Stocks fluctuated in a narrow range last week until Friday, at which point the bulls took control, and a fairly decent rally ensued. The economic data continues to reflect an economy that is slowing, while prices are flat or declining. The phenomena of disinflation, if not outright deflation, that we are experiencing indicates that raising rates is not what is needed right now. One wonders if it will ever happen. The problem world- wide is a lack of demand, at least from people with the means to pay for what they desire.

Coming back down from the macro-economic stratosphere to the real world, where life is “nasty, brutish, and short”, save for those owning dividend-paying stocks, we have several on my lists going ex-dividend this week:

2/25/2014    

NextEra Energy (NEE), yield 2.92%.

Molson Coors (TAP), yield 2.14%.

Prospect Capital (PSEC), yield 11.36%. PSEC pays monthly.

2/26/2014    

McDonalds (MCD), yield 3.61%.

Northrop Grumman (NOC), yield 1.63%.

Realty Income (O), yield 4.36%. O pays monthly.

Safety Insurance Group (SAFT), yield 4.52%.

Pan American Silver (PAAS), yield 5.00%.

2/28/2014   

Novartis (NVS), yield 2.69%. Better get on board soon if you want to collect a dividend from NVS, the dividend is only paid out once per year.

Now, on to earnings. I will note the firms on my list which reported last week, and when. Details are available from the firm’s websites, the financial press, brokerage websites, or from the site I consider the most convenient, Seeking Alpha. (http://seekingalpha.com)

2/17/2015

Medtronic (MDT), National Health Investors (NHI), Waste Management (WM), Realty Income (O).

2/18/2015

Energy Transfer Equity (ETE), Energy Transfer Partners LP (ETP), Williams Partners LP (WPZ).

2/19/2015

Frontier Communications (FTR), Linn Energy LLC (LINE), Newmont Mining (NEM), Pan American Silver (PAAS), SCANA (SCG).

2/20/2015

Public Service Enterprise Group (PEG), Health Care REIT (HCN).

Next up, the firms due to report this week, also reported by date:

2/23/2015

Alliant Energy (LNT), ONEOK Partners LP (OKS).

2/24/2015

Greif (GEF, GEF.B), Windstream (WIN), Annaly Capital (NLY).

2/25/2015

Hercules Technology Growth Capital (HTGC), Solar Capital (SLRC), Crestwood Midstream Partners LP (CMLP), Martin Midstream Partners LP (MMLP), Memorial Production Partners LP (MEMP), Transocean LTD (RIG), Transocean Partners LLC (RIGP), Legacy Reserves LP (LGCY).

2/26/2015

TICC Capital (TICC), Consolidated Communications (CNSL), Exterran Partners LP (EXLP), Ares Capital (ARCC), Main Street Capital MAIN), Ensco PLC (ESV), Seadrill Limited SHS (SDRL).

2/27/2015

Calumet Specialty Products Partners LP (CLMT).

It was a slow week for upgrades / downgrades on my stocks, but there were a few:

CenturyLink (CTL) was downgraded to sell at Goldman Sachs.

Ensco (ESV) was initiated at Market Perform at BMO Capital.

Noble (NE) was initiated at UnderPerform at BMO Capital.

Northrop Grumman (NOC) was initiated at UnderPerform at BMO Capital.

Transocean (RIG) was initiated at UnderPerform at BMO Capital.

Kinder Morgan Inc (KMI) was reinstated at OverWeight at Barclays.

Pan American Silver (PAAS) was downgraded from Sector Perform to UnderPerform at CIBC.

Wal-Mart (WMT) was downgraded from OverWeight to Equal Weight at Barclays.

There have been several articles recently in the financial press making the case that stocks are richly valued by historical standards, based on earnings, the most frequently used metric, and I really cannot argue with the logic of the argument. Historically, buying in when PE’s are high leads to disappointing total returns. On the other hand, the investor today really has nowhere else to go, considering interest rates and available yields. I continue to believe that a diversified dividend stock portfolio is the way to go, and an incremental, averaging-down acquisition strategy is the best way to acquire a position. The holder needs to be aware that if earnings fall short, PE’s will adjust to that reality. Translated: stock prices will decline. An investor counting on price appreciation will learn that life in a declining earnings environment will indeed be “nasty, brutal, and short”, a depiction of mankind’s existence from Thomas Hobbes (1588 – 1679).

JT

The market continued to exhibit considerable volatility during the week just ended, with the bulls holding an advantage, as evidenced by the venerable Dow Industrials Index closing above 18000 for the first time in 2015. The economy is definitely stalling, regardless of the government’s “happy talk”. So far, it seems the economic damage to the energy industry wrought by the collapse in crude prices is outweighing the anticipated benefits of lower gas prices to the non-energy sectors. We are affected also by economic stagnation in Europe and a slowdown everywhere, including China.

In this environment, the best medicine for an investor is a steady stream of dividend payments.  Stocks on my lists slated to keep the flow of payments coming are as follows, with the stock, ex-dividend date, and annualized yield, based on Friday’s closing price, shown:

Microsoft (MSFT), 2/17/2015, 2.83%.

Boardwalk Pipeline Partners LP (BWP), 2/17/2015, 2.36%.

GlaxoSmithKline (GSK), 2/18/2015, 5.42%.

Diebold (DBD), 2/18/2015, 3.21%.

Main Street Capital (MAIN), 2/18/2015, 6.62%. MAIN is a monthly payer.

Transocean LTD (RIG), 2/18/2015, 15.75%. The yield reflects the price collapse of RIG over the last several months. No one, including myself, expects RIG to continue paying out at the current rate, barring a huge rebound in crude prices this year, but it seems the party will last for at least one more quarterly payment.

General Electric (GE), 2/19/2015, 3.66%. GE has regained stature since the price collapse and dividend cut during the financial crisis, but the shares just can’t seem to get back above $30, and are currently testing a floor of $25. I can remember when GE was near $40, and when I bought in the low $30’s during a “temporary” dip, I believed I had taken advantage of a terrific bargain. Of course, later events revealed the extent to which GE was reliant on GE Capital for earnings, which were severely affected by the stresses of 2008-2009. But give management credit for striving to recover and improve the dividend, while refocusing on the industrial side of the business.

Johnson & Johnson (JNJ), 2/20/2015, 2.81%. The sub-three percent yield reflects the extended price, as JNJ is one of the most “over-loved” stocks trading today.   

Now, on to earnings. I will note the firms on my list which reported last week, and when. Details are available from the firm’s websites, the financial press, brokerage websites, or from the site I consider the most convenient, Seeking Alpha. (http://seekingalpha.com)

2/9/2015

Boardwalk Pipeline Partners LP (BWP), Fifth Street Finance (FSC). FSC dropped nearly 15% after the report, which included a dividend cut, as the firm’s exposure to investments in Canadian Oil Sands caused a major write-down. This underscores that the high yields of BDC’s can be at risk if performance slips.

2/10/2015

Coca Cola (KO), HCP Inc (HCP), Reynolds American (RAI), Molson Coors (TAP).

2/11/2015

Cisco Systems (CSCO), Pepsico (PEP), MFA Financial (MFA), CenturyLink (CTL).

2/12/2015

Kraft Foods Group (KRFT), Kellogg (K), Dr Pepper Snapple (DPS), Digital Realty (DLR), Diebold (DBD), Total S A (TOT), Medical Properties Trust (MPW).

2/13/2015

Smucker J M (SJM), Exelon (EXC), Ventas (VTR).

Statoil (STO) is scheduled to have their annual report available for investors 3/19/2015, per their website.  The firm announced cost-cutting steps on 2/6/2015, after a fourth-quarter net loss of 14.8B kroner. Other than that snippet, I cannot find any details on the fourth quarter results. Foreign firms generally do not report as often or in as much detail as domestic firms, which is one downside to investing in them.

Now on to this week’s earnings reports expected, presented by date:

2/17/2015

Medtronic (MDT), National Health Investors (NHI), Waste Management (WM), Realty Income (O).

2/18/2015

Energy Transfer Equity LP (ETE), Energy Transfer Partners LP (ETP), Williams Partners LP (WPZ).

2/19/2015

Frontier Communications (FTR), Linn Energy LLC (LINE), Newmont Mining (NEM), Pan American Silver (PAAS), SCANA Corp (SCG).

2/20/2015

Public Service Enterprise Group (PEG), Health Care REIT (HCN), Enerplus (ERF).

Finally, a tally of upgrades / downgrades out in the prior week on my stocks:

Exxon Mobil (XOM) was downgraded from Buy to Hold at Argus.

Emerson Electric (EMR) was downgraded from OutPerform to Perform at Oppenheimer.

Fifth Street Finance (FSC) was downgraded from OverWeight to Equal Weight at Barclays.

HCP Inc (HCP) was downgraded from Neutral to UnderPerform at Mizuho.

Fifth Street Finance (FSC) was downgraded to Market Perform at Raymond James.

Transocean (RIG) was downgraded to UnderPerform at Credit Suisse.

Medical Properties Trust (MPW) was upgraded from Neutral to OutPerform at Robert W Baird.

Dr Pepper Snapple (DPR) was downgraded from Buy to Hold at Gabelli & Co.

Waste Management (WM) was downgraded from Buy to Hold at Stifel Nicolaus.

At this point, I’m on hold just about everywhere. Energy stocks are off the lows, well above my recent acquisitions, so nothing to buy in that sector, one in which I’m overloaded at this point. BDC’s are presenting some values, but again I’m overloaded in that high-risk category. Utilities are off their highs, as are property REITs, but they are still pricey. Blue chip industrials, consumer staples, and just about any other sector you can name are pricey. Long story short, there is nothing to buy right now, and I already am over-allocated to cash, so no point in taking profits, where I have them, with nowhere to go with the proceeds. For me, now is a time to stay calm, stay cool, sit tight, and await better opportunities.

JT

Stocks gained four out of five days the first week of February, posting a fairly decent gain for the week. The major averages are less than two percent below the late December highs at this point. This is pretty remarkable, considering the performance of the energy sector over the past several months, and further considering the weighting of the energy component in the overall market. Friday was a modest down day, as the official numbers from the monthly Jobs report were unexciting, yet still were good enough to keep the Fed on track to tighten policy “sometime” down the road, dampening the market rally for at least one day.

Stocks on my lists going ex-dividend this week are as follows:

2/10/2015

Entergy (ETR), yield 4.03%.

2/11/2015

Emerson Electric (EMR), yield 3.30%.

3M Co (MMM), yield 2.47%.

Royal Dutch Shell (RDS.B), yield 5.46%.

JM Smuckers (SJM), yield 2.27%.

Excelon (EXC), yield 3.54%.

Spectra Energy (SE), yield 4.09%.

2/12/2015

ConocoPhillips (COP), yield 4.33%.

Chevron (CVX), yield 3.90%.

Southern Company (SO), yield 4.36%.

2/13/2015

Walgreens Boots Alliance (WBA), yield 1.77%.

Gladstone Investment (GAIN), yield 9.41%. GAIN pays monthly.

Also, several stocks went ex-dividend last week that I missed, as follows:

Pfizer (PFE), 2/4/2015, yield 3.38%.

Unilever (UL), 2/4/2015, yield 3.45%.

Magellan Midstream Partners LP (MMP), 2/4/2015, yield 3.35%.

NuStar Energy LP (NS), 2/5/2015, yield 6.96%.

Amerigas Partners LP (APU), 2/6/2015, yield 6.88%.

Now on to earnings. To repeat my change in approach as stated last week, rather than repeat what is available elsewhere, as I had been doing, I am going to just list the stocks that reported earnings in the previous week, which my previous posting had shown as upcoming. While there are many sources available for those who want more detail, I have found Seeking Alpha to be the easiest to access. Often a transcript of the earnings conference call is available, in addition to summaries of the numbers, guidance, and frequently some further analysis and interpretation of the results.

Reports, by date, were as follows:

2/2/2015

Sysco (SYY), Exxon Mobil (XOM), American Capital Agency (AGNC).

2/3/2015

Emerson Electric (EMR), Eaton (ETN), United Parcel Service (UPS), Universal (UVV).

2/4/2015

GlaxoSmithKline (GSK), Merck (MRK), Southern Company (SO), Amerigas Partners LP (APU), Plains All American Pipeline LP (PAA), Spectra Energy Partners LP (SEP), Gladstone Investment (GAIN), Prospect Capital (PSEC), PennantPark Investment (PNNT), Noble (NE). Medical Properties Trust (MPW), shown as reporting on this date, has moved the reporting date to 2/10/2015.

2/5/2015

Phillip Morris (PM), Sanofi (SNY), Entergy (ETR), Kimco Realty (KIM), Magellan Midstream Partners LP (MMP).

2/6/2015

Statoil (STO) was shown as reporting on this date, but is now scheduled for 2/10/2015.

Buckeye Partners LP (BPL) did report on this date as shown.

Kayne Anderson Energy Development Company (KED) is more like a fund of MLPs than a BDC, which was how I had always viewed the entity. Kayne Anderson Fund Advisors LLC, which serves as the advisor to KED, along with other funds, presented an annual report for KED for the year ending 11/30/2014 on 1/30/15. The report is available at www.kaynefunds,com.

Now, looking ahead, reports expected this week, by date, are:

2/9/2015

Boardwalk Pipeline Partners LP (BWP), Fifth Street Finance (FSC).

2/10/2015

Coca Cola (KO), Stateoil (STO), HCP Inc (HCP), Reynolds American (RAI), Molson Coors (TAP).

2/11/2015

Cisco Systems (CSCO), Pepsico (PEP), MFA Financial (MFA), CenturyLink (CTL).

2/12/2015

Kraft Foods Group (KRFT), Kellogg (K), DrPepper Snapple (DPS), Digital Realty Trust (DLR), Diebold (DBD), Total S A (TOT), Medical Properties Trust (MPW).

2/13/2015

Smucker J M (SJM), Exelon (EXC), Ventas (VTR).

Now for a quick run-down of upgrades / downgrades on my stocks from last week:

Exxon Mobil (XOM) was downgraded from Sector OutPerform to Sector Perform at Howard Weil.

Linn Energy LLC (LINE) was downgraded similarly at Weil.

NuStar Energy LP (NS) was downgraded from OutPerform to Neutral at Credit Suisse.

Freeport-McMoran (FCX) was downgraded to Neutral at BAC. The prior rating was not indicated in the notice. 

Sysco (SYY) was upgraded to Buy at Deutsche Bank. The prior rating was not indicated in the notice. 

Breitburn Energy Partners LP (BBEP) was downgraded from Neutral to UnderPerform at Credit Suisse.

JM Smuckers (SJM) was upgraded to Buy at Barclays. The prior rating was not given.

PennantPark (PNNT) was upgraded from Neutral to OutPerform at Robert W Baird, and also upgraded to OverWeight at JP Morgan.

One other development regarding my stocks was Williams Partners LP (WPZ) merged with Access Midstream Partners LP (ACMP). My understanding was that WPZ was acquiring ACMP, but it was not quite like that. WPZ holders received .86 units of the new entity for each unit of WPZ, and the new entity retained the WPZ name and symbol. So, my 100 units of WPZ is now 86 units of the new WPZ, which is trading at roughly the same price as the old WPZ. I keep asking myself, as I read the press release of how great the new entity is going to be, what’s wrong with this picture?  Supposedly, a special dividend for former WPZ holders will rectify matters. Stay tuned.

Generally, the world remains in terrible shape, the Eurozone is still in the news as a new Greek tragedy unfolds, or more accurately, as the old one continues, and things are slowing economically everywhere. But oil prices are up off of the lows, as are nearly all energy-related stocks, while most other stock groups remain at elevated levels, such that buy opportunities are limited. My plan is unchanged: collect a steady stream of dividends, take advantage of any buy opportunities, and maybe sell something I own if the price gets too ridiculously high. Just keep in mind, stocks at ridiculously high valuations can always get even more ridiculously valued, so don’t be too quick to pull the trigger.

JT

Better late than never, I suppose, as I am just now getting to my first posting for February. I could claim to be a Seahawks fan and say it was due to grief that I’m late, but the truth is I have just been covered up with work in my new job preparing taxes.

The final week of January saw the market gain two days and decline three days, with the down days winning by a substantial margin. Even more notable than the end result is the volatility seen, which has continued into February, with substantial gains occurring on each of the first two trading days of the new month. Oil prices rebounded from less than $45 on January 28 to over $53 on February 3, a huge gain for the commodity. As I write this, midday of February 4, oil has pulled back to around $50, but there is no telling what will happen in the coming days to the price.

Upcoming (or just passed) ex-dividend dates for the current week are as follows:

2/3/2015   

Memorial Production Partners LP (MEMP), yield 13.26%.

2/4/2015  

Intel (INTC), yield 3.87%.

Energy Transfer Equity LP (ETE), yield 3.15%.

Energy Transfer Partners LP (ETP), yield 6.64%.

Norfolk Southern (NSC), yield 2.22%.

Crestwood Midstream Partners LP (CMLP), yield 10.83%.

Martin Midstream Partners LP (MMLP), yield 11.00%.

2/5/2015

HCP Inc (HCP), yield 4.96%.

Breitburn Energy Partners LP (BBEP), yield 11.84%. BBEP pays monthly.

Exterran Partners LP (EXLP), yield 9.28%.

2/6/2015

American Electric Power (AEP), yield 3.39%.

Exxon Mobil (XOM), yield 3.39%.

Health Care REIT (HCN), yield 4.09%.

Linn Energy LLC (LINE), yield 10.73%. LINE pays monthly.

Noble PLC (NE), yield 8.79%.

Rather than repeat what is available elsewhere, as I have been doing, I am going to just list the stocks that reported earnings in the previous week, which my previous posting had shown as upcoming. While there are many sources available for those who want more detail, I have found Seeking Alpha to be the easiest to access. Often a transcript of the earnings conference call is available, in addition to summaries of the numbers, guidance, and frequently some further analysis and interpretation of the results.

Reports, by date, were as follows:

1/26/2015

Norfolk Southern (NSC), MicroSoft (MSFT).

1/27/2015

3M Co (MMM), NextEra Energy (NEE), Novartis (NVS), Pfizer (PFE), Procter & Gamble (PG), AT&T (T), Nucor (NUE), Freeport-McMoran (FCX).

1/28/2015

American Electric Power (AEP), Roche Holdings LTD (RHHBY), Potlatch (PCH).

1/29/2015

ConocoPhillips (COP), Colgate Palmolive (CL), Northrop Grumman (NOC), Raytheon (RTN), Royal Dutch Shell (RDS.B), Enterprise Products Partners LP (EPD),

1/30/2015

Chevron (CVX), Altria (MO), NuStar Energy LP (NS).

2/2/2015

American Capital Agency (AGNC), Exxon Mobil (XOM), Sysco (SYY).

2/3/2015

Emerson Electric (EMR), Eaton (ETN), United Parcel Service (UPS), Universal (UVV).

2/4/2015 (as of 12:00 noon)

Merck (MRK), Southern Company (SO), Spectra Energy (SE), Spectra Energy Partners LP (SEP).

Now, looking forward, additional earnings expected this week are:

2/4/2015 (after the close)

Amerigas Partners LP (APU), Plains All American Pipeline (PAA), Gladstone Investment (GAIN), Kayne Anderson Energy Development (KED), Prospect Capital (PSEC), PennantPark Investment (PNNT), Medical Properties Trust (MPW), Noble (NE).

2/5/2015

Phillip Morris (PM), Entergy (ETR), Kimco Realty (KIM), Magellan Midstream Partners LP (MMP).

2/6/2015

GlaxoSmithKline PLC (GSK), Sanofi (SNY), Stateoil (STO), Buckeye Partners LP (BPL).

Upgrades / downgrades that have come out on my stocks since my last posting are as follows:

HCP Inc (HCP) was downgraded from Buy to Neutral at Mizuho.

Amerigas Partners LP (APU) was downgraded from Buy to Hold at Jeffries.

United Parcel (UPS) was downgraded from OverWeight to Equal Weight at Barclays.

Norfolk Southern (NSC) was upgraded from Hold to Buy at Argus.

MicroSoft (MSFT) received a raft of downgrades after earnings were reported, from Buy to Neutral at Nomura, from OverWeight to Neutral at JP Morgan, and from Buy to Neutral at MKM Partners.

Freeport-McMoran (FCX) was downgraded from Buy to Hold at Brean Capital, and also BB&T Capital Markets issued the same downgrade, Buy to Hold.

Procter & Gamble (PG) was downgraded from Buy to Hold at Argus.

Exxon Mobil (XOM) was downgraded from Sector OutPerform to Sector Perform at Howard Weil.

Linn Energy LLC (LINE) was downgraded similarly at Weil.

NuStar Energy LP (NS) was downgraded from OutPerform to Neutral at Credit Suisse.

Waste Management (WM) was downgraded from OutPerform to In Line at Imperial Capital.

Freeport-McMoran (FCX) was downgraded to Neutral at BAC. The prior rating was not indicated in the notice.  

Sysco (SYY) was upgraded to Buy at Deutsche Bank. The prior rating was not indicated in the notice. 

I believe this posting catches me up to 2:00 PM Wednesday 2/4/2015.

Stocks are off the pace a bit today, but still up for the week after two days of triple-digit gains in the Dow Industrial average. I have seen my recent energy stock purchases rebound a little since I bought in during the scariest time, with “$30 Oil Coming Soon” in the headlines. Of course, the current respite means very little in terms of the big picture, but at this point I feel pretty good about owning Breitburn (BBEP) at an average price of $6.91, Linn Energy (LINE) at $9.69, and Legacy Reserves (LGCY) at $8.50, all acquired in the recent swoon. Other recent acquisitions were MicroSoft (MSFT) at $42.50, and AT&T (T) at $32.90. MSFT’s movement since then has reminded me why I adhere to an incremental acquisition approach, while T’s movement has me thinking that when a blue chip offers a brief window of opportunity, I should go large. The latter especially seems like the way to go when most solid Utes, REITs, Industrials, and Consumer Staples are significantly over-priced. The only way to stay sane is define a formula that suits your temperament, and then follow it, resisting the greed / fear emotions trying to get you to veer from the path.

JT