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Income Advisor
Conservative investing. Double-digit income.

January 10, 2023

A Great Start

So far, I like 2023 a whole lot better than last year. At midday on Monday, the S&P 500 is up 3.7% and the Nasdaq is 4.5% higher so far this year. And it hasn’t even been five full trading days yet.

Later this week, the December CPI number will come out, on Thursday. CPI is expected to be 6.6%, versus 7.1% in November. Assuming the number comes in at or better than expected, it could be very positive for the market. Falling inflation means the Fed won’t have to be as aggressive and investors could start sniffing out an end to this inflation/Fed conundrum later in the year.

It’s also earnings season. The big banks are first up and will be reporting this week. Expectations are dour, which means it will be harder for earnings to disappoint. We’ll see.

Good news this week will likely sustain the current rally. Cooling inflation is a big positive for the market. Lousy earnings also perpetuate the narrative that the Fed may end its rate hiking sooner. If things go well, this year could start with a substantial rally.

But I’m skeptical that this rally can lead out of the bear market. First, Wall Street may not like the actual numbers that are reported this week, and the rally will be squashed in the cradle. Second, even if the numbers are positive and ignite a bigger rally, there is still too much uncertainty.

A 6.6% CPI is still a long way from the Fed goal of 2%. It remains to been seen how far and fast inflation will fall. Even with cooling inflation, the Fed still might not call the dogs off anytime soon. Then there’s recession. Most economists are forecasting a recession in 2023. But the length and severity of the downturn is still unknown. Markets will need greater clarity to sustain a rally into the next bull market.

For now, rallies are a better time to sell covered calls. There are currently three outstanding calls in the portfolio. If the rally gets a boost this week, we can add a call on Visa (V) to the list.

Trades past month

December 28
SOLD O February 17 $62.50 calls at $3.00

Portfolio Recap

Brookfield Infrastructure Corporation (BIPC)
Yield: 3.6%
The infrastructure juggernaut has made a nice move off the low and is up about 8% already this month. The stock had been a laggard, largely because of the strong dollar and its negative effect on overseas revenues. But a recession is likely in 2023. And Brookfield has crucial assets likely to perform very well in a recession as well as growth projects coming online. A strong dollar is already reflected in the price and BIPC’s recession and inflation resilience should grow in popularity with investors as the year progresses. BUY

Global Ship Lease, Inc. (GSL)
Yield: 9.1%
There are plenty of headwinds for this shipping company. There are the ongoing Covid issues in China, a global economic slowdown, and falling shipping rates. Although the longer-term supply/demand dynamic is positive for container shipping, it’s a rough time. However, GSL is still off the bottom made in September. It may have already hit bottom on the way to a very positive longer-term trajectory. GSL could skyrocket sometime this year if things turn around, and perhaps soon of China opens up. HOLD

Intel Corp. (INTC)
Yield: 5.3%
INTC has had a nice move of fthe low and is up 16% in just a little over a week. It appears on the way to price levels not seen since late summer. It may be early to declare that the bottom is in but it’s certainly possible. The situation will surely improve for technology at some point. Hopefully, the big turnaround isn’t that far off. Intel’s individual prospects should significantly improve as growth investments come to fruition. HOLD

Yield: 5.3%
This midstream energy stock has also made a strong move in the recent market rally. The price has moved above its recent sideways range and is actually at the highest price since early June. We’ll see if the stock can make a sustained breakout from here in the weeks ahead. But regardless of whether that happens, OKE and other midstream energy companies have the right stuff as we enter 2023. Revenues are both recession and inflation resistant. The high dividend is safe. And the stock is still reasonably valued. OKE should deliver positive results over the course of 2023. BUY

Realty Income Corp. (O)
Yield: 4.7%
The legendary income REIT has been going sideways since the middle of November. It’s holding up but can’t seem to get above that 65 per share level. The stock is almost always bouncy. And there is no telling what the next few weeks might bring. But this is a popular and defensive income stock that should hold its own in the event of a recession next year. Investors should find their way to O and the stock should be buoyant over the course of the year. BUY

Star Bulk Carriers Corp. (SBLK)
Yield: 35.2%
SBLK is still bouncing around the sideways range it has been in since the end of August. It appears at this point that there may not be much downside in the stock. But there is still no evidence of a sustained or breakout recovery. The stock is facing headwinds for the China Covid situation. But slowing business has already been factored into the price of the stock. This is likely still the early innings of multiyear positive cycle for shipping. Plus, the likely opening of China should be a positive catalyst. HOLD

Qualcomm Corp. (QCOM)
Yield: 2.7%
Yeah, the stock is up well over 10% so far this year after a terrible year in 2022. Is this market rally real and sustainable? I have my doubts. That said, I think 2023 will be a strong year for QCOM. Technology will likely recover at some point during the year and QCOM should have strong leverage to the upside when that happens. The bear market rallies give you a preview of how fast QCOM can move higher when the situation improves. Before long, the market, which tends to anticipate six to nine months ahead, may start pricing in a real recovery in the sector. HOLD

Visa Inc. (V)
Yield: 0.9%
Look at V! The stock is now over 220 per share and at the highest level since last April. V is also up over 25% for the low made in the fall. Last year’s bear market was terrible for cyclical and financial stocks. But V held up remarkably well under the circumstances, returning -3.4% for 2022. And circumstances in the market are likely to get a whole lot better in 2023. V is typically one of the first stocks to recover when the market eventually turns. We’re seeing the evidence of that already. HOLD

The Williams Companies, Inc. (WMB)
Yield: 5.2%
While WMB held up better than most of its peers during the recent market selling and recorded by far the best 2022 return, it’s been a bit of a dud since the end of October. The market seems to like its defensive characteristics best and it tends to rally with the more defensive plays. That could be a great thing if the current rally rolls over. It pays a big income and thrives amid inflation and recession. Prospects for this year remain excellent. The company posted strong earnings because of resilient natural gas demand. BUY

Xcel Energy Inc. (XEL)
Yield: 2.7%
After a huge rally from the October lows, XEL has leveled off but has still remained within bad breath distance of the recent high. It stopped soaring but has given up very little. This clean energy utility stock is delivering as advertised. It’s doing just fine in a terrible market. Since more of the same is likely ahead in the next several months, XEL is an ideal stock to own right now. It’s a great stock to own anytime. But heading towards a likely recession, it’s still one of the very best. BUY

Active Covered Call Trades

Sell OKE January 20 $65 calls at $3.70 or better
Uh-oh. The market is rallying and OKE in now close to $3 per share above the strike price with less than two weeks to go before options expiration. That’s OK because this is probably a bear market rally. Either the stock will pull back by expiration and we’ll keep it and get the income, or it will be called and we will sell it into a temporary high.

Sell XEL January 20 $65 calls at $5.00 or better
This one is more likely to be called. It is more than $7 per share above the strike price with less than two weeks to go until expiration. But it could still dip below the strike price if the market gets ugly. Either way, we secured a high income in a tough market.

Sell O February 17 $62.50 calls at $3.00 or better
As I mentioned above, O has had trouble after hitting the 65 per share level in recent months. These calls were priced and sold near that level. There is a very good chance that with a lower market in the next couple of months O will close below the strike price. If not, we’ll still secure a high income.


Open RecommendationsTicker SymbolEntry DateEntry PriceRecent PriceBuy at or Under PriceYieldTotal Return
Qualcomm Inc. QCOM5/5/21$134.65$115.34NA2.74%-11.34%
Visa Inc.V12/22/21$217.96$217.75NA0.85%0.67%
Global Ship Lease, Inc.GSL2/23/22$24.96$16.52NA9.08%-29.82%
ONEOK, Inc.OKE5/25/22$65.14$66.57$67.005.77%5.43%
Star Buld Carriers Corp.SBLK6/1/22$33.30$19.60NA35.23%-29.53%
Intel CorporationINTC7/27/22$40.18$28.73NA5.30%-26.83%
The Williams Companies WMB8/24/22$35.58$32.56$38.005.22%-6.08%
Realty Income CorporatonO9/28/22$60.37$64.08$63.004.65%7.86%
Xcel Energy Inc.XEL10/26/22$62.57$71.29$65.002.74%14.72%
Brookfield Infrastructure corp.BIPC11/9/22$42.43$41.23$46.003.58%-2.06%
Open RecommendationsTicker SymbolIntial ActionEntry DateEntry PriceRecent Price Sell To Price or betterTotal Return
OKE Jan 20 $65 callOKE230120C00065000Sell 11/25/22$3.70$2.48$2.345.68%
XEL Jan 20 $65 callXEL230120C00065000Sell 11/25/22$5.00$6.00$5.607.99%
O Feb 17 $62.50 callO230217C00062500Sell12/28/22$3.00$2.86$3.004.97%
as of close on 1/06/2023
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$25-12.94%
SecurityIn/out moneySell DateSell PriceExp. Date$ 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-money9/24.2021$2.3011/19.2021$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%
QCOM Sep 16th $145 callout-of-money7/20.2022$11.759/16/2211.758.73%