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Income Advisor
Conservative investing. Double-digit income.

Cabot Income Advisor Issue: July 25, 2023

The population is aging. And it’s aging at warp speed. People 50 years of age and older now comprise a third of the U.S. population. The fastest growing segment of the population is 65 and older as an average of 10,000 baby boomers are turning 65 every single day. And it’s not just this country – aging is a global phenomenon.

We don’t know how sticky inflation will be or what the Fed will do. We don’t know if there will be a recession this year or next year or what the recovery will look like, or who will be the next president. But we do know that the population is shifting and companies on the receiving end of the torrent of dollars that will flow as a result should benefit mightily.

In this issue, I highlight another new stock to buy. This stock is cheap with strong momentum and properties that should help it perform well in any kind of market. It’s a healthcare stock ahead of a huge megatrend, the aging population.

Investing with the tailwind of a megatrend makes it so much easier to make a successful investment. It makes mediocre stocks great and good stocks one of your best investments ever.

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Forget the Fed, Profit from the Aging Population

Most investors focus only on that which is directly ahead. Meanwhile, there are far more powerful and significant tectonic shifts going on that will profoundly affect investments for years to come.

No one knows in which direction the next 10% move in the market will be. But the next 100% move will surely be higher. The primary beneficiaries of the next inevitable move higher will be those investments well positioned in front of the dominant trends. And those companies that are ideally poised in front of a megatrend will enjoy a tailwind that astronomically increases the odds of success.

There is currently a megatrend that is more pronounced and obvious than all others and will have a profound effect on the flow of money for many years to come. That trend is the aging of the population.

The population is aging. And it’s aging at warp speed. People 50 years of age and older now comprise a third of the U.S. population. The fastest growing segment of the population is 65 and older as an average of 10,000 baby boomers are turning 65 every single day. And it’s not just this country – aging is a global phenomenon.

The number of people over 65 is projected to grow from 600 million in 2015 to 1.3 billion in 2040, representing a whopping 14% of the world’s people. By 2050, the number is expected to growth to 16%. To put this in perspective, in 1950 people over 65 comprised just 5% of the global population.

The human demographic is changing before our eyes. The population of the country and the world is already older than ever before in human history, and the trend is accelerating. It makes a huge impact because baby boomers control more than 70% of the wealth in this country and they are demanding healthcare like crazy.

In 2012, total healthcare expenditures in the United States were $2.8 trillion. Since then, spending in the sector has increased 75% and now accounts for a staggering 20% of total U.S. Gross Domestic Product (GDP). And that number is sure to increase.

We don’t know how sticky inflation will be or what the Fed will do. We don’t know if there will be a recession this year or next year or what the recovery will look like, or who will be the next president. But we do know that the population is shifting and companies on the receiving end of the torrent of dollars that will flow as a result should benefit mightily.

In this issue, I highlight one of the very best healthcare companies in the world at a very cheap price with a high dividend and positive momentum.

What to Do Now

These are good times in the market with the S&P 500 up about 19% YTD. Previously dormant and underperforming positions are coming to life. After this week, there will be three portfolio stocks with covered calls, including one on recently higher Global Ship Leasing (GSL), which had been dead money.

Several other stocks are nearing territory where high premium covered calls can be sold including Qualcomm (QCOM), Intel (INTC), Hess (HES), Realty Income (O), and new position Digital Realty Trust (DLR). In this issue, I highlight a new covered call for midstream energy company ONEOK (OKE). It is the second call sold in this same position that was initiated in May. It’s also the seventh covered call sold on OKE is this portfolio. It’s an income machine.

I’m trying to strike a balance by selling calls on stocks that have moved to the high point of the recent range while holding off and riding the momentum on others. There will likely be several more covered calls sold in this portfolio in the next couple of weeks. Keep an eye out for “Trade Alerts”.

In this issue, I highlight another new stock to buy. This stock is cheap with strong momentum and properties that should help it perform well in any kind of market. It’s a healthcare stock ahead of a huge megatrend, the aging population.

Investing with the tailwind of a megatrend makes it so much easier to make a successful investment. It makes mediocre stocks great and good stocks one of your best investments ever.

Monthly Recap

June 27
Purchased Realty Income Corporation (O) - $60.19

July 11
SOLD V August 18 $235 calls at $9.00
SOLD GSL August 18 $20 calls at $1.25

July 18
Purchased Digital Realty Trust, Inc. (DLR) - $117.31
Intel Corp. (INTC) - Rating change “HOLD” to “BUY”
Qualcomm (QCOM) - Rating change “HOLD” to “BUY”

July 21
BIPC July 21 $45 calls – Expired
Brookfield Infrastructure Corp. stock (BIPC) – Called $45

July 25
Buy AbbVie Inc. (ABBV)
Sell OKE Sep 15 $65 calls at $3.00 or better

Featured Actions: Buy AbbVie Inc. (ABBV)

Yield: 4.2%
AbbVie is a U.S.-based biopharmaceutical company formed in 2013 as a spinoff from Abbott Laboratories (ABT). AbbVie is a research-based pharmaceutical company specializing in small-molecule drugs.

But this “spinoff” is bigger than the parent company and is now one of the largest pharmaceutical companies in the world with over $58 billion in annual revenues. AbbVie became an industry giant because of its mega-blockbuster drug Humira. It’s an autoimmune drug that became the world’s best-selling drug by far with annual revenues over $20 billion.

But the tremendous success of that drug is now a problem because it lost its patent overseas a couple of years ago and it lost its U.S. patent this year. This country accounts for over 75% of sales and the loss of the patent has reduced revenues. In the last quarter, AbbVie posted year-over-year revenues of -9.7% and earnings per share that were down 22% from last year’s quarter. The earnings and revenue shrinkage is expected to last for several more quarters.

That’s the bad news. The good news is that AbbVie has one of the best pipelines of new drugs in the business and can replace those lost Humira revenues in the next couple of years. This Humira patent expiration has been known and feared for a long time. Despite this bullet coming, ABBV has returned more than 18% per year on average over the last three years. That’s because of the market’s confidence in the pipeline.

The company is expected to resume earnings growth in 2025. AbbVie’s new immunology drugs, Skyrizi and Rinvoq, are expected to replace Humira’s peak revenues by 2025. The company also has several dozen promising drugs in late-stage trials. As the market increasingly looks to the future beyond the Humira expiration it will see one of the best drug companies in the world selling at a dirt-cheap valuation ahead of a promising future,

ABBV bottomed out to a 52-week low after first-quarter earnings disappointed the market. But the stock has made an impressive move off the bottom in the last couple of weeks. ABBV tends to run for a while after it gets momentum like this. It’s also worth noting that AbbVie reports second-quarter earnings later this week, which could be good or bad. But I believe in AbbVie and the future and earnings are more likely to boost the stock than hurt it.

Anything is possible in the near term. But I see ABBV as like Eli Lilly (LLY). I purchased that stock 11 years ago when the company and stock were floundering because of a steep cliff in patent expirations. Since then LLY is up more than 1,400%. ABBV is also a cutting-edge drug innovator with the enormously powerful tailwind of an aging population.

If ABBV continues this move it should generate fat call premiums in a short period of time.

AbbVie Inc. (ABBV)
Security type: Common stock
Sector: Healthcare
Price: $143.74
52-week range: $130.96 - $168.11
Yield: 4.2%
Profile: ABBV is one of the world’s largest biopharmaceutical companies.


  • AbbVie can easily replace Humira revenue in the next couple of years with one of the best drug pipelines in the industry.
  • Healthcare is a defensive industry that should perform well even if the economy slows or falls into recession.
  • A stellar company like this is unlikely to have an underperforming stock with the powerful tailwind of a rapidly aging population.


  • Year-over-year earnings and revenues are likely to continue shrinking for another year.
  • Investors may not reward the stock until earnings growth is in closer range.

AbbVie Inc. (ABBV)
Next ex-div date: October 14, 2023, est.

Sell OKE Sep 15 $65 calls at $3.20 or better

Expiration date: September 15
Strike price: $65
Call price: $3.20

As noted below, this is the second call sold on the same OKE position initiated in March. The two calls plus the dividend amount to a $7.81 income so far on a stock with a $60.98 original purchase price. However, OKE has been held in this portfolio on two prior occasions. Including those other holding periods, this is the 7th call sold on OKE for total premiums of $21.5 per share and that doesn’t include dividend income or appreciation from the prior positions.

OKE is an income machine, and we are going back to that fruitful well again. I do like the prospects of OKE for the rest of this year. But if the market continues to be kind to midstream energy stocks, we still have WMB.

Here are the three scenarios.

1. The stock closes above the $65 strike price at expiration.
Call premium: $3.20
Dividends: $1.91
Appreciation: $4.02 ($65 strike price minus $60.98 purchase price)
Total: $9.13 (total return will be 15% in 3 months, or 19.4% if you sold the earlier call for $2.70)

2. The stock price closes below but near our $45 strike price.
Call premium: $3.20
Dividend: $1.91
Total: $5.11 (total income of 8.4% in 3 months, or 12.8% with the earlier call)

3. The stock price declines.
There will be $5.11 in income to offset the decline. Plus, the original purchase price was more than $4 below the strike price.

Portfolio Recap


Open RecommendationsTicker SymbolEntry DateEntry PriceRecent PriceBuy at or Under PriceYieldTotal Return
Qualcomm Inc. QCOM5/5/21$134.65$124.72$130.002.57%-2.86%
Visa Inc.V12/22/21$217.96$239.25NA0.75%11.05%
Global Ship Lease, Inc.GSL2/23/22$24.96$20.25NA7.36%-10.43%
Star Buld Carriers Corp.SBLK6/1/22$33.30$17.06NA8.12%-35.94%
Intel CorporationINTC7/27/22$40.18$34.02$35.001.45%-11.90%
The Williams Companies WMB8/24/22$35.58$33.85$38.005.37%0.62%
ONEOK Inc.OKE3/28/23$60.98$66.49NA5.94%10.63%
NextEra Energy, Inc.NEE4/25/23$77.50$75.90$85.002.60%-1.85%
Hess CorporationHES6/6/23$132.25$142.20$140.001.29%7.88%
Realty Income Corp. O6/27/23$60.19$62.75$62.004.89%4.70%
Digital Realty TrustDLR7/18/23$117.31$120.15$125.004.16%2.42%
AbbVie Inc.ABBV7/25/23$143.74$150.004.16%
Existing Call Trades
Open RecommendationsTicker SymbolInitial ActionEntry DateEntry PriceRecent Price Sell To Price or betterTotal Return
V $235 Aug 18th callV230818C00235000Sell 7/11/23$9.00$11.85$9.004.13%
GSL $20 Aug 18th callGSL230818C00020000Sell 7/11/23$1.25$0.90$1.255.00%
OKE $65 Sep 15th callOKE230915C00060000Sell Pending$2.78$3.004.92%
as of close on 7/21/2023
SecurityTicker Symbol ActionEntry DateEntry PriceSale DateSale PriceTotal Return
Innovative Industrial Props.IIPRCalled6/2/20$87.829/18/20$100.0015.08%
U.S. BancorpUSBCalled 7/22/20$36.269/18/20$383.42%
Brookfield Infras. Ptnrs.BIPCalled6/24/20$41.9210/16/20$458.49%
Starbucks Corp.SBUXCalled8/26/20$82.4110/16/20$886.18%
Visa CorporationVCalled 9/22/20$200.5611/20/20$2000.00%
AbbVie Inc.ABBVCalled6/2/20$91.0412/31/20$10012.43%
Enterprise Prod. Prtnrs.EPDCalled6/24/20$18.141/15/21$2015.16%
Altria GroupMOCalled 6/2/20$39.661/15/21$407.31%
U.S. BancorpUSBCalled 11/25/20$44.681/15/21$451.66%
B&G Foods Inc,BGSCalled10/28/20$26.792/19/21$284.42%
Valero Energy Inc.VLOCalled8/26/20$53.703/26/21$6011.73%
Chevron Corp.CVXCalled12/23/20$85.694/1/21$9612.95%
KKR & Co.KKRCalled3/24/21$47.986/18/21$5514.92%
Digital Realty TrustDLRCalled1/27/21$149.177/16/21$1555.50%
NextEra Energy, Inc.NEECalled2/24/21$73.769/17/21$8010.00%
Brookfield Infras. Ptnrs.BIPCalled1/13/21$50.6310/15/21$5511.65%
AGNC Investment CorpAGNCSold1/13/21$15.521/19/22$155.92%
ONEOK, Inc.OKECalled5/26/21$52.512/18/22$6019.62%
KKR & Co.KKRSold8/25/21$64.522/23/22$58-9.73%
Valero Energy Inc.VLOCalled11/17/21$73.452/25/22$8315.53%
U.S BancorpUSBSold3/24/21$53.474/13/22$51-1.59%
Enterprise Product Ptnrs EPDCalled3/17/21$23.214/14.2022$2411.25%
FS KKR Capital Corp. FSKCalled10/27/21$22.014/14/22$2313.58%
Xcel Energy Inc. XELCalled10/12/21$63.005/20/22$7012.66%
Innovative Industrial Props.IIPRSold3/23/22$196.317/20/22$93-51.23%
One Liberty PropertiesOLPSold7/28/21$30.378/24/22$25-12.94%
ONEOK, Inc.OKECalled5/25/22$65.141/20/23$652.66%
Xcel Energy, Inc.XELCalled10/26/22$62.571/20/23$654.67%
Realty Income Corp. OCalled9/28/22$60.372/17/23$635.41%
Medical Properties TrustMPWSold1/24/23$13.223/21/23$8-38.00%
Brookfield Infrastructure Cp.BIPCCalled11/9/22$42.437/21/23$458.72%
SecurityIn/out moneySell DateSell PriceExp. Date$ ReturnTotal % Return
IIPR Jul 17 $95 callout-of money6/3/20$3.007/17/20$3.003.40%
MO Jul 31 $42 callout-of-money6/17/20$1.607/31/20$1.604.03%
ABBV Sep 18 $100 callout-of-money7/15/20$4.609/18/20$4.605.05%
IIPR Sep 18 $100 callin-the-money7/22/20$5.009/18/20$5.005.69%
QCOM Sep 18 $95 callin-the-money6/24/20$4.309/18/20$4.304.82%
USB Sep 18 $37.50 callin-the-money7/22/20$2.009/18/20$2.005.52%
BIP Oct 16 $45 callin-the-money9/2/20$1.9510/16/20$1.954.65%
SBUX Oct 16 $87.50 callin-the-money10/16/20$3.3010/16/20$3.304.00%
V Nov 20 $200 callin-the-money9/22/20$10.0011/20/20$10.004.99%
ABBV Dec 31 $100 callin-the-money11/18/20$3.3012/31/20$3.303.62%
EPD Jan 15 $20 callin-the-money11/23/20$0.801/15/21$0.804.41%
MO Jan 15 $40 callin-the-money11/25/20$1.901/15/21$1.904.79%
USB Jan 15 $45 callin-the-money11/25/20$2.001/15/21$2.004.48%
BGS Feb 19 $27.50 callin-the-money12/11/20$2.402/19/21$2.408.96%
VLO Mar 26 $60 callin-the-money2/10/21$6.503/26/21$6.5012.10%
CVX Apr 1 $95.50 callin-the-money2/19/21$4.304/1/21$4.305.02%
AGNC Jun 18 $17 callout-of-money4/13/21$0.506/18/21$0.503.21%
KKR Jun 18 $55 callin-the-money4/28/21$3.006/18/21$3.006.25%
USB Jun 16 $57.50 callout-of-money4/28/21$2.806/18/21$2.805.24%
DLR Jul 16 $155 callin-the-money6/16/21$8.007/16/21$8.005.36%
AGNC Aug 20 $17 callout-of-money6/23/21$0.508/20/21$0.503.00%
OKE Aug 20 $57.50 callout-of-money6/23/21$3.508/20/21$3.506.67%
NEE Sep 17 $80 callin-the-money8/11/21$3.509/17/21$3.504.75%
BIP Oct 15 $55 callin-the-money9./01/2021$2.0010/15/21$2.003.95%
USB Nov 19 $60 callout-of-money9/24/21$2.3011/19/21$2.304.30%
OKE Nov 26 $65 callout-of-money10/20/21$2.2511/26/21$2.254.28%
KKR Dec 17 $75 callout-of-money10/26/21$3.5012/17/21$3.505.42%
QCOM Jan 21 $185 Callout-of-money11/30/21$9.651/21/22$9.657.17%
OLP Feb 18 $35 Callout-of-money11/19/21$1.502/18/22$1.504.94%
OKE Feb 18 $60 Callin-the-money1/5/22$2.752/18/22$2.755.24%
USB Feb 25 $61 callout-of-money1/13/22$2.502/25/22$2.504.68%
VLO Feb 25 $83 callin-the-money1/18/22$4.202/25/22$4.206.13%
EPD Apr 14th $24 callin-the-money3/2/22$1.254/14/22$1.255.69%
FSK Apr 14th $22.50 callin-the-money3/10/22$0.904/14/22$0.904.09%
XEL May 20th $70 callin-the-money3/30/22$3.005/20/22$3.004.76%
SBLK July 15th $134 callout-of-money6/1/22$1.607/15/22$1.604.80%
OKE Oct 21st $65 callout-of-money8/24/22$3.4010/21/22$3.405.22%
OKE Jan 20th $65 callIn-the-money11/25/22$3.701/20/23$3.705.68%
XEL Jan 20th $65 callin-the-money11/25/22$5.001/20/23$5.007.99%
O Feb 17th $62.50 callin-the-money12/28/22$3.002/17/23$3.004.97%
QCOM Sep 16th $145 callout-of-money7/20/22$11.759/16/2211.758.73%
V Mar 17th $220 callout-of-money1/24/23$12.003/17/23$12.005.51%
OKE May 19th $65 callout-of-money4/11/23$2.705/19/23$2.704.43%
V Jun 2 $230 callout-of-money4/21/23$10.506/2/2310.54.82%
BIPC $45 July 21st callin-the-money5/23/23$3.257/21/23$3.257.66%

Digital Realty Trust, Inc. (DLR)

Yield: 4.2%

The positive momentum is continuing for this data center REIT. DLR is up 18% in the last month and 42% in the last two months. The stock has woken up after underperforming for more than a year. Yet it is still about 8% below the 52-week high. DLR rediscovered its mojo after the AI craze got real. Investors realize that the much higher than expected investment in AI technology will be another growth engine for digital going forward. The stock has great momentum right now and I want to ride that wave longer before selling a covered call. BUY


Digital Realty Trust, Inc. (DLR)
Next ex-div date: September 14, 2023, est.

Global Ship Lease, Inc. (GSL)

Yield: 7.5%

After a tough year in 2022, GSL has returned a market-beating 25% YTD. The longer-term prognosis for the container shipping company stock has always been strong, as the industry supply/demand dynamic is very favorable. Results have been strong. Last quarter Global grew normalized earnings per share by 14.6% while continuing to expand its fleet of ships. Shipping rates are benefiting from the opening of the Chinese economy. GSL poked its head above 20 per share. Perhaps it can rally from there or maybe it pulls back in the near term, like it did the past two times. The portfolio sold a covered call to generate a high income when GSL was near a recent high. HOLD


Global Ship Lease, inc. (GSL)
Next ex-div date: August 23, 2023, est.

Hess Corporation (HES)

Yield: 1.3%

The exploration and production company stock has been going sideways for two months but got a bump recently. Hess is sensitive to energy prices, although not as much as its peers because of its ability to increase production at low costs. Oil prices have risen recently on the stronger-than-expected economy. There are also OPEC and Saudi production cuts. We’ll see if energy prices rise to higher level now or later in the quarters ahead. BUY


Hess Corporation (HES)
Next ex-div date: September 14, 2023, est.

Intel Corp, (INTC)

Yield: 1.5%

INTC got a huge 30% bump as confidence in its chip production ability swells due to the indirect benefits from the soaring demand for AI-related products and services. We’ll see if Intel can slay the competition with its new plan and its new chips down the road. But a surge in technology demand across the board provided by the magnitude of the AI frenzy will lift all boats. Intel’s future got a lot better with the recent AI bump. It might increasingly be seen as a cheap stock with a brighter future. BUY


Intel Corporation (INTC)
Next ex-div date: August 4, 2023, est.

NextEra Energy, Inc. (NEE)

Yield: 2.6%

This combination regulated and clean energy utility stock has bounced around all over the place for the past two years and is currently at the low end of that range. NEE is still well below the recent high. Defensive stocks have floundered. But that might not last. This company is targeting earnings per share growth of 6% to 8% annually through 2026 and 10% per year dividend growth through at least 2024. BUY


NextEra Energy, Inc. (NEE)
Next ex-div date: August 27, 2023, est.


Yield: 6.0%

After getting clobbered in May when the market hated its purchase of Magellan Midstream Partners (MMP), OKE has been coming right back and has regained nearly all those losses. It’s up 10% since the beginning of June. The deal will turn ONEOK from a natural gas operator to a diversified midstream company that services oil and refined products as well. The deal is a longer-term positive that could hurt performance in the near term. But this will remain a solid performer with high and safe dividend and reliable earnings in an environment where overall market earnings are contracting. HOLD


Next ex-div date: July 28, 2023, est.

Realty Income Corp. (O)

Yield: 5.0%

This legendary monthly income stock is part of two underperforming sectors in the first half, Real Estate and Consumer Staples. It currently sells well below the pre-pandemic high, despite having higher earnings, and the stock is now near the lowest point since last summer. But income and safety may be at a premium in the second half of the year. Either investors will crave defense again or the rally will broaden out to include this year’s lagging sectors. BUY


Realty Income Corporation (O)
Next ex-div date: July 31, 2023

Star Bulk Carriers Corp. (SBLK)

Yield: 7.7%

The dry bulk shipping company had rallied earlier this year as shipping rates recovered somewhat. But the stock has pulled back to about even YTD as the Chinese recovery hasn’t delivered the desired effect, at least not yet. Unlike GLS, Star Bulk hasn’t massively increased their fleet size and year-over-year comparisons are tough as shipping rates have fallen. Although it is likely still the early innings of a multiyear positive cycle for shipping, the stock recently moved near the low. HOLD


Star Bulk Carriers Corp. (SBLK)
Next ex-div date: September 6, 2023, est.

Qualcomm Corp. (QCOM)

Yield: 2.6%

QCOM has leveled off since the big rise in late May and early June from the AI craze. Qualcomm has cutting-edge chips with AI capabilities and describes itself as the “on-device AI leader,” and the company should benefit mightily from the increasing shift towards AI and profits are now likely to soar sooner than previously expected. Although Qualcomm doesn’t benefit as directly and immediately from AI as some other companies, eventually the AI boost will find its way to mobile devices and QCOM will be in a great position. BUY


Qualcomm Inc. (QCOM)
Next ex-div date: August 30, 2023

Visa Inc. (V)

Yield: 0.8%

V loves the still strong economy and increasing soft-landing talk. Inflation is down, GDP was revised higher, and the consumer is still strong. In addition, Visa just purchased a Brazilian fintech company that rival MasterCard (MA) also wanted and beat them out. As a result, V soared to a new 52-week high. The stock tends to level off after it surges higher and the rally may have run out of gas. Therefore, the portfolio sold a call while the stock still has some momentum. HOLD


Visa Inc. (V)
Next ex-div date: August 9, 2023, est.

The Williams Companies, Inc. (WMB)

Yield: 5.4%

This midstream energy company has reliable earnings that should even remain solid in a slowing economy. Earnings per share grew a whopping 36% over last year’s quarter as natural gas volumes remained strong and growing. But growth is expected to slow as year-over-year comparisons include recent acquisitions. But the company is also investing heavily for future growth. Selling at just 8 times earnings, it is a cheap and defensive stock with a high and reliable dividend ahead of an uncertain second half of the year. BUY


The Williams Companies, Inc. (WMB)
Next ex-div date: September 9, 2023, est.

Existing Call Trades

BIPC July 21 $45 calls - Expired
BIPC is selling at nearly $2.00 per share above the strike price and options expire on Friday. We’ll see what happens. If shares are not called, BIPC is a good, solid holding in an uncertain market going forward. If shares are called, we will take a profit while this market is riding higher. But either way, we guarantee a strong income return.

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 August 22, 2023.

Tom Hutchinson is the Chief Analyst of Cabot Dividend Investor, Cabot Income Advisor and Cabot Retirement Club. He is a Wall Street veteran with extensive experience in multiple areas of investing and finance.