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Income Advisor
Conservative investing. Double-digit income.

June 18, 2024

Just when it looked like the rally was petering out, the market is having a great June so far. The S&P is up about 5% in June after making four consecutive record closes last week. The index is now up 14% so far this year, and it’s not even half over.

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The Rally Continues

Just when it looked like the rally was petering out, the market is having a great June so far. The S&P is up about 5% in June after making four consecutive record closes last week. The index is now up 14% so far this year, and it’s not even half over.

The market continues to benefit from the huge artificial intelligence catalyst in the technology sector. Technology is by far the best-performing S&P sector with a 30% YTD gain. The rest of the market is more dependent on the interest rate narrative, which has gotten better over the last week.

The May inflation numbers for both CPI and wholesale came in better than expected. The good inflation news raised expectations for a Fed rate cut before the end of the year. And the benchmark 10-year Treasury rate has tended lower also. Recent developments assuage fears that interest rates may not have peaked. The probability of that major risk has decreased, and the market has rallied as a result.

Several of the more interest rate-sensitive positions in the portfolio, particularly the REITs, have not gotten a big move from the news yet. Hopefully, they start to take off this week. It’s also worth noting that utilities are second best-performing market sector so far this year. Beaten-down stocks don’t stay that way for that long.

The newly targeted calls for Brookfield Infrastructure Corporation (BIPC) and NextEra Energy (NEE) didn’t reach the target price and never went off. But we will keep the order as there is a chance those stocks rally and the premium price is hit over the next week or two.

Past Month Activity

May 29
Purchased ONEOK, Inc. (OKE) – $79.59
Sell BIPC Sep 20th $35 calls at $3.00 or better

June 5
Sold QCOM July 19th $200 calls at $12.00 or better

June 11
NextEra Energy, Inc. (NEE) – Rating change “BUY” to “HOLD”

Sell NEE SEP 20th $77.50 calls at $4.40 or better

Realty Income Corp (O) – Rating change “BUY” to “HOLD”

Portfolio Recap

Alexandria Real Estate Equities, Inc. (ARE)
Yield: 4.5%

This life science specialty REIT was up a little over the past week. The improved interest rate outlook should be good for ARE but it hasn’t moved higher yet. The REIT has been bouncing around all year and is currently at the low range of the bounces. Hopefully, it can catch a wave in the weeks ahead. This is a solid REIT that reported strong earnings and raised the dividend again this quarter. ARE will likely bounce around somewhat at the mercy of the interest rate narrative and not significantly surge higher until rates muster a sustained move downward. BUY

American Tower Corporation (AMT)
Yield: 3.3%

AMT had a good month of May and the price remains right near the May high. As with ARE, better interest rate news should be good for this cell tower REIT. It too has been bouncing around with interest rates. But AMT is still a ways from the 52-week high. American Tower rallied strongly after the REIT beat estimates on both revenue and earnings with 9.8% adjusted funds from operations per share growth over last year’s quarter. The REIT also raised guidance for 2024. It’s a solid REIT with stronger growth than most of its peers but interest rates will be the biggest determinant of performance in the near term. BUY

Brookfield Infrastructure Corp. (BIPC)
Yield: 4.8%

This infrastructure company that used to be a market superstar in years past has been going sideways since the end of last year. The operational performance has been sound. Brookfield reported strong earnings and the company rallied strongly off the early April dip. But it’s been stuck in the mud again. The company did raise the quarterly dividend by 6%. The targeted covered call price was not reached as the stock moved lower since the May issue, but the price target remains and BIPC may move higher again. BUY

Enterprise Product Partners L.P. (EPD)
Yield: 7.3%

This midstream energy partnership pulled back a little bit from the high of early April but mostly it has just stopped going higher for now. The energy sector has been weaker because of falling oil prices, but prices have spiked higher in June. We’ll see if it is just a bounce or more of a sustained move. Earnings again showed Enterprise is solid operationally and that huge distribution yield is safe. I expect EPD to continue to pay the massive distribution and trend higher at a snail’s pace. (This security generates a K-1 form at tax time.) BUY

FS KKR Capital Corporation (FSK)
Yield: 14.3%

The massive-yielding BDC pulled back a little last week, most likely because the stock went ex-dividend last Wednesday. So far, FSK is delivering as advertised. It’s continued to pay the massive dividend and the price has appreciated since it was added to the portfolio. FSK will pay a second-quarter regular dividend of 0.70 per share and a supplemental dividend of 0.05, reflecting confidence in the BDC’s ability to cover the payout and support shareholders. Hopefully, FSK can muster some upward momentum after the dividend and be ripe for a covered call to add further to the income. BUY

Main Street Capital Corporation (MAIN)
Yield: 5.8%

This Business Development Company pulled back somewhat, about 2 per share, from the high made about a month ago. It’s still on an uptrend that began last fall and has been steady for weeks. MAIN paid the regular monthly dividend of 0.72 per share in the second quarter, marking a 6.7% increase year over year, as well as a 0.30 supplemental dividend. The safe and high yield pays dividends every single month with a strong possibility of supplemental dividends over the course of the year as well. The current yield is reflected above as 5.8% because I only include the regularly scheduled dividend. Including the supplemental dividends, the yield is 8.4%. BUY

NextEra Energy, Inc. (NEE)
Yield: 2.8%

After a huge run higher from March until the end of May, NEE is having a comeuppance in June. After a 40% run higher, the stock has pulled back 8% so far this month. The story hasn’t changed. It’s just that the rally had to run out of gas at some point. The quite long-in-the-tooth rally is the main reason NEE was downgraded to a HOLD last week. But NextEra posted solid earnings in the recent quarter, which also added to the stock’s revitalization. NEE had been a superstar performer before inflation and rising interest rates. I expect solid performance going forward over the longer term. HOLD

Yield: 5.1%

This is an amazing midstream energy company. Earnings are rock solid with inflation protection and recession resilience. The high yield should be at a premium in a likely more sideways market going forward. It is a more volatile stock than the other midstream companies that have been in the portfolio. That has been a good thing in a strong energy market. The higher volatility also provides for high call premiums, which have already benefited the OKE portfolio positions during earlier holding periods. BUY

Qualcomm Corp. (QCOM)
Yield: 1.6%

The mobile device chipmaker stock was showing signs of leveling off and consolidating after a big surge. But not much can seem to slow it down and it’s up 5% so far in June. Being perfectly positioned ahead of the next phase of artificial intelligence, in mobile devices, is very compelling to investors. The stock may pull back yet in the near term. Longer term, it should be off to the races as several analysts see a major smartphone upgrade cycle for AI next year. Qualcomm is at the leading edge of chips that enable AI for smartphones and should benefit mightily. BUY

Realty Income Corp. (O)
Yield: 5.8%

Realty has historically been a legendary income stock that has raised the monthly payout every year since 1969. It had also been one of the best REITS to own. But that has not been the case for a while. Sure, it’s been a tough market for REITs these past couple of years, and fortunes change. But O has continually underperformed its peers and the REIT index in good times and bad for a long time now. The stock is downgraded to HOLD but it will still be held in the portfolio because of the high monthly income it offers. The stock will be held in the portfolio, for now. HOLD

Existing Call Trades

BIPC Sep 20th $35 calls at $3.00 – Sell pending

The stock has floundered since these calls were highlighted and the premium never hit the target price. Since the expiration date is still far away in September and the interest rate narrative has improved, the pending sale remains. BIPC could have a good week and hit the price. Maybe patience will pay off.

Sell QCOM July 19th $200 calls at $12.00 or better

I’m not so sure the stock made a near-term peak. Nothing seems to damper investors’ spirits about QCOM lately. That said, it could always pull back in the next month, for many reasons. If not, we will still secure a huge income and total return.

Sell NEE SEP 20th $77.50 calls at $4.40 – Sell pending

It looks like we may have been a week too late in targeting these calls. NEE is finally cooling off this month and the target premium was not hit. But NEE is still a sought-after stock and investors could warm to it again quickly, especially since the interest rate prognosis has gotten better. We’ll leave this trade pending for now.

Current Recommendations

Open RecommendationsTicker SymbolEntry DateEntry PriceRecent PriceBuy at or Under PriceYieldTotal Return
Alexandria Real Estate Eq.ARE12/19/23$129.54$116.32$140.004.47%-8.42%
American Tower Corp.AMT1/23/24$202.26$197.03$220.003.29%-0.89%
Brookfield Infrstr. Cp.BIPC2/27/24$32.64$32.94$40.004.81%2.89%
Enterprise Product Ptnrs.EPD2/27/24$27.61$28.33$30.007.27%4.46%
FS KKR Capital Corp.FSK4/23/24$19.42$19.53$20.5014.34%4.38%
Main Street Capital Corp.MAIN3/26/24$46.40$49.34$50.008.39%7.91%
NextEra Energy, Inc.NEE4/25/23$77.50$73.06NA2.82%-2.56%
ONEOK, Inc.OKE5/29/24$79.59$78.10$84.005.07%-1.87%
Qualcomm Inc. QCOM5/5/21$134.65$215.33$165.001.58%71.53%
Realty Income Corp.O6/27/23$60.19$53.37NA5.91%-6.15%
Open RecommendationsTicker SymbolIntial ActionEntry DateEntry PriceRecent Price Sell To Price or betterTotal Return
BIPC Sep 20 $35 callBIPC240920P00035000Sell Pending$1.58$3.009.19%
QCOM July 19 $200 callQCOM240719C00200000Sell$17.75$12.008.91%
NEE Sep 20 $77.50 callNEE240920C00077500Sell Pending$2.00$4.405.68%
as of close on 06/14/2024
xTicker 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$62.571/20/2023$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%
Star Bulk Carriers Corp.SBLKSold6/1/22$33.308/8/23$18-31.38%
Visa Inc.VCalled12/22/21$217.168/18/23$2359.16%
Global Ship Lease, Inc.GSLSold2/23/22$24.968/29/23$19-13.82%
ONEOK, Inc.OKECalled3/28/23$60.989/15/23$659.72%
Hess CorporationHESCalled6/6/23$132.2510/20/23$15517.87%
Tractor Supply CompanyTSCOSold9/26/23$203.0311/28/23$200-1.02%
Digital Realty TrustDLRCalled7/18/23$117.311/19/24$13517.16%
Intel CorporationINTCCalled7/27/22$40.181/19/24$439.76%
AbbVie Inc.ABBVCalled7/25/23$141.633/15/24$16015.11%
Marathon Petroleum Corp. MPCCalled10/24/23$149.453/28/24$16512.06%
The Williams Companies, Inc.WMBCalled8/24/22$35.585/17/24$357.14%
SecurityIn/out moneySell DateSell PriceExp. Date$ 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%
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-money7/20/2022$11.759/16/22$11.758.73%
V Mar 17th $220 callout-of-money1/24/23$12.003/17/203$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$10.506/2/23$10.504.82%
BIPC $45 July 21st callin-the-money5/23/23$3.257/21/23$3.257.66%
V $235 Aug 18th callin-the-money7/11/23$9.008/18/23$9.004.13%
GSL $20 Aug 18th callout-of-money7/11/23$1.258/18/23$1.255.00%
OKE $65 Sep 15 callin-the-money9/15/23$3.207/25/23$3.204.92%
INTC $35 Oct 20th callout-of-money9/8/23$3.7810/20/23$3.789.41%
HES $155 Oct 20th callin-the-money9/8/23$9.0010/20/23$9.006.81%
DLR $135 Jan 19th callin-the-money11/22/23$6.001/19/24$6.005.11%
INTC $42.50 Jan 19th callin-the-money11/29/23$3.501/19/24$3.508.71%
ABBV $160 Mar 15th callin-the-money1/10/24$7.003/15/24$7.004.94%
MPC $165 Mar 28th callin-the-money2/14/23$10.003/28/24106.69%
QCOM $170 Apr 26th callout-of-money3/12/24$10.004/26/24107.42%
WMB $35 May 17th callin-the-money3/12/24$2.005/17/2425.62%

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