Surprisingly, volatility suddenly ceased last week. There were only two NYSE TICK readings outside the -1000 to +1000 range, both on the low side, and the Dow Industrials Index only moved at a triple-digit rate of any consequence one day, Wednesday, when a decline of 293 points occurred. And even then, it was an orderly, stair-step decline, not erratic. A disappointing Durable Orders reading on that day was likely responsible for the sell-off. The economic readings continue to point to a slowing economy, and there seems to be a general consensus that stock prices are richly valued, energy being an exception, all of which contribute to a dampening of enthusiasm for buying stocks. And maybe for good reason, as a number of recent articles have pointed out that buying in at market peaks generally leads to poor investing results.

It may not be a good time to buy, but all times are good times to own dividend-paying stocks. Stocks I track going ex-dividend this week are as follows, with the ex-dividend date and yield as shown:

Realty Income (O), 3/30/2015, 4.45%.

Raytheon (RTN), 3/30/2015, 2.44%.  

Cisco Systems (CSCO), 3/31/2015, 3.10%.

Sysco (SYY), known to investors as “the other Sysco”, 3/31/2015, 3.14%.

Kimco Realty (KIM), 4/1/2015, 3.62%.

ConAgra (CAG) was the only stock on my lists reporting last week. CAG, reporting on Thursday, beat consensus estimates on both revenue and EPS for FQ3, impressive when one considers the flat volume trends, as reported on Seeking Alpha. 

None of my stocks are scheduled to report this week.

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

Darden Restaurants (DRI) was upgraded from Market Perform to OutPerform at Telsey Advisory Group.

Kinder Morgan Inc. (KMI) was initiated at Buy at Argus.

Enterprise Products Partners LP (EPD) was upgraded from Hold to Buy at Jeffries.

Kimco Realty (KIM) was initiated at Neutral at Robert W. Baird.

Kimberly Clark (KMB) was upgraded to OutPerform at Wells Fargo.

Realty Income (O) was initiated at Neutral at Robert W. Baird.

General Dynamics (GD) was upgraded from Sector Perform to OutPerform at RBC Capital Markets.

BreitBurn Energy Partners LP (BBEP) was downgraded to Sell at UBS.

Alliant Energy (LNT) was upgraded to OutPerform at Robert W. Baird.

Seadrill (SDRL) was initiated at Reduce at HSBC.

DrPepper Snapple (DPS) was upgraded from Hold to Buy at Stifel Nicolaus.

Kraft Foods (KRFT) was downgraded from Hold to Sell at Argus, and was also downgraded to Market Perform at BMO Capital. These downgrades have to be based on valuation, as KRFT shares headed skyward following news of a merger with Heinz.

Royal Dutch Shell (RDS.B) was downgraded from Neutral to Reduce at HSBC.

Norfolk Southern (NSC) was downgraded to Neutral at Cleveland Research.

Kimberly Clark (KMB) was initiated at Sector Perform at RBC Capital Markets.

The week ahead may see subdued action similar to the week just ended. It will be a short week, with US markets closed for Good Friday. However, that date is not a Federal holiday, so the monthly jobs report will be released on schedule Friday. The report is not expected to generate much excitement, just more of the same distorted numbers indicating things are “improving”, albeit slowly. By the next trading day, Monday April 6, it will probably be all but forgotten. I believe now is a calm time before the market storm to come. The next round of earnings will likely disappoint investors, plus the possibility of geopolitical news impacting the market is higher than ever. Enjoy the calm while it lasts.

JT

Volatility was extreme last week, with the Dow Industrial index posting triple-digit moves in opposite directions each day for the most recent six trading days in succession. There seems to be general agreement that most sectors are fully-valued, energy being an exception, even though most issues are off recent highs. The economic data continues to point to an economy that is advancing at a very slow pace, while the geopolitical news just gets worse each day, reflecting the lack of confidence in the current U.S. political regime. In other words, the situation is unchanged.

In times like these, regular dividend payments are very comforting to an investor. The upcoming week’s contributors to solace are the following stocks, with ex-dividend dates and yields as indicated.

Phillip Morris (PM), 3/24/2015, 5.03%.

MFA Financial (MFA), 3/25/2015, 9.80%.

Medtronic (MDT), 3/26/2015, 1.56%.

National Health Investors (NHI), 3/27/2015, 4.68%.

Nucor (NUE), 3/27/2015, 3.16%.

Annaly Capital (NLY), 3/27/2015, 11.17%.

Windstream (WIN), 3/27/2015, 12.47%.

Main Street Capital (MAIN), 3/27/2015, 6.78%. MAIN pays monthly.

As for earnings, two of my stocks reported as scheduled last week, General Mills (GIS)
on 3/18/2015, and Darden Restaurants (DRI) on 3/20/2015. Both reported respectable results.

Only one of my stocks is scheduled to report this week, ConAgra (CAG) on 3/26/2015, before the open.

There were just a few upgrades / downgrades on my stocks last week.

NextEra Energy (NEE) was upgraded from Hold to Buy at Deutsche Bank.

Sanofi (SNY) was upgraded to OutPerform at Leerink Swann.

Enterprise Products Partners LP (EPD) was reinstated at Buy at Citigroup.

General Electric (GE) was downgraded to Hold at Ladenburg Thalman.

Newmont Mining (NEM) was upgraded to OverWeight at HSBC.

Looking ahead, economic releases of note coming out next week will be a couple of reads on housing, February CPI and Durable Orders, plus the third estimate of Q4 GDP. Barring a huge discrepancy from the numbers expected, none of these releases are likely to move the market much. Geopolitical developments are likely to dominate the news flow, as the collapse of American leadership at home and abroad continues. Investors are understandably nervous, which accounts for the extreme volatility we have been experiencing. Unfortunately, there is nothing on the horizon indicating any improvement is likely, at least in the near-term. My advice is to stay cautious, seek quality holdings, take advantage of any buy opportunities that surface, buy incrementally if at all, leaving room to add more if prices decline further, and be prepared for market storms that may be severe. And keep collecting those dividends.

JT

The market remained volatile last week, as evidenced by a decline Tuesday in excess of 300 Dow points, followed two days later by a rally on Thursday of 260 Dow points. Still, the trend has been down since the end of February. Crude oil prices are about to test the lows reached in January, which has led to renewed declines in energy-related stocks, which in turn has contributed to the overall market decline.

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

3/17/2015  

Greif (GEF, GEF.B), yield 4.43% for GEF, 5.72% for GEF.B.

Solar Capital (SLRC), yield 7.92%.

3/18/2015 

Total S A (TOT), yield 6.45%. Note that the yield is before accounting for foreign tax withholding of 30%.

BlackRock Kelso Capital (BKCC), yield 9.05%.

PennantPark Investment (PNNT), yield 11.73%.

Two of my stocks are scheduled to report earnings this week. Both are on a different reporting cycle than most U.S. corporations, reporting outside the quarterly “earnings season”.

General Mills (GIS) will report before the open on 3/18/2015. GIS made news last week by announcing a 7.3% increase in the quarterly dividend, which will now be $0.44 per share each quarter. Gotta love those big consumer staples stocks.

Darden Restaurants (DRI) will report before the open on 3/20/2014. Channeling Mark Twain, the death of DRI and most other restaurant stocks has been greatly exaggerated. I still see all the economic trends pointing to a dismal outlook for this crowded sector, although the low gas prices may have provided a temporary reprieve, allowing families more disposable cash for dining out, assuming the breadwinner is not employed in the energy sector. 

Upgrades / downgrades that came out last week on my stocks are:

ConocoPhillips (COP) was initiated at Neutral at Goldman Sachs.

Chevron (CVX) was also initiated at Neutral at Goldman.

ENI SpA (E) was upgraded to Buy at UBS.

ExxonMobil (XOM) was reinstated at Buy at Goldman.

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

Darden Restaurants (DRI) was initiated at Neutral at Credit Suisse.

McDonalds (MCD) was also initiated at Neutral at Credit Suisse.

Potlatch (PCH) was upgraded from Neutral to Buy at DA Davidson.

Royal Dutch Shell (RDS.B) was downgraded from OutPerform to Sector Perform at RBC Capital Markets.

Intel (INTC) was upgraded from Hold to Buy at Canaccord Genuity.

Intel (INTC) was upgraded to UnderPerform at CLSA. I’ve never seen an upgrade to UnderPerform. I suppose the prior rating was Sell.

This week is a Fed meeting week, which may be more significant than the no-hum Fed meetings of recent months, and in fact not so recent months as well. The reason is there may some indication that a teensy-weensy, baby-step towards normal interest rates is under consideration. If so, the market may sell off on the news. While nearly all stocks are off their recent highs, the only real bargains to be had are in the depressed energy sector. I’m choking on too much energy in my portfolio, but I may have to add just a little more if some of the super majors get a little cheaper.

JT

Last week the market experienced two up days and three down days, with the downs outweighing the ups, as Friday capped the week with a major sell off which saw the Dow Industrials decline by 279 points. Ouch! Most economic data points continue to point to a slowing economy. As for the employment picture, recent weekly statistics for unemployment claims have been higher than expected, even as the monthly employment report released Friday touted a greater than expected number of new jobs and an improved official unemployment rate of 5.5%, once considered “full” employment. Even as the regime touts the “improving” picture, the market apparently agrees with the critics who have pointed out flaws in the official statistics and the rosy official view.

Meanwhile, dividend activity seems to be picking up, as we move past year-end and into normal dividend cycles. Stocks on my lists going ex-dividend this week are as follows:

3/09/2015

Triangle Capital (TCAP), yield 8.75%.

3/10/2015

Hercules Technology Growth Capital (HTGC), yield 8.49%.

Frontier Communications (FTR), yield 5.55%.

Medical Properties Trust (MPW), 6.21%.

Newmont Mining (NEM), yield .43%.

3/11/2015

Wal-Mart (WMT), yield 2.37%.

Digital Realty (DLR), yield 5.23%.

3/12/2015

Coca Cola (KO), yield 3.18%.

Merck (MRK), yield 3.17%.

Altria (MO), yield 3.90%.

DrPepper Snapple (DPS), yield 2.45%.

Fifth Street Finance (FSC), yield 10.08%. FSC pays monthly.

Now, on to earnings. I will note the firms on my lists 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)

Hercules Technology Growth Capital (HTGC) reported 3/2/2015, Breitburn Energy Partners LP (BBEP) reported 3/3/2015, Greif (GEF, GEF.B) reported 3/4/2015, and BlackRock Kelso (BKCC) reported 3/5/2015.

Earnings season has come to an end, as none of my stocks are scheduled to report this week.

A few upgrades / downgrades came out last week on my stocks:

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

Centurylink (CTL) was upgraded from UnderPerform to Neutral at DA Davidson.

Ensco (ESV) was downgraded to UnderPerform at BMO Capital.

Hercules Technology Growth Capital (HTGC) was downgraded from Buy to Hold at BB&T Capital Markets.

Ensco (ESV) was downgraded to Hold at Societe Generale.

Ensco (ESV) was downgraded to UnderPerform at BMO Capital.

Exelon (EXC) was upgraded to Equal Weight at Morgan Stanley.

McDonalds (MCD) was upgraded from Sector Perform to OutPerform at RBC Capital Markets.

Exelon (EXC) was upgraded to OverWeight at JP Morgan.

McDonalds (MCD) was upgraded to Neutral at Piper Jaffray.

Exxon Mobil (XOM) was downgraded to Hold at Evergreen Partners.

The market continues to gyrate between froth and fear, with froth usually prevailing, although not last week. The possibility of even the slightest movement away from the “ZIRP” policy towards “normalcy” has given rise to better values in two interest-rate sensitive sectors, utilities and REITs. I’m currently considering Westar Energy (WR), Digital Realty (DLR), and Medical Properties Trust (MPW), all of which I have owned in the past. Southern Company (SO) seems to be in disfavor lately over cost-overruns on expansion projects. If I didn’t already own it, I would consider it. Nearly all stocks in these two groups are off their recent highs, although not really into “bargain” territory just yet. To reiterate my yield rules, a utility needs to yield at least 4% to be attractive, a REIT 5%, an MLP 6%, a blue-chip industrial or consumer-staple 3%, and a high-risk BDC or stressed sector 8% or more. Of course, there is much more to consider besides yield, but if it is not up to these levels, it isn’t worth my time to review any further. 

JT 

Stocks mostly gyrated within a narrow range last week, with only the NASDAQ ending with a gain on the week among the major averages, and a very modest gain at that. The economic news reflects a modest slowdown, with most readings coming in a bit below consensus. The dollar remains at elevated levels not seen for many years, and crude oil remains at depressed levels also not seen for a lengthy time, since 2008. In short, it was an uneventful week of the “same old same old”.

On a brighter note, my dividend payers just keep on paying, at least in all but a couple of distressed cases. As I have noted, I went in on several offshore drillers when they initially cratered, believing they presented value in a market severely lacking any, but in hindsight, I was early, and now I’m sitting on significant losses, even as the once-bountiful dividends have either been cut or have disappeared entirely. I’m speaking of Transocean (RIG), Ensco (ESV), Noble (NE), and Seadrill (SDRL). Even as I admit my mistake, I still believe the firms will survive, and I understand that their managements are taking prudent actions to improve the odds in favor of survival. Further, my strategies that limit position sizes in a stock or a sector, and that require diversification, have served me well in my hour of investment pain. But I digress. On to my dividend payers going ex-dividend in the upcoming week, presented as follows, by date:

3/04/2015    

Kimberly Clark (KMB), yield 3.21%.

Kellogg (K), yield 3.04%.

Pepsico (PEP), yield 2.65%.

Potlatch (PCH), yield 3.76%.

Ventas (VTR) yield 3.11%.

CenturyLink (CTL), yield 5.71%.

3/05/2015   

Eaton (ETN), 3.10%.

Westar Energy (WR), yield 3.71%.

Waste Management (WM), yield 2.83%.

3/06/2015   

Public Service Enterprise Group (PEG), yield 3.71%.

SCANA (SCG), yield 3.83%.

Reynolds American (RAI), yield 3.54%.

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)

Reporting 2/23/2015

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

Reporting 2/24/2015

Windstream (WIN), Annaly Capital (NLY), Crestwood Midstream Partners LP (CMLP).

Reporting 2/25/2015

Solar Capital (SLRC), Martin Midstream Partners LP (MMLP), Transocean (RIG), Transocean Partners LP (RIGP), Legacy Reserves (LGCY), Ensco (ESV).

Reporting 2/26/2015

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

Reporting 2/27/2015

Calumet Specialty Partners LP (CLMT).

Three stocks scheduled to report last week moved the date to this week. Hercules Technology Growth Capital (HTGC) moved to 3/2/2015, Greif (GEF, GEF.B) moved to 3/4/2015, and Memorial Partners LP (MEMP) moved to 3/2/2015. Other stocks on my list scheduled to report this week are Breitburn Energy Partners LP (BBEP) on 3/3/2015, and Blackrock Kelso (BKCC) on 3/5/2015.

A number of upgrades / downgrades came out last week on my stocks:

Total S A (TOT) was upgraded from Sector Perform to Sector OutPerform at Scotia Howard Weil.

Royal Dutch Shell (RDS,B) was downgraded from Sector OutPerform to Sector Perform at Scotia Howard Weil.

American Electric Power (AEP) was initiated at Buy at Jeffries.

Colgate Palmolive (CL) was upgraded to Buy at Citigroup.

Enerplus (ERF) was downgraded to Neutral at BAC.

Exelon (EXC) was initiated at Buy at Jefferies.

Intel (INTC) was initiated at OutPerform at BNP Paribas.

Noble (NE) was downgraded to Equal Weight at Capital One Financial.

Norfolk Southern (NSC) was initiated at UnderWeight at JP Morgan.

Transocean (RIG) was downgraded to Negative at Susquehanna.

Raytheon (RTN) was upgraded to Buy at Buckingham Research.

Chevron (CVX) was downgraded from OutPerform to Perform at Oppenheimer.

Transocean Partners LP (RIGP) was downgraded from EqualWeight to UnderWeight at Barclays.

Kayne Anderson Energy Development (KED) was downgraded from Buy to Hold at Stifel Nicolaus.

ONEOK was downgraded to UnderWeight at JP Morgan.  

Crestwood Midstream Partners LP (CMLP) was downgraded from Buy to Hold at Stifel Nicolaus.

Health Care REIT (HCN) was downgraded to Equal Weight at Morgan Stanley.

HCP Inc (HCP) was downgraded to Equal Weight at Morgan Stanley.

ONEOK (OKE) was downgraded to Neutral at Goldman Sachs, and to Hold at Evercore Partners.

ONEOK Partners LP (OKS) was downgraded from OutPerform to Neutral at Credit Suisse.

Memorial Production Partners LP (MEMP) was downgraded from Perform to UnderPerform at Oppenheimer.

Transocean (RIG) was downgraded to Sector Perform at Iberia Capital.  

Geopolitical news is likely to dominate the news this week, with the controversial address to Congress from Prime Minister Netanyahu in the headlines. The monthly Jobs Report, due out Friday, always has the potential to be a market-mover, although the headline “unemployment rate” is somewhat discredited these days, as the reality of how it is derived has become more widely known. Much of the nation is just weary of winter, and ready for some sunshine. I don’t plan to do much, but if an opportunity arises, I’ll be ready.

JT