Stocks stabilized last week, with the major averages posting positive numbers overall for the week. The benchmark for crude oil, West Texas Intermediate, likewise finally stopped declining, and reversed strongly on Friday to close above $30 for the first time in several days. Barring some unforeseen geopolitical event, which is always a possibility, the next major factor for stocks will be fourth quarter earnings, as well as full year results, and any guidance going forward.

There are a few more stocks on my lists going ex-dividend this week than the paltry number posted last week:

Enterprise Products Partners LP (EPD), 1/27/2016, yield 7.40%.

American Capital Agency (AGNC), 1/27/2016, yield 14.97%. AGNC pays monthly.

Plains All American Pipeline LP (PAA), 1/27/2016, yield 14.35%.

Alliant Energy (LNT), 1/27/2016, yield 3.82%.

Stag Industrial (STAG), 1/27/2016, yield 8.57%.

Prospect Capital (PSEC), 1/27/2016, yield 16.69%. PSEC pays monthly.

ConAgra Foods (CAG), 1/27/2016, yield 2.55%.

ONEOK Partners LP (OKS), 1/28/2016, yield 12.44%.

Kinder Morgan (KMI), 1/28/2016, yield 3.60%.

Enerplus (ERF), 1/28/2016, yield 10.38%.

Paychex (PAYX), 1/28/2016, yield 3.55%.

Realty Income (O), 1/28/2016, yield 4.54%. O pays monthly.

Calumet Specialty Products Partners LP (CLMT), 1/29/2016, yield 15.32%.

Earnings reports from last week were generally well received:

Kinder Morgan (KMI) did not report stellar numbers on 1/20/2016, but the revenue was in line with expectations, and overall the market was reassured by the steps the company is taking to deal with the oil crash. The stock gained 21% by the end of the week, albeit from a very depressed level.

Verizon (VZ), reporting on 1/21/2016, beat estimates on earnings and revenue, and also gained after reporting.

General Electric (GE), reporting on 1/22/2016, beat on EPS, but revenue was down slightly Y/Y. The stock dipped Friday in the AM, but rebounded to close flat on the day, and only slightly down on the week. GE has slipped below $30 with the recent market rout, but is laying the foundation for positive results going forward, in my opinion, as well as in the opinion of most pundits.

As always, see the firm’s websites, the financial press, or Seeking Alpha for earnings details.

As for the week ahead, fourth quarter results will be forthcoming for a number of stocks I follow, as indicated following, by date:

1/25/2016

Kimberly Clark (KMB), McDonalds (MCD).

1/26/2016

3M Co (MMM), Johnson & Johnson (JNJ), Potlatch (PCH), Procter & Gamble (PG), AT&T (T).

1/27/2016

General Dynamics (GD), Norfolk Southern (NSC).

1/28/2016

American Electric Power (AEP), Altria (MO), Blackstone Group (BX), Enterprise Products Partners LP (EPD), NextEra Energy (NEE), Nucor (NUE), Northrop Grumman (NOC), Raytheon (RTN), MicroSoft (MSFT).

1/29/2016

Chevron (CVX), Colgate Palmolive (CL), NuStar Energy LP (NS).

Upgrades / downgrades coming out last week on my stocks were as follows:

Procter & Gamble (PG) was upgraded from Hold to Buy at Stifel.

McDonalds (MCD) was upgraded from Hold to Buy at BTIG Research.

Noble PLC (NE) was upgraded from Hold to Buy at Canaccord Genuity.

Fifth Street Financial (FSC) was upgraded from Market Perform to OutPerform at Wells Fargo.

Enterprise Products Partners LP (EPD) was upgraded from Equal Weight to OverWeight at Morgan Stanley.

Plains All American Pipeline (PAA) was upgraded to OverWeight at Morgan Stanley.

Spectra Energy Partners LP (SEP) was upgraded from UnderWeight to Equal Weight at Morgan Stanley.

Emerson Electric (EMR) was upgraded from Hold to Buy at Standpoint Research.

Seadrill (SDRL) was downgraded from Neutral to UnderPerform at BofA/Merrill.

Eaton (ETN) was initiated at Buy at Standpoint Reserch.

Chevron (CVX) was downgraded from OverWeight to Neutral at Simmons.

Roche Holdings LTD (RHHBY) was initiated at OverWeight at Piper Jaffray.

DrPepper Snapple (DPS) was upgraded from UnderPerform to OutPerform at Credit Agricole.

Energy Transfer Partners LP (ETP) was downgraded from OutPerform to Perform at Oppenheimer.

ONEOK Partners LP (OKS) was downgraded from OutPerform to Perform at Oppenheimer.

Walgreen Boots Alliance (WBA) was initiated at Hold at Jeffries.

STAG Industrials (STAG) was initiated at OutPerform at RW Baird.

Mid-America Apartment Properties (MAA) was downgraded from Buy to Neutral at Sun Trust Robinson Humphrey.

The burning question for this week is whether the sell off is over, or was last week just a temporary pause? Certainly, just about anything related to Energy is a screaming bargain just now, unless the oil age is truly over. Even if it takes a long while, say a couple of years, if the past is any indication, the oversupply will eventually end, and oil prices, and related stocks will recover. I’m thinking of adding to my Kinder Morgan (KMI) holdings, and maybe starting a new position in Enterprise Products Partners LP (EPD), probably the strongest, safest MLP out there. I’m also considering buying STAG Industrials (STAG), a REIT that may be underpriced just now. Now may be a good time to buy in, albeit cautiously, committing capital slowly, incrementally.

JT

Stocks gained three days last week and declined only two days. That is the good news. The bad news is that the total decline was about twice the total gain. West Texas Intermediate dipped further to close below $30 for the first time in a long while, and many pundits are arguing that the bottom is NOT yet in. Previous oil price declines have been due to a collapse in demand, but this decline is due to oversupply. It is taking much longer to correct than originally predicted, as desperate producers keep pumping all out, trying to survive, even at these low prices. It certainly looks like a bear market could be in our future in 2016. It has already arrived for oil and gas stocks.

Only a few stocks on my lists will be going ex-dividend this week, as follows:

Gladstone Investment (GAIN), 1/20/2016, yield 10.16%. GAIN pays monthly.

Procter & Gamble (PG), 1/20/2016, yield 3.48%.

Main Street Capital (MAIN), 1/20/2016, yield 7.90%. MAIN pays monthly.

Colgate Palmolive (CL), 1/21/2016, yield 2.39%.

Intel (INTC) reported earnings on 1/14/2016, beating estimates for both EPS and revenue, plus offered up solid revenue guidance. That didn’t prevent the stock from selling off, as it dropped below $30 on Friday, as the market sold off hard.

Stocks on my lists reporting this week are Kinder Morgan (KMI) on 1/20/2016, Verizon (VZ) on 1/21/2016, and General Electric (GE) on 1/22/2016. KMI will receive a lot of attention, or should I say scrutiny, as investors try to determine if the most recent earnings predictions by management are holding up.

There were quite a few upgrades / downgrades last week on my stocks, as follows:

Noble Corp PLC (NE) was downgraded from OutPerform to Market Perform at Cowen.

General Dynamics (GD) was upgraded from Market Perform to OutPerform at Cowen.

Plains All American Pipeline LP (PAA) was downgraded from OverWeight to Equal Weight at Barclays.

Spectra Energy Partners LP (SEP) was upgraded from Equal Weight to OverWeight at Barclays.

Prospect Capital (PSEC) was downgraded from Market Perform to UnderPerform at Wells Fargo.

Seadrill (SDRL)was downgraded to UnderWeight at Simmons & Co.

Coca Cola (KO) was upgraded from Hold to Buy at Stifel.

Intel (INTC) was upgraded from Neutral to Buy at Mizuho.

Intel (INTC) was initiated at OverWeight at JP Morgan.

Digital Realty (DLR) was upgraded from Hold to Buy at Jeffries.

Entergy (ETR) was upgraded from UnderPerform to Buy at BofA/Merrill.

Freeport-McMoRan (FCX) was downgraded from Buy to Hold at Jeffries.

Medical Properties Trust (MPW) was downgraded from Buy to Hold at Jeffries.

HCP Inc (HCP) was downgraded from Hold to UnderPerform at Jeffries.

Newmont Mining (NEM) was upgraded from Buy to Hold at Jeffries.

Senior Housing Properties Trust (SNH) was upgraded from Hold to Buy at Jeffries.

Total S A (TOT) was upgraded from Hold to Buy at Jeffries.

Unilever PLC (UL) was upgraded from UnderWeight to OverWeight at JP Morgan.

Duke Energy (DUK) was upgraded from UnderPerform to Neutral at BofA/Merrill. Duke will be a new utility addition to my Tier2 list soon.

ENI S p A (E) was upgraded from UnderPerform to Hold at Jeffries.

MicroSoft (MSFT) was upgraded from Equal Weight to OverWeight at Morgan Stanley.

Plains All American Pipeline LP (PAA) was downgraded from OverWeight to Neutral at JP Morgan, and from OverWeight to Equal Weight at Capital One.

Dr Pepper Snapple (DPS) was downgraded from Neutral to Sell at Goldman.

Plains All American Pipeline LP (PAA) was downgraded from OutPerform to Sector Perform at RBC Capital Markets.

Colgate Palmolive (CL) was upgraded from Neutral to OutPerform at Exane BNP Paribas.

Seadrill (SDRL) was initiated at UnderWeight at JP Morgan.

Williams Partners LP (WPZ) was downgraded from OutPerform to Market Perform at Wells Fargo.

Annaly Capital Management (NLY) was downgraded from OutPerform to Market Perform at Wells Fargo.

MFA Financial (MFA) was downgraded from OutPerform to Market Perform at Wells Fargo.

Intel (INTC) was initiated at Neutral at Sun Trust Robinson Humphrey.

I took advantage of the market decline to add to my position in Emerson Electric (EMR), and also to my position in Conoco Phillips (COP). The latter trade broke my rule of “no more energy stocks”, but I couldn’t help myself when shares were on the board for only $39. I only added my minimal purchase amount. COP has indicated that maintaining the dividend will be a priority. Of course, if every stock for which management had made that statement had indeed kept on paying, I would be a lot richer now than I am. Still, I believe acquiring COP at today’s price will work out in the long run, even if a dividend cut occurs. A play that failed was a low-ball limit order to buy back the Intel (INTC) position that I had sold barely two weeks ago. I placed the order before leaving for work Friday. I missed getting filled by exactly one cent! If I had been “on station”, I would have increased my bid when INTC declined so near my bid, and gotten in. Oh, well, the way things are going, I will probably get another chance this week.

As I go over my buy list of “triple AAA” stocks and desired buy prices, I am taken aback at how well prices of quality names are holding up. Once you veer away from energy, miners, BDCs, and MREITS, there are still very few bargains to be found, even as the major averages are declining by “end of the world” margins, at least per the headlines put up by the financial press. Except for the afore-mentioned beaten down sectors, we are nowhere near the levels reached during the 2008-2009 financial crisis. Thus, now is not the time to go “all in” with available cash.

JT

Stocks declined on four of the first five trading days of the New Year, and all of the down days were by significant margins, while the up day was only fractionally so. The financial press has stated that this is the worst start ever for a new year. Just looking at the stock index most often quoted, the venerable Dow Industrials, the market has officially entered into a correction, which is defined as a decline of 10% from a high. The high of 18351 occurred in May 2015, and the week just ended closed at 16346. Doing the math, the average has declined 10.9%, over 2000 points. The reasons cited are the continuing carnage in energy, a slowdown in China and all emerging economies, and geopolitical concerns aplenty, not to mention the apparent beginning of a Fed tightening cycle. The consensus of most market pundits seems to be that a U.S. recession in 2016 is imminent. I feel kind of like BB King in the famous commercial, whereby upon being informed of a string of personal catastrophies, smiles and says “great – now I can really sing the blues”. My glee is not that I can sing the blues, but that maybe I can finally buy some quality stocks at a reasonable price.

Meanwhile, the quality stocks that I track, plus a few others that are not “blue chip” quality, continue to pump out payments to shareholders. Upcoming ex-dividend dates are as follows:

General Dynamics (GD), 1/13/2016, yield 2.11%.

RPM International (RPM), 1/13/2016, yield 2.64%.

Mid-America Apartment Communities (MAA), 1/13/2016, yield 3.61%.

Fifth Street Financial (FSC), 1/13/2016, yield 11.61%. The BDC pays monthly.

Consolidated Communications Holdings (CNSL), 1/13/2016, yield 7.73%.

Two of my stocks reported earnings last week. RPM International (RPM) beat estimates for EPS, while revenue was in-line. Walgreen Boots Alliance (WBA) also beat EPS estimates, but revenue came in below expectations. See the firm’s websites, the financial press, or Seeking Alpha for earnings details. As for the week ahead, the only scheduled report of the stocks I follow is Intel (INTC), scheduled to report on 1/14/2016.  

While the pace has picked up considerably, as far as analyst upgrades / downgrades are concerned, there were not a lot of changes for the stocks I track. Actions noted were as follows:

McDonalds (MCD) was upgraded from Neutral to Buy at Nomura.

Magellan Midstream Partners LP (MMP) was upgraded from OutPerform to Strong Buy at Raymond James.

Spectra Energy (SE) was upgraded from OutPerform to Strong Buy at Raymond James.

Crestwood Equity Partners LP (CEQP) was downgraded from OutPerform to Market Perform at Raymond James.

Plains All American Pipeline LP (PAA) was downgraded from OutPerform to Market Perform at Raymond James.

Colgate Palmolive (CL) was downgraded from OutPerform to Sector Perform at RBC Capital Markets.

HCP Inc (HCP) was downgraded from Buy to Hold at Argus.

Williams Partners LP (WPZ) was downgraded to Market Perform at Raymond James.

RPM International (RPM) was initiated at Seaport Global Securities at Accumulate.

Enterprise Products Partners LP (EPD) was initiated at Sector Outperform at Scotia Howard Weil.

HCP Inc (HCP) was downgraded to UnderWeight at Barclays.

Newmont Mining (NEM) was downgraded from OutPerform to Sector Perform at RBC Capital Markets.

Paychex (PAYX) was downgraded from Neutral to UnderPerform at B of A/Merrill.

MicroSoft (MSFT) was initiated at OutPerform at BMO Capital Markets.

Freeport McMoran (FCX) was downgraded from OutPerform to Neutral at CLSA (Credit Agricole).

Noble Corp PLC (NE) was upgraded from Hold to Buy at Societe Generale.

Enerplus (ERF) was downgraded from OutPerform to Neutral at Macquarie.

Note that I indicate the prior rating when it is available; otherwise, I just indicate the new rating.

My most recent trades were a sale of Intel (INTC) on 12/31/2015 at $34.70, an initial buy of Emerson Electric (EMR) at $45.35, and an add-on buy of CenturyLink (CTL) at $24.25. I sold INTC for no real good reason other than I just wanted to take a profit and add to my cash available. If INTC goes back down to $30 or less, I will buy it back, maybe even without missing a dividend. I have been waiting for EMR to get below $45, and I guess I just got tired of waiting. I suspected it was going to get there, which it did later on, so I only started with my minimum position. I have a GTC order in to buy more at $43. EMR is a cyclical stock, and is down because of the economic slowdown, which is beginning to show up in results. I believe EMR is among the “strongest of the strong” in the category, and now is a good time to start a long-term holding, even realizing it will probably get worse before it gets better. As for CTL, it is on most dividend seekers “bad” list because of a dividend cut a few years back, plus concerns regarding debt and the sustainability of the current dividend. Considering the 9% yield and a price $10 below my initial purchase, I added an incremental amount of shares as a worthy speculation, even though CTL, on my Tier3 higher risk list, is nowhere near the status of INTC or EMR. Mostly I am waiting on better prices for solid blue chips in defensive sectors, such as Procter & Gamble (PG), General Mills (GIS), or Coca Cola (KO), or possibly utilities or top-rated property REITs.

JT

Stocks gained the first three days of Christmas week, then declined on four of the remaining five trading days in the year. Still, the major averages ended the two week period above where they were at the start, as the up days were up more than the down days were down. More significantly, both of the major blue-chip averages, the Dow Jones Industrials and the S&P 500 ended the year moderately below where they were when the year began. The significance of this observation is that this is the first time this has happened since the current bull market started in 2009.    

Ex-dividend dates announced on my stocks occurring in the first week of the New Year are as follows:

Cisco Systems (CSCO), 1/4/2016, yield 3.05%.

Raytheon (RTN), 1/4/2016, yield 2.13%.

Kayne Anderson Energy Development (KED), 1/6/2016, yield 12.61%.

Sysco (SYY), 1/6/2016, yield 2.99%.

Darden Restaurants (DRI), 1/6/2016, yield 3.11%.

AT&T (T), 1/6/2016, yield 5.53%.

Verizon (VZ), 1/6/2016, yield 4.83%.

General Mills (GIS), 1/7/2016, yield 3.01%.

Universal Corp (UVV), 1/7/2016, yield 3.68%.

Both of my stocks scheduled to report on 12/22/2015 did so, ConAgra (CAG) and Paychex (PAYX),  with positive results in both cases. See the firm’s websites, the financial press, or Seeking Alpha for earnings details. Only two of my stocks are scheduled to report in the week ahead, RPM International (RPM) on 1/6/2016, and Walgreens Boots Alliance (WBA) on 1/7/2016.

As expected, the previous two weeks did not see much action in the way of analyst upgrades / downgrades on my stocks:

Plains All American Pipeline (PAA) was downgraded from OutPerform to Sector Perform at Oppenheimer.

General Dynamics (GD) was upgraded from Hold to Buy at Drexel Hamilton.

Chevron (CVX) was upgraded from Neutral to OutPerform at Macquarie.

Digital Realty (DLR) was initiated at Neutral at JP Morgan.

Nucor (NUE) was initiated at Hold at Standpoint Research.

Memorial Production Partners (MEMP) was downgraded to Equal Weight at Morgan Stanley.

Note that I indicate the prior rating when it is available; otherwise, I just indicate the new rating.

A few changes to my stock lists to start the New Year are:

Two REITs have been “promoted” from Tier2 to Tier1, Welltower (HCN) and Ventas (VTR), joining Realty Income (O) as top-rated REITS.

Kraft Heinz (KHC) has been demoted from Tier1 to Tier2.

Two new “high-yielders” have been added to Tier3, Iron Mountain (IRM), yielding over 7%, and STAG Industrials (STAG), an industrial REIT, also yielding over 7%.

The year just ended was challenging for investors, to put it mildly. With dividends, I have done OK, but still this has been my poorest performing year since 2008. The collapse of oil prices and the effect on the energy sector has hit me pretty hard. It appears that 2016 is not going to see a rebound, as the Saudis seem determined to drive high-cost producers out of business. Beyond energy, the pundits continue to remind us that the bull market is aging, and some notables are predicting a recession “soon”. My strategy is to put a hold on further acquisitions in the energy sector, and focus on the safest, strongest stocks, adding to positions if and when opportunities arise. I’m talking about firms such as Proctor & Gamble (PG), General Mills (GIS), Coca Cola (KO), and Johnson & Johnson (JNJ), to list a few of my favorites. I own all of these except JNJ, which I regrettably sold a couple of years ago for a “large” gain, and have not been able to get back in since without paying up. Now is a time to be cautious, conserve cash, and be very selective on new buys.

JT