For the first time since starting this blog in 2011, I will be suspending publication for a time. As a tax preparer, I was swamped with work and missed the weekly posting for the week beginning 4/16/2018, and the following weekend I determined that I would be moving. With a myriad of tasks to be done in connection with the move, I made the decision that I had to have a break from posting. I will continue to monitor the markets and the stocks on my lists, and the website will remain online. I intend to do a thorough review of the stocks on my lists, reorganize the lists, moving some stocks from one list to another, dropping some stocks, and updating buy and sell prices to reflect current realities. I remain convinced that the strategy espoused by OPTIMUMSTOCKINVESTING.COM remains the correct strategy for the patient investor, particularly if retired or nearing retirement. My anticipated time frame for restarting weekly posting is mid to late summer, or early fall at the latest. In closing, I will reiterate what the strategy espoused by this website is and what can be expected when I resume weekly posting.

What is WWW.OPTIMUMSTOCKINVESTING.COM all about?  Namely, to present a comprehensive approach to investing in stocks, with dividends as the foundation, complemented by occasional trades and speculations. A conservative approach to improving returns using options is also incorporated into the strategy. I have an identified subset of stocks I follow, categorized into four lists, or tiers. I originally decreed that the number of stocks followed would be capped at 100, but currently the total is closer to 120. Tier1 stocks are the safest, strongest firms, the least likely to cut their dividends or go bankrupt. Tier1 yields are usually in the low single digits. Tier2 stocks are less safe, with risk factors that Tier1 stocks do not have, and while dividend cuts may occur, the firms are unlikely to go bankrupt, barring a severe economic downturn, or more likely, disastrous management decisions, such as an ill-advised acquisition. For example, MLPs are by definition in this category, as they have a built-in risk factor of an adverse change in the tax code. Tier3 stocks are either high-yield or high potential for capital gains, and can do very well if the economy remains strong or the fundamentals change for the better in their sector. Included here are BDCs, MREITs, rural telecoms, metals miners, and less substantial MLPs. Obviously, if hard times strike, these firms will cut or eliminate their dividends, and may go bankrupt. Tier4 stocks are the “walking dead”, stocks previously on the other lists, but now their dividends are absent or reduced, and bankruptcy is a real possibility. I have given up on these firms, but I will continue to track them as an exercise in masochism, as long as they continue to hang on. There is even a remote chance a Tier4 stock may recover and get back to at least my Tier3 list. Also, occasionally a stock that is being acquired will move to Tier4, since it is no longer recommended, but will be followed for as long as it exists. 

My web site explains the approach I follow in detail, and contains a wealth of information and resources. My acquisition approach is based on the value investing approach outlined by Ben Graham in his classic works, updated a bit for the modern era, with just a hint of a trader’s mindset incorporated. I advocate acquiring a position in a stock incrementally, averaging down with subsequent acquisitions, and limiting holdings in any one stock or sector to a pre-defined maximum. The key take-away I want viewers to gain from my presentation is an understanding of the risks inherent in stocks, as well as the rewards, and the need for caution and diversification, and most of all, the realization that ANYTHING can happen, nothing is 100% safe or guaranteed!

The focus of my weekly postings, also shown on my Facebook Page, is to present new information regarding the stocks I follow, such as upcoming ex-dividend dates, earnings reports, analyst upgrades, downgrades, and reiterations of ratings, plus initiations and resumptions of coverage. I also highlight any other significant developments regarding the stocks on my lists. I  share information of moves I have made, in line with my strategy, and comment on other articles I have read that I feel are of interest.

Regarding analyst ratings,  my standard admonition is that while I’m always interested to learn of analysts’ opinions of stocks I follow, they are to be taken with a grain (or a whole shaker) of salt. That is, I do not treat analyst ratings as actionable advice. For one thing, the ratings changes usually come far too late to be useful. If you haven’t bought or sold by the time the ratings to do so are out, you are probably too late. Also, note that the ratings focus almost exclusively on the near-term expectation of the stock price movement, not the long-term value as an investment, with dividends considered. For upgrades and downgrades, I give the prior rating if available from my source.

The website provides a list of articles I have authored that are available on SEEKING ALPHA, with direct links. Also provided are the stocks on my lists, with a snapshot as of a given date of price, yield, buy price, and consider selling price. Other references are provided as well, including a detailed presentation of the investing approach, including use of options.

Until I Return,

JT

The roller-coaster ride continued last week, with Monday and Friday exhibiting huge declines, while the days in between recorded gains totaling only slightly less than the total declines. The major factor that seems to have the market spooked is a concern over trade and economic repercussions of tariffs. A disappointing monthly Jobs report on Friday contributed to the downdraft at week’s end.

Meanwhile, I am lifted out of my market depression when I tally up the dividends coming my way soon, as follows:

Darden Restaurants (DRI), ex-dividend date 4/9/2018, yield 2.91%. 

General Mills (GIS), ex-dividend date 4/9/2018, yield 4.31%. 

AT&T (T), ex-dividend date 4/9/2018, yield 5.53%. 

Verizon (VZ), ex-dividend date 4/9/2018, yield 2.91%. 

Raytheon (RTN), ex-dividend date 4/10/2018, yield 1.58%. 

Mid America Apartment Communities (MAA), ex-dividend date 4/12/2018, yield 3.99%. 

Freeport McMoRan (FCX), ex-dividend date 4/12/2018, yield 1.10%. 

Consolidated Communications Holdings (CNSL), ex-dividend date 4/12/2018, yield 13.75%. 

General Dynamics (GD), ex-dividend date 4/12/2018, yield 1.68%. 

RPM International (RPM), ex-dividend date 4/16/2018, yield 2.63%. 

PennantPark Floating Rate Capital Ltd (PFLT), ex-dividend date 4/16/2018, yield 8.56%. 

As can be seen, the stratospheric prices the defense stocks RTN and GD have gotten to has dropped their yields to less than 2%. If CNSL can continue to pay out as it has for the 10 years I have owned it, one could not ask for a better deal than what is available today. The dividend experience of Frontier Communications (FTR) and Windstream Holdings (WIN) has spooked everyone from owning telecoms other that AT&T (T) and Verizon (VZ), creating the CNSL opportunity.

RPM International (RPM) reported last week on 4/5/2018 as scheduled, beating earnings estimates by three cents, with revenue in-line.

None of my stocks are scheduled to report in the upcoming week.

A roundup of analyst ratings coming out last week on my stocks is as follows. As always, I list these as being of interest, not as actionable advice.   

Darden Restaurants (DRI) was upgraded from Sector Perform to OutPerform at RBC Capital Markets.

Paychex (PAYX) was upgraded from UnderPerform to Sector Perform at RBCCapital Markets.

Greif (GEF) was downgraded from Buy to Neutral at BofA/Merrill.

Greif (GEF) was upgraded from Market Perform to OutPerform at BMO Capital.

3M Co (MMM) was reiterated at Hold at Stifel.

General Electric (GE) was reiterated at Hold at Stifel.

Transocean (RIG) was upgraded from Hold to Buy at HSBC Securities.

Vodafone (VOD) was upgraded from Neutral to Buy at Citigroup.

GlaxoSmithKline (GSK) was upgraded from Neutral to OutPerform at Exane BNP Paribas.

Merck (MRK) was upgraded from Equal Weight to OverWeight at Barclays.

Magellan Midstream Partners L P (MMP) was upgraded from Hold to Buy at Jeffries.

Intel (INTC) was upgraded from Neutral to Buy at Tigress Financial, and was downgraded from Buy to Hold at Stifel.

Triangle Capital (TCAP) was downgraded from Market Perform to UnderPerform at Raymond James.

Pfizer (PFE) was downgraded from OverWeight to Equal Weight at Barclays.

Buckeye Partners L P (BPL) was reiterated at Equal Weight at Barclays. 

Another week with no trades. Bargains abound in MLPs, BDCs, Telecoms, and REITs. Non-MLP energy stocks are more or less reasonable, as are some staples, such as General Mills (GIS). Most everything else remains overpriced, recent volatility notwithstanding. My take right now is I will take advantage of true bargains when available, but cautiously, which means incrementally. Add a little at a time, never go all-in in one shot. Caution remains the watchword.

JT

Stocks rebounded somewhat on Monday of last week, recovering about half of the huge decline that occurred the latter part of the prior week, then gyrated up and down the rest of the week. The economy continues to improve, but the prospect of tariffs and retaliations continues to put a damper on enthusiasm.

I can always get enthused about stocks on my lists paying dividends in the week ahead, a tally of which follows, with ex-dividend date and yield as indicated..

Kimco Realty (KIM), 04/02/2018, yield 7.71%.

Cisco Systems (CSCO), 04/04/2018, yield 3.17%.

Wheaton Precious Metals (WPM), 04/05/2018, yield 1.74%.

Sysco (SYY), 04/05/2018, yield 2.43%.

Universal (UVV), 04/06/2018, yield 4.61%.

General Mills (GIS), 04/09/2018, yield 4.42%.

Darden Restaurants (DRI), 04/09/2018, yield 2.99%.

Verizon (VZ), 04/09/2018, yield 4.92%.

Only one of my stocks reported earnings last week, Paychex (PAYX) on 3/26/2018, which reported positive results. The stock went up in response to the positive report and upbeat outlook.

Again this week, only one of my stocks is scheduled to report, RPM International (RPM) on 4/5/2018.

A roundup of analyst ratings coming out last week on my stocks is as follows. As always, I list these as being of interest, not as actionable advice.   

Darden Restaurants (DRI) was upgraded from Equal Weight to OverWeight at Stephens.

Eaton (ETN) was upgraded from Hold to Buy at Jeffries.

Intel (INTC) was upgraded from UnderPerform to Market Perform at Raymond James.

MicroSoft (MSFT) was reiterated at OverWeight at Morgan Stanley.

Freeport-McMoRan (FCX) was reiterated at Equal Weight at Morgan Stanley.

Intel (INTC) was reiterated at OutPerform at Baird.

McDonalds (MCD) was reiterated at Equal Weight at Morgan Stanley.

3M Co (MMM) was Reiterated at UnderWeight at Barclays.

Altria (MO) was initiated at Buy at Deutsche Bank.

Statoil (STO) was downgraded from Buy to Neutral at UBS.

Realty Income (O) was upgraded to Buy at DA Davidson.

Exelon (EXC) was upgraded from Sell to Neutral at Goldman.

Duke Energy (DUK) was downgraded from Neutral to Sell at Goldman.

Raytheon (RTN) was initiated at Equal Weight at Barclays.

Statoil (STO) was downgraded from Neutral to Sell at Citigroup.

General Dynamics (GD) was initiated at OverWeight at Barclays.

AT&T (T) and Verizon (VZ) were both upgraded from Hold to Buy at HSBC Securities.

General Electric (GE) was downgraded from Hold to Sell at DZ Bank.

Main Street Capital (MAIN) was initiated at Buy at B. Riley FBR, Inc.

Amerigas Partners LP (APU) was reiterated at Neutral at Citigroup.

Buckeye Partners LP (BPL) was reiterated at Buy at Citigroup.

RPM International (RPM) was initiated at OutPerform at BMO Capital.

Spectra Energy Partners LP (SEP) was reiterated at Neutral at Citigroup.   

Kinder Morgan Inc (KMI) was upgraded from Neutral to Buy at Citigroup.

Paychex (PAYX) was reiterated at Hold at Stifel.

Iron Mountain (IRM) was initiated at Buy at Goldman.

Kimco Realty (KIM) was downgraded from OverWeight to Equal Weight at Morgan Stanley.

Monroe Capital (MRCC) was initiated at Neutral at B. Riley FBR, Inc.

I did not make any trades last week. After the big drop the prior week, I had thought I might see some stocks I am watching move into buy territory, but the decline did not continue. As I have noted before in recent weeks, the current bargain bin is full of REITS, BDCs, and Oil & Gas Pipeline MLPs, some of which are quality. But in the interest of maintaining diversification overall, I am fully subscribed to these sectors, so I cannot in good conscience add more. A couple of famous names not in these sectors that are currently in the bargain bin are General Mills (GIS) and General Electric (GE). I believe GIS is definitely the safer of the two, with the dividend unlikely to be cut, and I would buy it if I didn’t already own it. GE’s dividend, not what it was a few months ago, could be cut even more, or eliminated entirely, but I would still consider GE at today’s price ($13.48) a worthwhile speculation for the patient investor. I believe the new management will right the ship, but it is going to take a long time. As for the market overall, a 2008 style crash does not seem to be imminent, but the economic headwinds are definitely going to get worse in the months and years ahead, so a healthy cash position is the only way to go for the indefinite future, in my opinion. Further, make selective buys only when presented with a truly terrific opportunity, and never go “all in”, on a given stock, or on stocks in general. Remember, an even better bargain may be available in the future, so control yourself by keeping that thought in mind.  

JT  

Stocks resumed their decline last week, with a couple of one-day drops reminiscent of the financial crisis of 2008, at least in terms of point declines. Since the averages, particularly the Dow Industrials, are at much higher levels, the percentage declines are not as much as in 2008. But it is scary enough for most people, especially newbies who haven’t experienced this type of volatility.

Dividends hitting the account certainly can help ease the pain. Following are stocks on my lists going ex-dividend this week.

Apollo Investment (AINV), 3/26/2018, yield 10.70%.

AGNC Investment (AGNC), 3/28/2018, yield 11.51%. AGNC pays monthly.

Annaly Capital Management (NLY), 3/28/2018, yield 11.37%.

Enerplus (ERF), 3/28/2018, yield 0.80%. ERF pays monthly, same as when it was a Canadian Trust. Unfortunately, that is the only thing regarding ERF’s dividend that is the same as those high payout days.

National Health Investors (NHI), 3/28/2018, yield 5.96%.

Nucor (NUE), 3/28/2018, yield 2.49%.

Prospect Capital (PSEC), 3/28/2018, yield 10.65%. PSEC is a monthly payer.

STAG Industrial (STAG), 3/28/2018, yield 6.01%. STAG also pays monthly.

Ventas (VTR), 3/29/2018, yield 6.41%.

Realty Income (O), 3/29/2018, yield 5.28%. O is famously known as “the monthly dividend company”.

Kimco Realty (KIM), 4/02/2018, yield 7.89%.

All 4 stocks listed last week as scheduled to report did so as expected. See last week’s posting for the names and dates. Rather than repeat here information that is abundantly available elsewhere, I point the reader desiring specifics to the firms’ press releases, available on their web sites, compilations of articles on brokerage web sites, the financial press web sites, or my preferred resource, Seeking Alpha. In many cases a transcript of the earnings teleconference with analysts is available on Seeking Alpha.

Only one of my stocks is scheduled to report this week, Paychex (PAYX) on 3/26/2018.

A roundup of analyst ratings coming out last week on my stocks is as follows. As always, I list these as being of interest, not as actionable advice.   

DrPepper Snapple (DPS) was upgraded from Sector Perform to OutPerform at RBC Capital Markets.

Amerigas Partners L P (APU) was downgraded from Neutral to UnderWeight at JP Morgan.  

ONEOK (OKE) was upgraded from Hold to Buy at Jeffries.

Nucor (NUE) was initiated at Buy at Goldman.

Freeport-McMoRan (FCX) was initiated at Buy at Goldman.

HCP Inc (HCP) was reiterated at Market Perform at Wells Fargo.

Senior Housing Properties Trust (SNH) was reiterated at UnderPerform at Wells Fargo.

Kinder Morgan (KMI) was upgraded from Neutral to Buy at BofA/Merrill.

General Mills (GIS) was upgraded from Sell to Hold at Societe Generale, and reiterated at Hold at Stifel.

GlaxoSmithKline (GSK) was upgraded from UnderWeight to Equal Weight at Morgan Stanley. The highest-yielding drug company continues to pay out handsomely, but with all the turmoil in health care and excessive government involvement, one wonders for how much longer. That is why I sold my GSK some time ago, which thus far has seemed to be a mistake.

Royal Dutch Shell (RDS.A, RDS.B) was upgraded from Hold to Buy at Societe Generale.

Sanofi (SNY) was upgraded from Hold to Buy at Liberium.

Unilever (UL, UN) was upgraded from Hold to Buy at Argus.

General Mills (GIS) was upgraded from Neutral to Positive at Susquehanna. I believe the “Cheerios Kid” won’t go under as long as the “Boomers” remain a sizeable component of the population.

Buckeye Partners L P (BPL) was downgraded from OverWeight to Equal Weight at Morgan Stanley. Yielding over 12%, BPL is on my radar, as much as I don’t relish adding to my energy exposure, especially MLPs.

Darden Restaurants (DRI) was reiterated at Buy at Stifel. DRI has defied gravity for so long I hesitate to predict it’s demise, but it may be coming, as DRI declined nearly 10 points over two days last week, following a disappointing forecast.

There certainly are some bargains available, at least based on yield, in today’s market, if one has the fortitude to increase exposure to REITs, BDCs, or Oil & Gas, particularly MLPs. Other than that, while the general decline has knocked prices down a bit, there aren’t many stocks selling at “fire sale” prices. I added to my new MLP holding Energy Transfer Partners L P (ETP) at $16.50 last week, and I’m considering starting a new position in Buckeye (BPL). But I’m holding steady with a larger-than-usual cash position, just in case the recent decline is only the start of something much more serious. At this point, anything is possible. Of course, that has always been true about the stock market, as long-time players know, and newbies are finding out.

JT