/26/21 | $60 | 11.73% |
| Chevron Corp. | CVX | Called | 12/23/20 | $85.69 | 4/1/21 | $96 | 12.95% |
| KKR & Co. | KKR | Called | 3/24/21 | $47.98 | 6/18/21 | $55 | 14.92% |
| Digital Realty Trust | DLR | Called | 1/27/21 | $149.17 | 7/16/21 | $155 | 5.50% |
| NextEra Energy, Inc. | NEE | Called | 2/24/21 | $73.76 | 9/17/21 | $80 | 10.00% |
| Brookfield Infras. Ptnrs. | BIP | Called | 1/13/21 | $50.63 | 10/15/21 | $55 | 11.65% |
| AGNC Investment Corp | AGNC | Sold | 1/13/21 | $15.52 | 1/19/22 | $15 | 5.92% |
| ONEOK, Inc. | OKE | Called | 5/26/21 | $52.51 | 2/18/22 | $60 | 19.62% |
| KKR & Co. | KKR | Sold | 8/25/21 | $64.52 | 2/23/22 | $58 | -9.73% |
| Valero Energy Inc. | VLO | Called | 11/17/21 | $73.45 | 2/25/22 | $83 | 15.53% |
| U.S Bancorp | USB | Sold | 3/24/21 | $53.47 | 4/13/22 | $51 | -1.59% |
| Enterprise Product Ptnrs | EPD | Called | 3/17/21 | $23.21 | 4/14.2022 | $24 | 11.25% |
| FS KKR Capital Corp. | FSK | Called | 10/27/21 | $22.01 | 4/14/22 | $23 | 13.58% |
| Xcel Energy Inc. | XEL | Called | 10/12/21 | $63.00 | 5/20/22 | $70 | 12.66% |
| Innovative Industrial Props. | IIPR | Sold | 3/23/22 | $196.31 | 7/20/22 | $93 | -51.23% |
| One Liberty Properties | OLP | Sold | 7/28/21 | $30.37 | 8/24/22 | $25 | -12.94% |
| ONEOK, Inc. | OKE | Called | 5/25/22 | $65.14 | 1/20/23 | $65 | 2.66% |
| Xcel Energy, Inc. | XEL | Called | 10/26/22 | $62.57 | 1/20//2023 | $65 | 4.67% |
| Realty Income Corp. | O | Called | 9/28/22 | $60.37 | 2/17/23 | $63 | 5.41% |
| Medical Properties Trust | MPW | Sold | 1/24/23 | $13.22 | 3/21/23 | $8 | -38.00% |
| Brookfield Infrastructure Cp. | BIPC | Called | 11/9/22 | $42.43 | 7/21/23 | $45 | 8.72% |
| Star Bulk Carriers Corp. | SBLK | Sold | 6/1/22 | $33.30 | 8/8/23 | $18 | -31.38% |
| Visa Inc. | V | Called | 12/22/21 | $217.16 | 8/18/23 | $235 | 9.16% |
| Global Ship Lease, Inc. | GSL | Sold | 2/23/22 | $24.96 | 8/29/23 | $19 | -13.82% |
| ONEOK, Inc. | OKE | Called | 3/28/23 | $60.98 | 9/15/23 | $65 | 9.72% |
| Hess Corporation | HES | Called | 6/6/23 | $132.25 | 10/20/23 | $155 | 17.87% |
| Tractor Supply Company | TSCO | Sold | 9/26/23 | $203.03 | 11/28/23 | $200 | -1.02% |
| Digital Realty Trust | DLR | Called | 7/18/23 | $117.31 | 1/19/24 | $135 | 17.16% |
| Intel Corporation | INTC | Called | 7/27/22 | $40.18 | 1/19/24 | $43 | 9.76% |
| AbbVie Inc. | ABBV | Called | 7/25/23 | $141.63 | 3/15/24 | $160 | 15.11% |
| Marathon Petroleum Corp. | MPC | Called | 10/24/23 | $149.45 | 3/28/24 | $165 | 12.06% |
| The Williams Companies, Inc. | WMB | Called | 8/24/22 | $35.58 | 5/17/24 | $35 | 7.14% |
| Main Street Capital Corp. | MAIN | Called | 3/26/24 | $46.40 | 9/20/24 | $49 | 10.91% |
| Brookfield Infrastructure Cp. | BIPC | Called | 2/27/24 | $32.64 | 9/20/24 | $35 | 11.00% |
| American Tower Corp. | AMT | Called | 1/23/24 | $202.26 | 9/20/24 | $210 | 5.43% |
| ONEOK, Inc. | OKE | Called | 8/27/24 | $79.59 | 10/18/24 | $88 | 11.18% |
| Alexandria Real Estate Eq. | ARE | Sold | 12/19/23 | $129.54 | 11/19/24 | $108 | -12.82% |
| FS KKR Capital Corp. | FSK | Called | 4/23/24 | $19.42 | 12/20/24 | $20 | 14.06% |
| Enterpise Product Ptnrs. | EPD | Called | 2/27/24 | $27.61 | 1/17/25 | $29 | 12.60% |
| Cheniere Energy Prtns. | CQP | Called | 1/22/25 | $53.04 | 3/21/25 | $60 | 14.67% |
| EXPIRED OPTIONS | |||||||
| Security | In/out money | Sell Date | Sell Price | Exp. Date | $ return | Total % Return | |
| IIPR Jul 17 $95 call | out-of money | 6/3/20 | $3.00 | 7/17/20 | $3.00 | 3.40% | |
| MO Jul 31 $42 call | out-of-money | 6/17/20 | $1.60 | 7/31/20 | $1.60 | 4.03% | |
| ABBV Sep 18 $100 call | out-of-money | 7/15/20 | $4.60 | 9/18/20 | $4.60 | 5.05% | |
| IIPR Sep 18 $100 call | in-the-money | 7/22/20 | $5.00 | 9/18/20 | $5.00 | 5.69% | |
| QCOM Sep 18 $95 call | in-the-money | 6/24/20 | $4.30 | 9/18/20 | $4.30 | 4.82% | |
| USB Sep 18 $37.50 call | in-the-money | 7/22/20 | $2.00 | 9/18/20 | $2.00 | 5.52% | |
| BIP Oct 16 $45 call | in-the-money | 9/2/20 | $1.95 | 10/16/20 | $1.95 | 4.65% | |
| SBUX Oct 16 $87.50 call | in-the-money | 10/16/20 | $3.30 | 10/16/20 | $3.30 | 4.00% | |
| V Nov 20 $200 call | in-the-money | 9/22/20 | $10.00 | 11/20/20 | $10.00 | 4.99% | |
| ABBV Dec 31 $100 call | in-the-money | 11/18/20 | $3.30 | 12/31/20 | $3.30 | 3.62% | |
| EPD Jan 15 $20 call | in-the-money | 11/23/20 | $0.80 | 1/15/21 | $0.80 | 4.41% | |
| MO Jan 15 $40 call | in-the-money | 11/25/20 | $1.90 | 1/15/21 | $1.90 | 4.79% | |
| USB Jan 15 $45 call | in-the-money | 11/25/20 | $2.00 | 1/15/21 | $2.00 | 4.48% | |
| BGS Feb 19 $27.50 call | in-the-money | 12/11/20 | $2.40 | 2/19/21 | $2.40 | 8.96% | |
| VLO Mar 26 $60 call | in-the-money | 2/10/21 | $6.50 | 3/26/21 | $6.50 | 12.10% | |
| CVX Apr 1 $95.50 call | in-the-money | 2/19/21 | $4.30 | 4/1/21 | $4.30 | 5.02% | |
| AGNC Jun 18 $17 call | out-of-money | 4/13/21 | $0.50 | 6/18/21 | $0.50 | 3.21% | |
| KKR Jun 18 $55 call | in-the-money | 4/28/21 | $3.00 | 6/18/21 | $3.00 | 6.25% | |
| USB Jun 16 $57.50 call | out-of-money | 4/28/21 | $2.80 | 6/18/21 | $2.80 | 5.24% | |
| DLR Jul 16 $155 call | in-the-money | 6/16/21 | $8.00 | 7/16/21 | $8.00 | 5.36% | |
| AGNC Aug 20 $17 call | out-of-money | 6/23/21 | $0.50 | 8/20/21 | $0.50 | 3.00% | |
| OKE Aug 20 $57.50 call | out-of-money | 6/23/21 | $3.50 | 8/20/21 | $3.50 | 6.67% | |
| NEE Sep 17 $80 call | in-the-money | 8/11/21 | $3.50 | 9/17/21 | $3.50 | 4.75% | |
| BIP Oct 15 $55 call | in-the-money | 9./01/2021 | $2.00 | 10/15/21 | $2.00 | 3.95% | |
| USB Nov 19 $60 call | out-of-money | 9/24.2021 | $2.30 | 11/19.2021 | $2.30 | 4.30% | |
| OKE Nov 26 $65 call | out-of-money | 10/20/21 | $2.25 | 11/26/21 | $2.25 | 4.28% | |
| KKR Dec 17 $75 call | out-of-money | 10/26/21 | $3.50 | 12/17/21 | $3.50 | 5.42% | |
| QCOM Jan 21 $185 Call | out-of-money | 11/30/21 | $9.65 | 1/21/22 | $9.65 | 7.17% | |
| OLP Feb 18 $35 Call | out-of-money | 11/19/21 | $1.50 | 2/18/22 | $1.50 | 4.94% | |
| OKE Feb 18 $60 Call | in-the-money | 1/5/22 | $2.75 | 2/18/22 | $2.75 | 5.24% | |
| USB Feb 25 $61 call | out-of-money | 1/13/22 | $2.50 | 2/25/22 | $2.50 | 4.68% | |
| VLO Feb 25 $83 call | in-the-money | 1/18/22 | $4.20 | 2/25/22 | $4.20 | 6.13% | |
| EPD Apr 14th $24 call | in-the-money | 3/2/22 | $1.25 | 4/14/22 | $1.25 | 5.69% | |
| FSK Apr 14th $22.50 call | in-the-money | 3/10/22 | $0.90 | 4/14/22 | $0.90 | 4.09% | |
| XEL May 20th $70 call | in-the-money | 3/30/22 | $3.00 | 5/20/22 | $3.00 | 4.76% | |
| SBLK July 15th $134 call | out-of-money | 6/1/22 | $1.60 | 7/15/22 | $1.60 | 4.80% | |
| OKE Oct 21st $65 call | out-of-money | 8/24/22 | $3.40 | 10/21/22 | $3.40 | 5.22% | |
| OKE Jan 20th $65 call | In-the-money | 11/25/22 | $3.70 | 1/20/23 | $3.70 | 5.68% | |
| XEL Jan 20th $65 call | in-the-money | 11/25/22 | $5.00 | 1/20/23 | $5.00 | 7.99% | |
| O Feb 17th $62.50 call | in-the-money | 12/28/22 | $3.00 | 2/17/23 | $3.00 | 4.97% | |
| QCOM Sep 16th $145 call | out-of-money | 7/20.2022 | $11.75 | 9/16/22 | $11.75 | 8.73% | |
| V Mar 17th $220 call | out-of-money | 1/24/23 | $12.00 | 3/17/203 | $12.00 | 5.51% | |
| OKE May 19th $65 call | out-of-money | 4/11/23 | $2.70 | 5/19/23 | $2.70 | 4.43% | |
| V Jun 2 $230 call | out-of-money | 4/21/23 | $10.50 | 6/2/23 | $10.50 | 4.82% | |
| BIPC $45 July 21st call | in-the-money | 5/23/23 | $3.25 | 7/21/23 | $3.25 | 7.66% | |
| V $235 Aug 18th call | in-the-money | 7/11/23 | $9.00 | 8/18/23 | $9.00 | 4.13% | |
| GSL $20 Aug 18th call | out-of-money | 7/11/23 | $1.25 | 8/18/23 | $1.25 | 5.00% | |
| OKE $65 Sep 15 call | in-the-money | 9/15/23 | $3.20 | 7/25/23 | $3.20 | 4.92% | |
| INTC $35 Oct 20th call | out-of-money | 9/8/23 | $3.78 | 10/20/23 | $3.78 | 9.41% | |
| HES $155 Oct 20th call | in-the-money | 9/8/23 | $9.00 | 10/20/23 | $9.00 | 6.81% | |
| DLR $135 Jan 19th call | in-the-money | 11/22/23 | $6.00 | 1/19/24 | $6.00 | 5.11% | |
| INTC $42.50 Jan 19th call | in-the-money | 11/29/23 | $3.50 | 1/19/24 | $3.50 | 8.71% | |
| ABBV $160 Mar 15th call | in-the-money | 1/10/24 | $7.00 | 3/15/24 | $7.00 | 4.94% | |
| MPC $165 Mar 28th call | in-the-money | 2/14/23 | $10.00 | 3/28/24 | $10 | 6.69% | |
| QCOM $170 Apr 26th call | out-of-money | 3/12/24 | $10.00 | 4/26/24 | $10 | 7.42% | |
| WMB $35 May 17th call | in-the-money | 3/12/24 | $2.00 | 5/17/24 | $2 | 5.62% | |
| QCOM $200 July 19th call | out-of-money | 6/5/24 | $12.00 | 7/19/24 | $12 | 8.91% | |
| MAIN $49.4 Sep 20th Call | in-the-money | 6/27/24 | $2.00 | 9/20/24 | $2 | 4.31% | |
| BIPC $35 Sep 20th Call | in-the-money | 7/16/24 | $3.00 | 9/20/24 | $3 | 9.19% | |
| AMT Sep 20 $210 call | in-the-money | 7/30/24 | $15.00 | 9/20/24 | $15 | 7.42% | |
| OKE Oct 18 $87.50 call | in-the-money | 8/27/24 | $3.50 | 10/18/24 | $3.50 | 4.40% | |
| FSK Dec 20 $20 call | in-the-money | 10/25/24 | $0.95 | 12/20/25 | $0.95 | 4.89% | |
| CEG Dec 29 $260 call | out-of-money | 9/25/24 | $24.00 | 12/20/24 | $24 | 12.24% | |
| EPD Jan 17 $29 call | in-the-money | 11/12/24 | $2 | 1/17/25 | $2 | 6.34% | |
| CEG Mar 21 $20 call | Buyback | 1/7/25 | $20.00 | 3/4/25 | $16.50 | 8.41% | |
| CQP Mar 21 $60 call | in-the-money | 1/22/25 | $3.00 | 3/21/25 | $3.00 | 5.66% | |
| QCOM Mar 21 $160 call | out-of-money | 1/7/25 | $10.00 | 3/32/2025 | $11.00 | 8.17% | |
Portfolio Recap
AbbVie Inc. (ABBV)
Yield: 3.8%
There had been reason to be cautious with ABBV. Very often, the stock pulls back after a surge to new highs. And it did in fact start coming down from its peak. But this market took ABBV, along with just about everything else, way down. The recent plunge gets the stock’s habit of pulling back after a surge out of its system. ABBV is at a great price right now. Sure, it could take a hit again if the market panics. But it should move higher after the market stabilizes. Things have improved as the company has moved beyond the Humira patent loss and has already replaced the revenues. I like the prospects for the stock for the rest of this year. BUY
AbbVie Inc. (ABBV)
Next ex-div date: July 15, 2025, est.
AGNC Investment Corp. (AGNC)
Yield: 17.3%
The mortgage REIT hit a 52-week low last week after rallying near the high back in February. AGNC has since bounced back somewhat along with the rest of the market. The ten-year Treasury rate has moved higher again, and the Fed is likely to cut the Fed Funds rate several times this year, perhaps beginning in June. Those two issues will help increase the spreads and profits for the mortgage REIT. AGNC can’t stand up to a market like we’ve had recently with indiscriminate selling. But it should come back when the market stabilizes. The mortgage REIT also reports earnings this week. HOLD
AGNC Investment Corp. (AGNC)
Next ex-div date: April 30, 2025
Ally Financial Inc. (ALLY)
Yield: 3.8%
This online banker has been bouncing around since late last summer. It has been bouncing off the recent low, but this market squelched that. ALLY has fallen over 16% in just the last couple of weeks. If the economy deteriorates toward a recession or close to it, the stock will sell off further. It deals primarily with auto loans, which are highly cyclical. However, a recession is still unlikely at this point. ALLY will be downgraded until this market seemingly finds a bottom and stabilizes. HOLD
Ally Financial Inc. (ALLY)
Next ex-div date: May 1, 2025
Broadcom Inc. (AVGO)
Yield: 1.4%
Technology has been in the crosshairs of the market lately, and AVGO is now down over 30% from the high. Technology stocks that were the hottest a few months ago are taking the worst of the selling. AVGO was a superstar that has recently been in the market’s crosshairs. But the stock is being dragged down by the sector and the external environment. The company itself is doing gangbusters.
Broadcom soundly beat expectations with 25% revenue growth and 45% earnings growth and raised guidance for the current quarter. AI revenue grew 77% over last year’s quarter, and the company reported that it has scored two more large AI chip customers. The stock price was soaring for a good reason: skyrocketing revenues. That should continue to be the case. AVGO can make up for lost time fast when it moves higher again. And it will at some point. BUY
Broadcom Inc. (AVGO)
Next ex-div date: June 20, 2025, est.
Cheniere Energy Inc. (LNG)
Yield: 0.9%
The liquid natural gas exporter stock has been spectacular under the circumstances. LNG had been strong ever since the November election as investors anticipated more natural gas exports, increased domestic production, and friendlier regulations. The stock did take a big dip earlier this month as the market ravaged everything, but it has made up all those losses already. LNG is solid in all but the worst markets and should resume the upward trend when the market stabilizes. It has the look of a stock that wants to go higher. HOLD
Cheniere Energy, Inc. (LNG)
Next ex-div date: May 7, 2025, est.
Constellation Energy Corporation (CEG)
Yield: 0.8%
This nuclear provider of electricity has come off the bottom but is still in sorry shape compared to where it was. CEG had been one of the hottest stocks on the market until late January. The electricity trade unwound after the DeepSeek news, and then all Hell broke loose with the tariffs. CEG soared and crashed. The market overdid it on the buy side and now it’s overdoing it on the sell side. Meanwhile, the company itself is doing great. Electricity demand is sure to grow. The two huge recent deals (the Microsoft (MSFT) deal and the Calpine acquisition) will deliver a high level of earnings growth in the years ahead, and there may be more new deals coming. The market will regain its footing at some point, and CEG can come back fast. HOLD
Constellation Energy Corp. (CEG)
Next ex-div date: June 7, 2025, est.
NextEra Energy, Inc. (NEE)
Yield: 3.4%
Even the safe stocks are getting pummeled. As a utility, NEE has held up relatively well in the recent market. But it hasn’t been that great because interest rates have risen again. NEE is still down, just not as much as most stocks. But NEE should have less downside than the overall market from here. And it should be a desirable stock when investors come back to buying and demand more safety. NEE has also performed well in strong markets. I think NEE will be higher in the months ahead and should provide a smoother rise than most stocks. BUY
NextEra Energy, Inc. (NEE)
Next ex-div date: May 31, 2025, est.
ONEOK, Inc. (OKE)
Yield: 4.8%
OKE tends to be more volatile than the other midstream companies in the portfolio. For much of the past few years, that has been a good thing. But lately, it’s been a very bad thing. The midstream energy stock has been trending higher throughout 2024 and took off to nosebleed levels in November. It came down from those levels but was still solid until this month’s indiscriminate selling. I’m very bullish on midstream energy companies over the longer term, especially the ones that specialize in natural gas. The stock should resume trending higher when the market stabilizes, but it could get knocked around more if the market has trouble. HOLD
ONEOK, Inc. (OKE)
Next ex-div date: May 3, 2025, est.
Qualcomm Corp. (QCOM)
Yield: 2.7%
Technology has not been a good place to be. QCOM had been holding up okay because it was underperforming before the market rolled over. But this month took no prisoners, and QCOM got whacked. But it has come off the low from earlier this month. Although the stock is already beaten to a pulp, it could fall further if the market makes a new low. However, QCOM can make up for lost time when it moves higher, and it will eventually. The company is still in an ideal position to provide AI-enabled chips for mobile devices, including smartphones. It should be a beneficiary of the next wave of AI. HOLD
Qualcomm Incorporated (QCOM)
Next ex-div date: June 5, 2025
Realty Income Corp. (O)
Yield: 5.8%
This legendary income REIT is finally paying off. It has been a subpar performer during the inflation and rising interest rates. But now it is showing some impressive defensive chops. It’s actually higher for the month of April and has returned 12% YTD. It should continue to perform well as investors are likely to gravitate toward more defensive plays. O is still attractively valued and should have some pent-up upside as the environment of inflation and rising interest rates likely fades into the past. It’s proving to be a nice holding in a dicey market. HOLD
Realty Income Corporation (O)
Next ex-div date: May 1, 2025
Toll Brothers, Inc. (TOL)
Yield: 1.1%
The luxury homebuilder stock actually fared alright in the recent market crash. That’s probably because the stock was beaten to a pulp before the tariff selloff. It also actually benefits from the benchmark 10-year Treasury rate moving lower. It fell below 4% for the first time since early October. That means mortgage rates will likely fall, which should improve affordability and home demand. However, rates started moving higher again, and the solid relative performance floundered. The longer-term supply/demand dynamic is hugely favorable to this company, and it will rebound eventually. HOLD
Toll Brothers, Inc. (TOL)
Next ex-div date: July 11, 2025, est.
Existing Call Trades
Sell ABBV June 20th $210 call at $9.50 or better
This is an unforgiving market that is punishing just about everything. ABBV had been a strong performer for good reasons. It has overcome the Humira patent expiration, which had held the stock back. The company has turned the corner and is now poised to strongly grow earnings this year. ABBV tends to pull back after surging to a new high, and this market has exacerbated the move. But we locked in a fat call premium that will make it easier to wait for the stock to resume an upward trend after the market stabilizes.
Income Calendar
Ex-Dividend Dates are in RED and italics. Dividend Payments Dates are in GREEN. Confirmed dates are in bold, all other dates are estimated. See the Guide to Cabot Income Advisor for an explanation of how dates are estimated.
The next Cabot Income Advisor issue will be published on May 27, 2025.
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