A Great Time to Lock in a High Income
Stocks have been very resilient. The market has proven a lot of naysayers wrong. But prices are high, and uncertainty abounds.
There’s a lot of good news. After flirting with a bear market (down 20% from the high) amid the tariff hysteria in April, stocks have completely recovered and then some. The S&P is now just a few percent below the all-time high.
It looks like the tariffs aren’t going to ignite inflation and tank the economy after all. Job numbers are strong. The economy isn’t anywhere near a recession. Inflation has been petering out. And the artificial intelligence catalyst is still alive and well.
But risks are growing. Tariffs won’t be a disaster but there will still be more headlines and uncertainty in the months ahead. The economy is OK but it’s not great. Interest rates are still stubbornly high. And now the Iran conflict is thrown into the uncertainty smorgasbord along with the tariffs and the economy. Meanwhile, the market indexes are hovering near the high and most stocks are pricey.
I believe these issues will turn out OK and the market will be higher than it is now by the end of the year. But it’s hard to see how stocks generate lasting upside traction until there is more clarity with the current issues. And that could take many months.
Meanwhile, several portfolio positions have had strong rallies in the recovery and generate high call premiums. The high strike prices guarantee a strong total return if the stocks are called. The high premiums provide a great way to lock in the recent market good fortune by generating a high income from call premiums.
Let’s take what the market is giving. Right now, it’s giving a high income. Tomorrow, who knows?
There are currently three covered call positions outstanding, on Broadcom (AVGO), Constellation Energy (CEG), and the recently added Oracle Corporation (ORCL). Two covered calls expired last week, Cheniere Energy (LNG) and AbbVie (ABBV). In this month’s issue I highlight another covered call for Qualcomm (QCOM). It is the sixth covered call sold on the position since it was added to the portfolio a little more than four years ago.
What to Do Now
The market can go either way from here in the near term. While the tariff uncertainty is much better, the state of the economy is still very much in question in the near term. It’s unclear whether to go with defensive or cyclical stocks. Interest rates could go up or down. And that was the case before the Iran conflict got hot.
The strongest rally was in the most previously beaten down sector, technology. Technology had driven this market higher throughout the current bull market until this year. A correction was due. But that sector already had a big recovery. There have been huge rallies in CEG, AVGO, and recently ORCL. These stocks may have further upsides but have leveled off somewhat.
It is also likely to be a good year for certain energy stocks, especially the midstream energy companies including Enterprise Product Partners (EPD), ONEOK Inc. (OKE), and The Williams Companies (WMB). Natural gas demand is still strong, and energy production is likely to thrive going forward. OKE is currently in the portfolio, and it is likely that one of the other stocks will be added soon.
However, it’s time for caution in the health care stocks including AbbVie Inc. (ABBV) and Eli Lilly (LLY). The industry is facing the Trump administration’s pending executive order tying U.S. prices to overseas prices, and the details remain vague. There are also tariffs coming for pharmaceuticals, as promised by the administration. The sector is likely to be in the crosshairs of uncertainty in the weeks ahead and those stock ratings have been reduced to a “HOLD” pending more clarity.
For the reasons mentioned above, the most compelling trade right now is in covered calls. But things can change quickly. Stay tuned.
Recent Activity
May 28
Purchased Oracle Corporation (ORCL) - $163.85
June 3
SOLD AVGO July 18th $250 call at $16.00 or better
June 10
Broadcom Inc. (AVGO) – Rating change “BUY” to “HOLD”
June 18
SOLD ORCL August 15th $210 call at $13.00 or better
June 20
ABBV June 20th $210 call at $9.50 – Expired
LNG June 20th $230 call at $15.00 – Expired
Cheniere Energy, Inc (LNG) stock – Called
June 24
Sell QCOM August 15th $150 call at $10.00 or better
Featured Action
Sell QCOM August 15th $150 call at $10.00 or better
Expiration date: August 15
Strike price: $150.00
Call price: $10.00
Qualcomm Inc. (QCOM)
QCOM peaked about a year ago around 250 per share and has been a dog ever since. The stock has generated strong upside in short periods of time in the past. But investors seem to be waiting for smartphone demand to pick up in an upgrade cycle where customers embrace AI. That may happen in the quarters ahead. And Qualcomm is perfectly positioned as the AI leader in mobile devices. But it isn’t happening yet. Despite the bouncy price history, QCOM has been a reliable income generator in the portfolio. Five previous calls were sold on the position for a total of $53.40. This call will further milk the income capabilities from the stock while we wait for the next big upside move.
Here are the three scenarios.
1. The stock closes above the $150.00 strike price at expiration.
Call premium: $10.00
Dividends: $14.10
Appreciation: $15.35 ($150.00 strike price minus $134.65 purchase price)
Total: $39.45 (total return will be 29.3% in four years and 3 months, and 69% with the five previous calls)
2. The stock price closes below but near our $150 strike price.
Call premium: $10.00
Dividends: $14.10
Total: $24.10 (total income of 17.9% in four years and three months, and 57.6% with the previous calls)
3. The stock price declines.
There will be $24.10 in income to offset the decline. Plus, the original purchase price is more than $15 per share below the strike price.
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 | $185.30 | NA | 3.54% | 7.66% |
| AGNC Investment Corp | AGNC | 9/24/24 | $10.47 | $9.24 | NA | 15.57% | -1.27% |
| Ally Financial Inc. | ALLY | 11/26/24 | $39.42 | $36.94 | NA | 3.25% | -4.69% |
| Broadcom Inc. | AVGO | 1/28/25 | $207.36 | $249.99 | NA | 0.94% | 21.22% |
| Constellation Energy Corp. | CEG | 8/27/24 | $196.14 | $304.92 | NA | 0.51% | 56.20% |
| Eli Lilly and Company | LLY | 4/22/25 | $827.54 | $762.73 | NA | 0.79% | -7.65% |
| NextEra Energy, Inc. | NEE | 4/25/23 | $77.50 | $71.53 | $75.00 | 3.17% | -1.77% |
| ONEOK, Inc. | OKE | 2/25/25 | $95.77 | $82.37 | NA | 5.00% | -12.89% |
| Oracle Corporation | ORCL | 5/28/25 | $163.85 | $205.17 | $175.00 | 0.97% | 25.22% |
| Qualcomm Inc. | QCOM | 5/5/21 | $134.65 | $151.32 | NA | 2.35% | 23.21% |
| Realty Income Corp. | O | 6/27/23 | $60.19 | $57.18 | NA | 5.65% | 6.31% |
| Toll Brothers, Inc. | TOL | 10/22/24 | $148.02 | $108.31 | NA | 0.92% | -26.50% |
| Open Recommendations | Ticker Symbol | Initial Action | Entry Date | Entry Price | Recent Price | Sell To Price or better | Total Return |
| CEG July 18th $290 call | CEG250718C00290000 | Sell | 5/20/25 | $24.00 | $25.54 | $24.00 | 12.23% |
| AVGO July 18th $250 call | AVGO250718C00250000 | Sell | 6/3/25 | $16.00 | $10.53 | $15.00 | 7.72% |
| ORCL Aug 15th $210 call | ORCL250815C00210000 | Sell | 6/18/25 | $13.00 | $7.35 | $13.00 | 7.93% |
| QCOM Aug 15th 150 call | QCOM250815C00150000 | Sell Pending | $9.94 | $10.00 | 7.43% | ||
| as of close on 6/20/2025 | |||||||
| 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 | 4/14/22 | $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 | 1/20/23 | $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% |
| Cheniere Energy, Inc. | LNG | Called | 2/25/25 | $216.04 | 6/20/25 | $230 | 6.69% |
| 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 | 9/1/21 | $2.00 | 10/15/21 | $2.00 | 3.95% | |
| USB Nov 19 $60 call | out-of-money | 9/24/21 | $2.30 | 11/19/21 | $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 | 7/20/22 | $11.75 | 9/16/22 | $11.75 | 8.73% | |
| V Mar 17th $220 call | out-of-money | 1/24/23 | $12.00 | 3/17/23 | $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 | $10.00 | 6.69% | |
| QCOM $200 July 19th call | out-of-money | 6/5/24 | $12.00 | 7/19/24 | $12.00 | 8.91% | |
| MAIN $49.4 Sep 20th Call | in-the-money | 6/27/24 | $2.00 | 9/20/24 | $2.00 | 4.31% | |
| BIPC $35 Sep 20th Call | in-the-money | 7/16/24 | $3.00 | 9/20/24 | $3.00 | 9.19% | |
| AMT Sep 20 $210 call | in-the-money | 7/30/24 | $15.00 | 9/20/24 | $15.00 | 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 | $24.00 | 12.24% | |
| EPD Jan 17 $29 call | in-the-money | 11/12/24 | $2.00 | 1/17/25 | $2.00 | 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 | 3/31/25 | $11.00 | 8.17% | |
| ABBV June 20 $210 call | out-of-money | 4/1/25 | $9.50 | 6/20/25 | $9.50 | 5.42% | |
| LNG June 20 $230 call | in-the-money | 5/7/25 | $15.00 | 6/20/25 | $15.00 | 6.64% | |
AbbVie Inc. (ABBV)
Yield: 3.5%
ABBV continues to hang in there. It took a hit along with the rest of the market in early April. Then the quick recovery got interrupted by pending tariff and pricing issues in May. Health care is still vulnerable to tariff news and stocks have been stuck. The executive order tying U.S. drug prices to international prices landed without much damage to the stocks. But there is also the issue of pharmaceuticals being targeted for tariffs floating around after the administration said they are coming. The issue could have a negative impact on drug companies, and they are unlikely to move meaningfully higher until there is more clarity. AbbVie itself is doing well as the Humira expiration pain is behind it and earnings are growing again. HOLD
AbbVie Inc. (ABBV)
Next ex-div date: July 15, 2025
AGNC Investment Corp. (AGNC)
Yield: 15.6%
The mortgage REIT has moved well above the low of early April. That’s the most that can be said for it right now. AGNC has benefitted from the better economic news and a more risk-friendly environment. Even though the strong jobs reports make the Fed less likely to cut rates soon, it is still likely that the Fed will lower the Fed Funds rates this year, which will reduce funding costs. It will also help with the net asset value (NAV), which tends to determine the share price direction. However, there is still a lot of uncertainty out there between the tariffs, economy, and Middle East turmoil. Meanwhile, AGNC pays a huge yield while you wait. HOLD
AGNC Investment Corp. (AGNC)
Next ex-div date: June 30, 2025
Ally Financial Inc. (ALLY)
Yield: 3.3%
It’s really about the economy with this online banker. ALLY made a nice move over the past couple of months with the better economic news. But the stock is still stuck in the upper range of where it has been bouncing around since the end of last summer
The price has spiked more than 20% since late April. Rates are still high and there is still a high degree of uncertainty regarding the direction of the economy over the rest of the year, but the prognosis is improving. ALLY is getting a boost from the strong jobs report. As long as the economy stays solid and the worst of the tariff uncertainty stays behind, ALLY should be strong and eventually make up for some lost time. HOLD
Ally Financial Inc. (ALLY)
Next ex-div date: August 1, 2025, est.
Broadcom Inc. (AVGO)
Yield: 0.9%
The custom AI chipmaker has leveled off after the earnings report earlier this month. AVGO made a huge 80% gain from the low of April. The company did what was expected in the earnings report but didn’t issue unexpected and exciting news, like the 10-for-1 stock split or the estimates of $60 to $90 billion in AI revenue in a few years. It looks like a “sell the news” situation. But while the price has stopped rising for now, it hasn’t pulled back with any significance. It’s holding the gains, just not adding to them for the time being. It’s encouraging that AVGO isn’t pulling back. It has done this before where it levels off and consolidates until the next surge. HOLD
Broadcom Inc. (AVGO)
Next ex-div date: September 20, 2025, est.
Constellation Energy Corporation (CEG)
Yield: 0.5%
Constellation announced another big energy deal earlier this month. The company struck a 20-year deal to provide nuclear power to Meta (META) to power its AI-capable data centers from its nuclear plant in Clinton, Illinois. Financial details are not yet available. It is the latest in tech companies purchasing carbon-free nuclear power to accommodate the huge growth in electricity demand from data centers. Constellation indicated that such a deal, and maybe more, was imminent in the last earnings report.
CEG bounced around for a while after the news. But it’s back up to a new recent high, although it is still below the all-time high that was hit in January. The price had to slow down eventually and now the stock has leveled off. However, CEG is holding onto the recent gains, which is an encouraging sign. HOLD
Constellation Energy Corp. (CEG)
Next ex-div date: August 16, 2025, est.
Eli Lilly and Company (LLY)
Yield: 0.8%
LLY is a juggernaut that’s lost its mojo over the past year. It’s down 20% from the 52-week high and is down more than 11% over the past year. But even after the lackluster year LLY has still returned more than 400% over the last five years. It’s a hot stock that has cooled off lately. That’s a big slowdown. Drugs are likely soon to be targeted for tariffs and inputs for Lilly’s weight-loss drugs come from Ireland. However, the administration indicated that time would be given to relocate facilities to the U.S. and Lilly has already begun that process. Tariffs are unlikely to sting Lilly that much.
Lilly is still knocking the cover off the ball with huge demand for its weight-loss and other drugs. There is also likely approval for an oral weight-loss drug later this year. But until there is more clarity on these issues, LLY is unlikely to generate lasting upside traction. That’s why it is rated “HOLD” for now. But LLY should soar on the other side of this uncertainty and make up for lost time. HOLD
Eli Lilly and Company (LLY)
Next ex-div date: August 16, 2025, est.
NextEra Energy, Inc. (NEE)
Yield: 3.2%
The regulated and clean energy utility stock has been trending higher since April, albeit in a bouncy fashion. But NEE is still 20% below the 52-week high and even further from the all-time high. The stock initially pulled back on the spike in interest rates. Then, the clean energy industry took a hit as the new bill in Congress passed the House and promises to strip subsidies for clean energy. The huge subsidies had given support for much of the industry. It’s certainly negative for NextEra which was a big beneficiary. The company can stand on its own and has before. It should endure this storm in decent shape. In fact, NEE has already made up all the losses. But the news cycle on this may have more legs and the rating will be reduced to HOLD until the damage seems complete and NEE shows signs of generating lasting upward momentum. HOLD
NextEra Energy, Inc. (NEE)
Next ex-div date: September 1, 2025, est.
ONEOK, Inc. (OKE)
Yield: 5.0%
This midstream energy company stock performance has been disappointing. OKE is down 16% YTD (after two very strong years) while the overall energy sector is up 3% over the same period. OKE recently took a hit when it missed on earnings in an unforgiving environment. But earnings were generally solid, and ONEOK reaffirmed guidance for 2025 and 2026 which includes an earnings growth jump to 15% as new assets come online, including two sizable recent acquisitions. The story is still quite strong but there has been some recent share dilution that somewhat mutes the earnings growth. This stock should pick up soon, but I’ll watch it closely. HOLD
ONEOK, Inc. (OKE)
Next ex-div date: August 5, 2025, est.
Oracle Corporation (ORCL)
Yield: 1.0%
ORCL has levelled off after a huge week when it gained 23%. The technology stalwart reported earnings that beat expectations. But the main event was that management reiterated enormous growth with data centers and AI. OCI revenue grew 49% last year. While that’s impressive, management has said growth should eclipse 70% this year. There isn’t nearly enough current data center capacity to meet demand. Management intends to double data center capacity this fiscal year and triple it by the end of next fiscal year. Investors were reminded and reassured that Oracle has a huge growth catalyst ahead. The stock has leveled but has held onto most of those gains. BUY
Oracle Corporation (ORCL)
Next ex-div date: July 10, 2025
Qualcomm Corp. (QCOM)
Yield: 2.3%
The chipmaker got a boost after reporting a deal to buy Alphawave IP Group for $2.4 billion to move faster into the artificial intelligence data center market. Qualcomm is making a big push to get its central processing unit chips used in the fast-growing data center market. The deal is expected to close in the first quarter of 2026. The market likes that deal as the stock jumped about 4% on the day of the announcement. The company is broadening its offerings across a wider spectrum which is good for the future. But the market wants to see rising smartphone demand for the stock to take off. That isn’t happening yet. HOLD
Qualcomm Incorporated (QCOM)
Next ex-div date: June 5, 2025
Realty Income Corp. (O)
Yield: 5.6%
This legendary income REIT is finally paying off. It was a subpar performer during the days of high inflation and rising interest rates. But it recently showed some impressive defensive chops. It was higher through the market tumult of April. O has returned over 11% so far this year. 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 was a nice holding in a dicey market and could have further upside when the Fed starts cutting rates again. HOLD
Realty Income Corporation (O)
Next ex-div date: July 1, 2025
Toll Brothers, Inc. (TOL)
Yield: 0.9%
This beleaguered homebuilder company stock has moved up from the April low. But that’s the only positive thing that can be said about it. TOL showed some signs of life amid the better economic news recently. But mortgage rates are still stubbornly high, and that kills home affordability and sales. That said, the longer-term dynamics are hugely favorable for Toll Brothers. The demand for housing greatly exceeds supply and there is a lot of pent-up demand when mortgage rates come down. If the economy proves to be strong for the rest of the year, TOL should be OK and if rates come down the stock could soar. HOLD
Toll Brothers, Inc. (TOL)
Next ex-div date: July 11, 2025
Existing Call Trades
ABBV June 20th $210 call at $9.50 – Expired
Call premium: $9.50
Dividends: $3.28
Total: $12.78 (total income of 7.3% in 6 months)
We sold this call when the stock was riding high after a surge. Then the tariff turmoil roiled stocks and after that the issue of possible pharmaceutical tariffs became front and center. We locked in a great income and kept the stock, which has strong longer-term prospects. Meanwhile, ABBV is a useful income generator.
LNG June 20th $230 call at $15.00 – Expired and Called
Call premium: $15.00
Dividends: $0.50
Appreciation: $13.96 ($230.00 strike price minus $216.04 purchase price)
Total: $29.46 (total return of 13.6% in 4 months)
The stock and the call provided a great return in just four months. The S&P 500 has returned less than 1% over the same time. I do like LNG for the future, and it got called away. But the stock has been flat for the last three months and it might turn out to be a decent sell price.
Sell CEG July 18th $290 call at $24.00 or better
CEG certainly appeared to have peaked in the near term after it pulled back following the announcement of the Meta (META) deal. But CEG has regained some upward momentum and is now near the recent high, and it’s $20 per share above the strike price. It’s tough to value this stock but locking in a huge income and possible high total return is prudent in a market this unpredictable.
Sell AVGO July 18th $250 call at $16.00 or better
AVGO is looking toppy right around the strike price. It isn’t pulling back or moving higher at this point. The stock could go either way over the next month. It’s a conservative move to capitalize on the latest surge and get a high income and high possible total return.
Sell QCOM August 15th $150 call at $10.00 or better - Pending
QCOM has been struggling for a year. Yet, the stock generates high-priced call premiums because it can move fast when it gets going. I believe QCOM will have its day again at some point later in the year but most likely not for several months. This market is a great opportunity to milk the stock for a huge call premium and high income while we wait for better days.
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 July 22, 2025.
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