Stocks managed on Monday to mostly recover from the selloff that occurred the previous Friday, then proceeded from that point to gain modestly over the next four trading days. Volatility was negligible all week, as measured by the volatility indexes and the NYSE TICK readings, and confirmed by the barely changed stock averages. The economic news was very light, although homebuilding has definitely slowed a bit, and the feared earnings collapse has thus far not materialized. Oil prices have continued to recover, holding well above $50 for WTI, leading some pundits to conclude the worst of the price crash is over.

More of my stocks will be going ex-dividend this week than in the past several weeks. One stock that I missed from last week was Procter & Gamble (PG), which went ex-dividend 4/23/2015. PG yields 3.27% as of Friday’s closing price of $81, and is very close to being in buy range. The stock has recently fallen out of favor as performance seems to have stalled lately.

Moving on to this week’s stocks going ex-dividend, they are listed below by date, with the current yield indicated:

4/27/2015

Windstream Holdings (WIN), 7.66%.

4/28/2015

Alliant Energy (LNT), 3.47%, ConAgra (CAG), 2.67%, Enterprise Products Partners LP (EPD), 4.43%, Kinder Morgan Inc. (KMI), 4.33%, ONEOK Partners LP (OKS), 7.51%, Prospect Capital (PSEC), 11.68%, American Capital Agency (AGNC), 12.23%, Enerplus (ERF), 4.80%. Note that PSEC, AGNC, and ERF all are monthly payers, with ERF paying $.05 per month Canadian.

4/29/2015

Realty Income (O), 4.61%, Plains All American Pipeline (PAA), and Legacy Reserves LP (LGCY), 10.60%. O and LGCY are both monthly payers.

4/30/2015

Eaton (ETN), 3.21%, Magellan Midstream Partners LP (MMP), 3.49%.

5/01/2015

Calumet Specialty Products Partners LP (CLMT), 9.85%.

Moving on to earnings, the week just ended saw a number of my stocks reporting. To reiterate my reporting policy, I will only note stocks that reported, and when. Instead of repeating information abundantly available elsewhere, I refer readers wanting specifics to other resources. 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), which frequently makes available transcripts of earnings conference calls, along with other summations and articles. Stocks reporting, by date, were:

4/21/2015

Kimberly Clark (KMB), Verizon (VZ).

4/22/2015

Coca Cola (KO), McDonalds (MCD), AT&T (T), Potlatch (PCH), NuStar Energy LP (NS).

4/23/2015

American Electric Power (AEP), 3M Co (MMM), Altria (MO), MicroSoft (MSFT), Novartis (NVS), Pepsico (PEP), Procter & Gamble (PG), Raytheon (RTN), DrPepper Snapple (DPS), Nucor (NUE), Freeport-McMoran (FCX), Newmont Mining (NEM).

4/24/2015

I missed Ventas (VTR) in last week’s tally of stocks scheduled to report. VTR did report earnings on 4/24/2015.

The pace of reporting will accelerate this week, as earnings season moves into high gear. Reports expected, by date, are:

4/27/2015

Unilever (UL), American Capital Agency (AGNC).

4/28/2015

Kraft Foods (KRFT), Merck (MRK), Pfizer (PFE), United Parcel Service (UPS), Entergy (ETR), Total S A (TOT).

4/29/2015

Eaton (ETN), General Dynamics (GD), NextEra Energy (NEE), Northrop Grumman (NOC), Realty Income (O), Southern Company (SO), Waste Management (WM), Exelon (EXC), Norfolk Southern (NSC), Williams Partners LP (WPZ), MFA Financial (MFA), Linn Energy LLC (LINE), Martin Midstream Partners LP (MMLP), Noble (NE).

4/30/2015

ConocoPhillips (COP), Colgate Palmolive (CL), Alliant Energy (LNT), Royal Dutch Shell (RDS.B), SCANA (SCG), Statoil (STO), ExxonMobil (XOM), Diebold (DBD), Enterprise Products Partners LP (EPD), BlackRock Capital (BKCC), Ensco (ESV).

5/01/2015

Chevron (CVX), Public Service Enterprise Group (PEG), Buckeye Partners LP (BPL).

Last week saw a higher than usual volume of upgrades / downgrades / initiations of coverage on my stocks:

General Mills (GIS) was upgraded from Sell to Neutral at Goldman Sachs.

Colgate Palmolive (CL) was downgraded from Neutral to Sell at Goldman. The downgrade must be because of valuation, CL is performing very well.

Paychex (PAYX) was upgraded from UnderWeight to Neutral at JP Morgan.

Total S A (TOT) was upgraded from Neutral to OutPerform at Credit Suisse.

ConocoPhillips (COP) was downgraded to Hold at Edward Jones, and initiated at Neutral at Nomura.

Sanofi (SNY) was upgraded from Sell to Neutral at Citigroup.

Statoil (STO) was downgraded from Hold to Sell at Deutsche Bank.

American Electric Power (AEP) was initiated at Neutral at Guggenheim.

Southern Company (SO) was initiated at Neutral at Guggenheim.

Exelon (EXC) was initiated at Buy at Guggenheim.

Ensco (ESV) was downgraded to UnderWeight at Morgan Stanley.

Noble (NE) was downgraded to UnderWeight at Morgan Stanley.

Transocean (RIG) was downgraded to UnderWeight at Morgan Stanley.

It appears Morgan Stanley has become bearish on the offshore drilling contractors. Talk about being late with a call. 

Total S A (TOT) was downgraded to Hold at Deutsche Bank.

Royal Dutch Shell (RDS.B) was upgraded from Reduce to Hold at HSBC.

NextEra (NEE) was initiated at Buy at Mizuho.

SCANA (SCG) was initiated at Buy at Mizuho.

Southern Company (SO) was initiated at Buy at Mizuho.

American Electric Power (AEP) was upgraded from Hold to Buy at Deutsche Bank.

MicroSoft (MSFT) was upgraded from Neutral to Buy at Nomura, and from Neutral to OutPerform at Macquarie.

Freeport-McMoran (FSC) was downgraded from Buy to Hold at Clarkson Capital.

Enerplus (ERF) was initiated at Neutral at UBS.

It seems like many if not most of the energy and utility ratings are very late in coming. One could do worse than treating the ratings as contrarian indicators. By the time the last holdouts downgrade energy stocks, it may be time to buy. Now that utilities have had a nice run up, and the buy ratings are coming in, it may be time to sell, or at least hedge. I don’t know if using ratings as contrarian indicators is wise, but based on what I’ve seen over the years, it would seem to be a better bet than using the ratings as actionable indicators according to what they recommend. Of course, one could go on and on about the usefulness or lack thereof of analyst ratings, some of which are truly ridiculous. How about initiating coverage at “Neutral” or “Hold”. It would seem to me that at least at the point of initiating coverage, there should be an opinion registered, pro or con. Otherwise, why initiate coverage? Or what about the “Perform” rating? Perform as compared to what? Analyst reports can be useful to learn about a company and recent history, but are probably not useful for timing buys and sells.

The week ahead will be focused primarily on earnings, as earnings season moves toward the zenith of the period. Thus far, the impact has been minimal. But that may change as more stocks in the challenged energy sector report. Moves either way can present buy / sell opportunities.

JT

After nearly three weeks of minimal volatility, Friday saw a significant sell off, with the headline Dow Industrials Index ending the day down 279 points. A couple of overseas developments were said to have been the cause, new concerns over Greece and new market regulations in China allowing shorting, plus new margin rules. American Express (AXP) reported muted results, blaming the shortfall on the strong dollar, and this theme is expected to recur throughout earnings season as the major international firms present their results in the coming days.    

The week ahead will see fewer of my stocks going ex-dividend than usual:

Colgate Palmolive Co (CL), 4/21/2015, yield 2.19%.

Unilever PLC (UL), 4/22/2015, yield 3.29%.

Gladstone Investment (GAIN), 4/22/2015, yield 9.51%. GAIN pays monthly.

Four of my stocks reported earnings last week on schedule, and one reported early. My resource had indicated that the report from Reynolds American (RAI) would not occur until this week, but the firm actually reported on Thursday 4/16/2015. Other stocks reporting were Intel (INTC) and Johnson & Johnson (JNJ) on 4/14/2015, Kinder Morgan Inc. (KMI) on 4/15/2015, and Phillip Morris (PM) on 4/16/2015. Again, as per my new policy, I will only note stocks that reported, and when. Instead of repeating information abundantly available elsewhere, I refer readers wanting specifics to other resources. 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), which frequently makes available transcripts of earnings conference calls, along with other summations and articles.

Earnings will be in focus even more so this week, as a number of my stocks are scheduled to report. Earnings reports expected, by date, are:

4/21/2015

Kimberly Clark (KMB) and Verizon (VZ).

4/22/2015

Coca Cola (KO), McDonalds (MCD), AT&T (T), Potlatch (PCH), and NuStar Energy LP (NS).

4/23/2015

American Electric Power (AEP), 3M Co (MMM), Altria (MO), MicroSoft (MSFT), Novartis (NVS), Pepsico (PEP), Procter & Gamble (PG), Raytheon (RTN), DrPepper Snapple (DPS), Nucor (NUE), Freeport-McMoran (FCX), and Newmont Mining (NEM).

There isn’t much to get excited about just now. Quality, blue-chip stocks are way over-valued for the most part, with many formerly respectable yields now barely 2%, if that. Energy stocks have recovered some, such that the screaming bargains in major oils have evaporated. The real bargains, miners, drilling contractors, and oil and gas producers have proven to be value traps, as yields have been drastically reduced or eliminated. REITs are once again over-priced. Many BDC’s have terrific yields, but as 2008 illustrated, those stocks will likely not stand up if a major economic storm comes along. My two largest holdings, General Electric (GE) and Kinder Morgan Inc. (KMI), provided some solace last week, which has helped my market morale considerably. GE reported that the firm would be intensifying efforts to exit the financial business and sell off most of GE Capital, and the stock responded to the news with a 10% advance. KMI increased the dividend 6.7% to $0.48/share quarterly, as the firm reported for the first time post-merger. The yield is over 4%, even though the stock price has held up far better than most firms in the troubled energy sector. The price has held onto the big jump that occurred when the reorganization was announced, and in fact has expanded since then, closing Friday at $43.90. Tellingly, Chairman Rich Kinder lamented in the earnings call that “easy access to capital” has limited the availability of acquisition bargains one would expect in a time of stress such as the energy sector is now experiencing. Shareholders can assume that if things get worse, KMI will be the hunter, not the hunted, if bargains surface, as desperate firms look to be acquired (cheaply) as an alternative to bankruptcy.  One thing that is usually true in the market is that winners just keep on winning. And Rich Kinder has certainly been a winner year after year.

JT

Volatility was absent last week, with just one TICK reading all week outside the 1000 range. The volatility indexes VIX, VXO, and VXN readings all reflect that realty, as all three declined over the week, while the major stock averages registered modest gains. Contributing to the calm was a dearth of economic readings during the week, and what did come out yielded no surprises. With earnings season rapidly approaching, this must be the calm before the storm, as numerous pundits have warned that earnings are likely to disappoint the market. And we all know what happens when over-priced high PE stocks report disappointing earnings.

What is the cure for market malaise – dividends, of course? Upcoming ex-dividend dates on stocks I track are:

Fifth Street Finance (FSC), 4/13/2015, yield 10.16%. FSC pays monthly.

Consolidated Communications (CNSL), 4/13/2015, yield 7.30%.

Freeport-McMoran (FCX), 4/13/2015, yield 1.09%, after an 84% dividend cut. See last week’s posting on this topic.

Kayne Anderson Energy Development Company (KED), 4/15/2015, yield 7.25%.

Main Street Capital (MAIN), 4/17/2015, yield 6.72%. MAIN pays monthly.

Two of my stocks reported earnings last week. As per my new policy, I will only note stocks that reported, and when. Instead of repeating information abundantly available elsewhere, I refer readers wanting specifics to other resources. 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), which frequently makes available transcripts of earnings conference calls, along with other summations and articles.

RPM International (RPM) reported on 4/8/2015, and Walgreens Boots Alliance (WBA) reported on 4/9/2015.

As for the week ahead, reports expected are Kinder Morgan (KMI) on 4/13/2015, Intel (INTC) and Johnson & Johnson (JNJ) on 4/14/2015, and Phillip Morris (PM) on 4/16/2015.

Several upgrades / downgrades came out last week on my stocks. I will note the prior rating if available from my resources. Otherwise, I will only note the new rating. The resources I use are ETrade, which always notes the prior rating, and MarketWatch/Benzinga, which frequently only notes the new rating.

MicroSoft (MSFT) was upgraded to OutPerform at Wells Fargo.

Frontier Communications (FTR) was upgraded from UnderPerform to Neutral at DA Davidson.

Coca Cola (KO) was initiated at Hold at Evercore Partners.

Total S A (TOT) was upgraded to OutPerform at RBC Capital.

Annaly Capital (NLY) was downgraded from Market Perform to UnderPerform at FBR Capital.

Entergy (ETR) was reinstated at Equal Weight at Barclays.

Gladstone Investment (GAIN) and Gladstone Capital (GLAD) were both resumed at Neutral at Janney Capital.

Two REITs that I have followed for years that I will be adding to my lists in the next revamp, coming soon, are Home Properties (HME) and Mid America Apartment Communities (MAA). While both have stood the test of time, they are a bit pricey right now, as are most REITs. HME currently yields 4.49%, while MAA yields 4.07%. Both REITs were initiated at Buy last week at Janney Capital.

Probably the most exciting market development last week was the announcement by General Electric (GE) on Friday that it would be selling most of GE Capital and exiting, for the most part, the financial arena. GE has been steadily trending towards being an industrial company and less of a financial company for years, ever since the financial crisis exposed GE’s reliance upon GE Capital. GE has also regained stature and respect as a reliable dividend payer in recent years, as the dividend has been increased steadily since the cut necessitated by the crisis. The stock, which had been stalled for years, gained 10% Friday, following the news. GE has been on my list from the beginning, and is my largest personal holding.

The upcoming week will see earnings starting to be reported, along with several monthly economic releases of note. Included will be PPI, CPI, and Industrial Production, several reads on the housing market, and the usual weekly statistics. While I don’t expect a dramatic increase in volatility this week, it could be a bit livelier than the past two weeks.

JT

Volatility returned briefly to the market last week, with Monday up over 200 and Tuesday down 200, per the headline Dow Industrials stock average, but then things slowed down considerably for the final two days of the short week, as attention possibly turned to chocolate bunnies and such. A rare occurrence of a closed market coinciding with a monthly Jobs Report on Friday capped the week, as the numbers released were considerably short of expectations, frustrating the many apologists for the regime. The market will have to wait to Monday to crash, I suppose, but by then, the shock will likely have subsided.

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

General Dynamics (GD), 4/8/2015, yield 2.06%.

General Mills (GIS), 4/8/2015, yield 3.11%.

Kraft Foods (KRFT), 4/8/2015, yield 2.47%.

AT&T (T), 4/8/2015, yield 5.67%.

Verizon (VZ), 4/8/2015, yield 4.45%.

Darden Restaurants (DRI), 4/8/2015, yield 3.26%.

RPM International (RPM), 4/9/2015, yield 2.18%.

Universal (UVV), 4/10/2015, yield 4.40%.

Freeport-McMoran (FCX), 4/13/2015, yield 1.05%. This one is not until the following week, I realize, but it is noteworthy because of the 84% dividend cut which produces the 1% yield. FCX “diversified” from precious metals into oil and gas a few years ago, a strategy that worked reasonably well until mid-2014. With gold, copper, and oil all down, the dividend cut was expected and necessary.

None of my stocks reported earnings last week, but two are scheduled for the upcoming week. RPM International (RPM) on 4/8/2015, and Walgreens, now known as Walgreen Boots Alliance (WBA), on 4/9/2015. Earnings season for Q1 earnings officially begins on 4/8/2015, when Alcoa (AA), even though no longer a Dow component, reports, but it will still be a couple of weeks before things really get rolling. Market pundits have intimated that this will be a disappointing quarter, with high PE stocks (which includes most stocks) having the potential to generate a market decline if earnings begin to falter. But we have heard that before. Still, this time around, it may well come to pass.

A few upgrades/downgrades of note came out last week on my stocks.

Digital Realty (DLR) was initiated at Neutral at Goldman Sachs.

Kraft Foods (KRFT) was upgraded to Buy at Canaccord Genuity.

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

Linn Energy LLC (LINE) was also downgraded to Sell at UBS.

Transocean (RIG) was upgraded to Neutral at Global Hunter.

Fifth Street Finance (FSC) was downgraded from Buy to Neutral at UBS.

Medley Capital (MCC) was also downgraded from Buy to Neutral at UBS.

Kimberly Clark (KMB) was downgraded from OutPerform to Market Perform at BMO Capital Markets.

Procter & Gamble (PG) was also downgraded from OutPerform to Market Perform at BMO Capital Markets.

The week ahead will be light on economic releases, with the ISM Services Index on Monday and Import / Export Prices on Friday being about it, other than the usual weekly items. The release of the Fed meeting minutes on Wednesday may excite Fed watchers, but I doubt it. Further, as noted earlier, earnings releases will be minimal next week. So, it should be a slow week, unless a major geopolitical event occurs to rattle the markets. Probably the most significant quandary at this point is whether crude oil has seen the bottom, or not, in which case sub-$40 oil prices are in our future. There are many opinions on both sides of the argument, but of course, no one really knows. If you knew that information, you could certainly make a fortune in 2015.

JT

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