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Income Advisor
Conservative investing. Double-digit income.

January 3, 2023

A Better 2023, Just Not Yet

This year begins in 2022 form, lower. Although the calendar changed, the issues that have pressured stocks lower over the past month remain. There is still great uncertainty regarding inflation, the Fed, and a recession.

No one really knows how sticky inflation will be or how much longer the Fed will remain aggressive. The U.S. and global economies are slowing, and many are predicting a recession in 2023. But the severity of that recession is unknown. Until the market can see past these troubles, stocks are unlikely to sustain a sufficient rally to end the bear market.

But that turn is likely at some point in 2023, just probably not in the first quarter. Although things may well get worse in this market, 2023 is highly likely to be a much better year than 2022, a year in which the S&P 500 fell 19.4%.

Safe stocks and income where we can get it are the best strategies for now. We sold covered calls on three defensive stock positions at a time when the stock prices were near a recent high. Getting a high income is a great way to endure markets like this.

There will likely be fantastic stock-buying opportunities at some point this year. But it makes sense to play it safe in the meantime.

Trades Past Month

December 7th
Sell O January 20th $65 calls at $2.35 or better – Remove

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

Portfolio Recap

Brookfield Infrastructure Corporation (BIPC)
Yield: 3.7%
Recent events have dragged the price of this infrastructure stalwart lower ahead of a likely period of historic outperformance. First, rising interest rates caused a huge selloff in defensive dividend stocks in the fall. Second, as most of those stocks bounced back, BIPC continued to struggle because of the strong dollar. But a recession is likely to pressure rates lower. 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 take center stage as the year progresses. BUY

Global Ship Lease, Inc. (GSL)
Yield: 8.8%
There are plenty of headwinds for this shipping company. There are 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. HOLD

Intel Corp. (INTC)
Yield: 5.5%
INTC has been a dog and, apparently, the dunking in technology isn’t over yet. The sector has been the worst performing on the market over the past weeks as the market turned south again. Things may get worse in the near term, but 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. It’s been a painful slog. But it could prove to be worth the pain over time. But it will be reduced to HOLD until there is evidence of positive momentum. HOLD

Yield: 5.7%
This midstream energy stock has rallied sharply off the September lows but has moved sideways in an up-and-down fashion over the last month. Although the rally has sputtered, it is likely that OKE and other midstream energy companies have the right stuff going into 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 held up very well in the recent market selling. But it 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. BUY

Star Bulk Carriers Corp. (SBLK)
Yield: 33.0%
The stock is facing headwinds from the China covid situation. But slowing business has already been factored into the price as the stock is down 40% from the high. The short term has been ugly in the downturn but made easier with the massive dividend, with the last one accounting for 6% of the current price. It is likely still the early innings of a multiyear positive cycle for shipping. Plus, the likely opening of China should be a positive catalyst. HOLD

Qualcomm Corp. (QCOM)
Yield: 2.7%
After a terrible year, QCOM is enduring another selloff in the latest market downturn. It is possible that a new low could be hit. But it’s also approaching the darkest point before the dawn. This is a bargain-basement price compared to where QCOM is likely to be priced a year from now. Technology stocks can turn around fast and make up for lost time as the environment changes, and it likely will in the new year. The market has been pricing in bad news all year, even while earnings were still booming. Before long, the market, which tends to anticipate six to nine months ahead, may start pricing in a recovery. HOLD

Visa Inc. (V)
Yield: 0.9%
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. These have been bad times for a stock like V. It’s encouraging that it has held steady. 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 have had to endure little pain en route to likely better performance in 2023. HOLD

The Williams Companies, Inc.
Yield: 5.2%
The stock has leveled off and pulled back over the past month. But WMB was built for the current environment. It pays a big income and thrives amid inflation and recession. That’s why the stock returned about 33% in 2022 while the S&P 500 was down 19.4% for the year. And its relative outperformance should continue. Prospects for next year remain excellent. The company posted strong earnings because of resilient natural gas demand. BUY

Xcel Energy Inc.
Yield: 2.8%
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 has both safety, from a very defensive utility business, and growth, from the clean energy side. It’s a great stock to own anytime. But heading towards a likely recession it’s one of the very best. BUY

Active Covered Call Trades

Sell OKE January 20th $65 calls at $3.70 or better
Prospects are still good for OKE in 2023. The stock is also close to the strike price. But I just don’t trust this market in the weeks and months ahead. While OKE should hold up relatively well in a downturn, it may well close below the strike price in three weeks.

Sell XEL January 20th $65 calls at $5.00 or better
This one is more likely to be called. It is more than 4 per share above the strike price with only three weeks to go until expiration. But it could easily dip below the strike price if the market gets ugly. Either way, we secured a high income in a tough market.

Sell O February 17th $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$109.94NA2.73%-15.49%
Visa Inc.V12/22/21$217.96$207.76NA0.87%-3.94%
Global Ship Lease, Inc.GSL2/23/22$24.96$16.65NA8.83%-29.27%
ONEOK, Inc.OKE5/25/22$65.14$65.70$67.005.69%4.05%
Star Buld Carriers Corp.SBLK6/1/22$33.30$19.23NA33.03%-30.86%
Intel CorporationINTC7/27/22$40.18$26.43NA5.52%-32.69%
The Williams Companies WMB8/24/22$35.58$32.90$38.005.17%-5.09%
Realty Income CorporatonO9/28/22$60.37$63.43$63.004.70%6.77%
Xcel Energy Inc.XEL10/26/22$62.57$70.11$65.002.78%12.83%
Brookfield Infrastructure corp.BIPC11/9/22$42.43$38.90$46.003.70%-7.60%
Open RecommendationsTicker SymbolIntial ActionEntry DateEntry PriceRecent Price Sell To Price
or better
Total Return
OKE Jan 20 $65 callOKE230120C00065000Sell 11/25/22$3.70$2.29$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$2.36$3.004.97%
as of close on 1/03/2023
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%