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Income Advisor
Conservative investing. Double-digit income.

September 12, 2023

The market is starting this week higher on optimism about a “soft landing.” But the CPI inflation number for August that comes out on Wednesday could derail or support the rally.

Things seem upbeat Monday morning. Treasury Secretary Janet Yellen said on Sunday that she is “feeling very good” about avoiding a recession while still reining in prices. Of course, she called inflation “transitory” in early 2021. There were also some encouraging numbers about the Chinese economy. Also, the Fed is widely expected not to raise the Fed Funds rate later this month.

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Get a High Income While the Getting Is Good

The market is starting this week higher on optimism about a “soft landing.” But the CPI inflation number for August that comes out on Wednesday could derail or support the rally.

Things seem upbeat Monday morning. Treasury Secretary Janet Yellen said on Sunday that she is “feeling very good” about avoiding a recession while still reining in prices. Of course, she called inflation “transitory” in early 2021. There were also some encouraging numbers about the Chinese economy. Also, the Fed is widely expected not to raise the Fed Funds rate later this month.

The CPI number is expected to bump a little higher to 3.6% for August while core CPI is forecast to grow to 4.3%. If the number is in line or lower, the market should be happy. But a higher-than-expected number could spook the market and reignite fears that the Fed will raise rates later this month at the next meeting.

The market has successfully threaded the needle so far with inflation falling in a still-strong economy. Hopefully, that situation continues this fall. But if either inflation or the economy sours, it could spoil the party. Anything can happen.

This newsletter is taking a more cautious income-oriented approach. As certain positions make new 52-week highs in a solid market it makes sense to use the opportunity to get high-priced call premiums and lock in a high total return if the stocks are called. That way we hedge our bets by getting a great income that can compensate if the market turns south while having stock positions that will benefit if the market rallies.

Two new covered calls hit the targeted buy price last week, energy exploration and production company Hess Incorporated (HES) and previously beleaguered technology stalwart Intel (INTC).

Past Month Activity

August 18th
V August 18th $235 calls at $9.00 – Expired
GSL August 18th $20 calls at $1.25 – Expired
Visa Inc. (V) stock – Called

August 22nd
Purchased Xcel Energy Inc. (XEL) - $57.95
Sell HES October 20th $155 calls at $9.00 or better

August 29th
Sold Global Ship Leasing (GSL) - $19.11

September 5th
Sell DLR October 20th $130 calls at $6.00 or better
Sell INTC October 20th $35 calls at $3.00 or better

September 8th
SOLD HES October 20th $155 calls at $9.00
SOLD INTC October 20th $35 calls at $3.76

Portfolio Recap

AbbVie Inc. (ABBV)
Yield: 4.0%
The cutting-edge biopharmaceutical company stock has leveled off after a sharp rise from the bottom in July. I like the way the healthcare sector is set up ahead of a slowing economy and perhaps a further correction in the market in the fall. Meanwhile, AbbVie reported earnings that beat on both earnings and revenue and raised guidance for the year. The report emboldens the notion that the revenue drop from the Humira patent expiration will be temporary and AbbVie will turn the corner sooner than expected. BUY

Digital Realty Trust (DLR)
Yield: 3.7%
This data center REIT has been firing on all cylinders. DLR even moved steadily higher in the down market of August and hit a new 52-week high last week. Digital reported better-than-expected earnings because of strong data center demand and solid growth. Even more importantly, the company assuaged fears that had driven the stock price down earlier this year by executing capital recycling plans that raised over $2 billion by selling joint venture assets. But DLR appears to be leveling off and the stock may be out of gas for this late spike higher. We’ll see. BUY

Hess Corporation (HES)
Yield: 1.1%
After pulling back from the July rally for most of August, the exploration and production company has again found legs and moved to a new 52-week high last week. As an exploration and production company, Hess is highly levered to energy prices, and prices reached the highest level since last fall. Many are predicting further increases as global production has been cut and U.S. inventories are low amid high demand. The target call price was finally reached after a couple of weeks last Friday. BUY

Intel Corp, (INTC)
Yield: 1.4%
After another strong week, INTC is now up over 44% YTD. The company had a terrible last few years as competitors surpassed them and they had manufacturing problems. But Intel has invested heavily in future chips in high-growth areas and is launching a serious foundry business. The future could be bright, and investors seem to be warming to the still-cheap stock. The stock is higher recently because the company raised third-quarter earnings guidance and received a prepayment from a “large unnamed customer” to secure capacity at its foundry for producing semiconductors. It demonstrates the tangible viability of the company’s foundry plans and makes success and higher revenues for the business likely to come sooner. BUY

NextEra Energy, Inc. (NEE)
Yield: 2.8%
The weakness continues. This stock is still wallowing near a multi-year low. But this is a historically superstar performer and the low may already be in. NEE moved above the low last week and may be finally perking investor interest. The utility grew earnings 8.6% in the second quarter and 11% in the first half versus the same periods last year. It also has predictably solid earnings going forward because of a considerable project backlog. It’s a great stock that is just out of favor right now and selling near a multi-year low. BUY

Yield: 5.9%
Energy has perked up again after a lull following the sector’s spring and summer surge. OKE moved sharply higher in the early summer but has since leveled off. The midstream energy company reported solid earnings and raised earnings guidance for the year. We’ll see if OKE can resume the upside rally in light of renewed energy sector strength. Longer term the stock looks solid as the company is expected to grow revenue by an average of 10% per year over the next three years. HOLD

Realty Income Corp. (O)
Yield: 5.5%
The legendary, defensive income stock is in the same boat as NEE right now. Defensive stocks have been shunned by the market. Even though operational performance has been sound as earnings were solid with a stellar 99% occupancy rate for its properties and an additional $3.1 billion invested in the quarter in 710 properties, O is wallowing near the 52-week low. This is now a very cheap and high-yielding stock with an excellent historical track record in a very uncertain market and economy. BUY

Qualcomm Corp. (QCOM)
Yield: 2.8%
The chipmaker stock slumped again last week on news that the Chinese government is forbidding government employees from using Apple (AAPL) phones. But QCOM is overcoming some of that selloff after signing a deal with Apple to provide smartphone chips through 2026. There was concern that Apple’s competing chip would replace Qualcomm’s and the company would lose that revenue. But now that won’t happen for at least a few more years. That’s a major concern to get out of the way. Also, Smartphone sales have been hurting but may have bottomed. BUY

The Williams Companies, Inc. (WMB)
Yield: 5.3%
The midstream energy company stock moved sharply higher in the summer until leveling off around the middle of August. Perhaps the recent strength in the more commodity price-sensitive energy stock can reignite further upside from here. Earnings were solid and recent expansion and acquisition activity bodes well for growth in 2023 and 2024 beyond what was expected. BUY

Xcel Energy Inc. (XEL)
Yield: 3.7%
This clean energy utility hasn’t fared any better than NEE in a very tough market for utilities. XEL has been trending lower since the beginning of April and is wallowing near the 52-week low. But things change, and XEL is cheap and one of the best utility stocks to own. These are dark days for utilities. But things always change and XEL and NEE are selling at 52-week lows in an expensive market and ahead of a likely slowing economy. BUY

Existing Call Trades

Sell OKE Sep 15th $65 calls at $3.20 or better
These options expire on Friday and OKE is right on the cusp. The stock is currently trading right around the 65 strike price. It could go either way. The stock could be called or the options could expire worthless. Either way, we have secured yet another round of great income from this stock and possibly a solid total return if OKE gets called.

Sell HES October 20th $155 calls at $9.00 or better
The call premium finally reached the targeted price on Friday, a couple weeks after it was first targeted. The calls have started this week selling above the 9 per call target price and are worth selling if you haven’t already. We are set up for a great income and total return no matter what happens in the next five-plus weeks. Much will depend on what oil prices do over that time.

Sell INTC October 20th $35 calls at $3.50 or better
These calls hit the targeted price on Friday after being targeted at $3 per call earlier last week. The option price closed below $3 per call on Thursday but then opened at $3.84 per call on Friday and closed the day at $3.76. The $3.76 price is what will be used even though the calls were targeted at $3 (or better) because you could have gotten a lower price.

Sell DLR October 20th $130 calls at $6.00 - Pending
These calls have not hit the target price since the “Trade Alert” last Tuesday. The stock has floundered, and these calls are selling below $5 per call to start the week. As we’ve seen with the two calls above, patience can pay off and we will leave that $6 targeted price for now.


Open RecommendationsTicker SymbolEntry DateEntry PriceRecent PriceBuy at or Under PriceYieldTotal Return
Qualcomm Inc. QCOM5/5/21$134.65$106.14$130.003.01%-16.75%
Intel CorporationINTC7/27/22$40.18$38.01$35.001.31%-1.22%
The Williams Companies WMB8/24/22$35.58$33.82$38.005.29%1.86%
ONEOK Inc.OKE3/28/23$60.98$64.77NA5.90%9.30%
NextEra Energy, Inc.NEE4/25/23$77.50$66.83$85.002.80%-12.98%
Hess CorporationHES6/6/23$132.25$160.52$140.001.09%21.77%
Realty Income Corp. O6/27/23$60.19$55.32$62.005.54%-6.89%
Digital Realty TrustDLR7/18/23$117.31$129.98$125.003.75%10.80%
AbbVie Inc.ABBV7/25/23$141.63$149.02$150.003.97%5.22%
Xcel Energy Inc. XEL8/22/23$57.95$57.07$65.003.64%-1.52%

Existing Call Trades

Open RecommendationsTicker SymbolIntial ActionEntry DateEntry PriceRecent Price Sell To Price or betterTotal Return
OKE $65 Sep 15th callOKE230915C00060000Sell 7/25/23$3.20$0.50$3.204.92%
DLR $130 Oct 20th callDLR231020C00130000Sell Pending$4.40$6.00
INTC $35 Oct 20th callINTC231020C00035000Sell 9/8/23$3.78$3.78$3.009.41%
HES $155 Oct 20th callHES231020C00155000Sell 9/8/23$9.00$9.60$9.006.81%
as of close on 9/08/2023


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//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%


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$11.759/16/2211.758.73%
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$10.506/2/2310.54.82%
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$1.258/18/231.255.00%