Complacency has returned, for another week at least. The Dow Industrials index did not get to triple digits on any day last week, and posted modest gains four days out of five. The index is now above where it was two weeks ago, before things got exciting last week. The political news is as depressing as ever, but the market seems to be handling it well, certainly better than I am.

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

Kellogg (K), 5/30/2017, yield 2.86%.

Realty Income (O), 5/30/2017, yield 4.59%. O pays monthly.

Safety Insurance Group (SAFT), 5/30/2017, yield 4.18%.

Total S A (TOT), 5/31/2017, yield 2.86%.

Pepsico (PEP), 5/31/2017, yield 2.74%.

Gladstone Investment (GAIN), 6/01/2017, yield 8.35%. GAIN pays monthly.

CenturyLink (CTL), 6/01/2017, yield 8.66%.

Ensco (ESV), 6/01/2017, yield 0.59%. Paying $.01/mo, about the only purpose for ESV’s dividend is to keep the machinery working, just in case fortunes should change and a reasonable dividend can be paid once again.

McDonalds (MCD), 6/01/2017, yield 2.51%.

Ventas (VTR), 6/02/2017, yield 4.61%.

Triangle Capital (TCAP), 6/05/2017, yield 9.84%.

Potlatch (PCH), 6/05/2017, yield 3.33%.

None of my stocks reported last week, and none are scheduled to report this week.

A tally of upgrades/downgrades, reiterations, and initiations/resumptions of coverage from the previous week on stocks I track is presented following. For upgrades/downgrades, the previous rating is given, if available from my source.

Blackstone Group L P (BX) was upgraded from Neutral to Buy at Citigroup.

Plains All American Pipeline L P (PAA) was upgraded from Market Perform to OutPerform at Raymond James.

Nucor (NUE) was upgraded from Neutral to OutPerform at Credit Suisse.

Kraft Heinz (KHC) was initiated at Neutral at Piper Jaffray.

Kellogg (K) was initiated at OverWeight at Piper Jaffray.

Reynolds American (RAI) was initiated at Neutral at Piper Jaffray.

Altria (MO) was initiated at OverWeight at Piper Jaffray.

General Mills (GIS) was initiated at UnderWeight at Piper Jaffray.

GlaxoSmithKline (GSK) was upgraded from Hold to Buy at Berenberg.

Chevron (CVX) was downgraded from Neutral to UnderPerform at Exane BNP Paribas.

Alliant Energy (LNT) was initiated at Hold at Jeffries.

That’s it! Last week was a slow week for upgrades / downgrades.

Well, I wish I had some cutting edge market insights to share, but unfortunately, I don’t. Stocks continue to levitate, seemingly held up by some unseen, inexplicable force. A downturn is coming, but no one knows when, and it may be a long way off. Realty Income did not remain in the bargain bin for long. Immediately after I bought at $53, it bounced back up above $55. I regret being too cautious. I now wish I had bought more than I did. But I did find an interesting article on O on Seeking Alpha. The gist of the article is that O is priced for a higher pace of dividend growth than is likely to occur. The author concedes that O is well-run and has stable tenants, but that O will not see the favorable lease renewals that it has been able to achieve historically, as the top-flight tenants O typically has will have much more bargaining power amidst a retail depression than they have had historically. The author may well have a valid point. I like O under $53, and I like it even more under $50. I’ll hold what I bought, and wait until I can average down before buying more.

JT 

The market was dislodged from its complacency last week, as the political storm emanating from Washington reached a crescendo on Wednesday, with the Dow Industrials recording a 373 point decline on the day. Stocks rebounded Thursday and Friday, recovering 60% or so of the lost ground, as the President left town on his first foreign trip since the election. He was probably glad to be getting away, and most of Washington, even his few supporters, were probably glad as well, as all probably need a break from the ongoing drama.

Drama or not, my dividend payers continue to pay. Stocks on my lists scheduled to go ex-dividend this week are as follows:

Hershey Co (HSY), 5/23/2017, yield 2.23%.

Pitney Bowes (PBI), 5/24/2017, yield 5.04%.

Enerplus (ERF), 5/24/2017, yield 1.10%. ERF pays one cent CAN monthly, which equates to $.0074 US.

Johnson & Johnson (JNJ), 5/25/2017, yield 2.65%.

NextEra Energy (NEE), 5/25/2017, yield 2.87%.

AGNC Investment (AGNC), 5/26/2017, yield 10.80%. AGNC pays monthly.

STAG Industrial (STAG), 5/26/2017, yield 5.37%. STAG also pays monthly.

Realty Income (O), 5/30/2017, yield 4.70%. O is a long-time monthly payer, touting itself as “The Monthly Dividend Company”.

Kellogg (K), 5/30/2017, yield 2.97%.

Safety Insurance Group (SAFT), 5/30/2017, yield 4.19%.

Two stocks going ex-dividend last week that I missed were Kraft Heinz (KHC), 5/17/2017, yield 2.66%, and Pan American Silver (PAAS), 5/19/2017, yield 0.58%. PAAS is obviously not a dividend play, but a precious metals speculation.

The three stocks on my lists expected to report last week all did so, Cisco Systems (CSCO) on 5/17/2017, and Apollo Investment (AINV) and Wal-Mart Stores (WMT), both on 5/18/2017. For earnings details, see the firm’s press releases, articles on the mainstream financial media, brokerage compilations, or my preferred resource, Seeking Alpha.

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

A tally of upgrades/downgrades, reiterations, and initiations/resumptions of coverage from the previous week on stocks I track is presented following. For upgrades/downgrades, the previous rating is given, if available from my source.

Senior Housing Properties Trust (SNH) was downgraded from OutPerform to Sector Perform at RBC Capital Markets.

Cisco Systems (CSCO) was upgraded from Equal Weight to OverWeight at Morgan Stanley.

CenturyLink (CTL) was downgraded from Market Perform to UnderPerform at Raymond James.

Exelon (EXC) was upgraded from Neutral to Buy at UBS.

Fifth Street Financial (FSC) was downgraded from Buy to Hold at Deutsche Bank.

Johnson & Johnson (JNJ) was upgraded from Neutral to OverWeight at JP Morgan.

Pitney Bowes (PBI) was downgraded from Buy to Neutral at Sidoti.

Washington Real Estate (WRE) was upgraded from Neutral to OutPerform at Robert W Baird.

Sysco (SYY) was initiated at Buy at Loop Capital.

DrPepper Snapple (DPS) was upgraded from Equal Weight to OverWeight at Morgan Stanley.

RPM International (RPM) was upgraded from Neutral to Buy at Seaport Global Securities.

Valero (VLO) was downgraded from Buy to Neutral at Goldman.

Pfizer (PFE) was downgraded from Neutral to Sell at Citigroup.

ConocoPhillips (COP) was upgraded from Hold to Buy at Jeffries.

Digital Realty (DLR) was downgraded from OutPerform to Market Perform at Wells Fargo.

Transocean (RIG) was initiated at Sell at Odeon Capital.

Windstream Holdings (WIN) was upgraded from UnderPerform to OutPerform at Raymond James. 

Triangle Capital (TCAP) was initiated at Buy at Wunderlich.

Cisco Systems (CSCO) was reiterated at OutPerform at RBC Capital Markets.

Main Street Capital (MAIN) was reiterated at OutPerform at RBC Capital Markets.

Johnson & Johnson (JNJ) was reiterated at Hold at Stifel.

Noble Corp PLC (NE) was upgraded from Reduce to Neutral at Nomura.

Wal-Mart Stores (WMT) was reiterated at OutPerform at Telsey Advisory Group.

Wal-Mart Stores (WMT) was upgraded to Market Perform at BMO Capital.

I made a new buy last week, as old favorite Realty Income (O) dropped, along with many other REITs considered to be involved in retail properties, as the impending “death” of malls and associated mall anchor department stores made headlines. There is no doubt that malls and many famous name department stores (think Sears, JC Penny, Dillards, etc) usually situated in malls are hurting, pressured by discounters, new entrants, and online retailers (mainly Amazon), but Realty Income is not nearly as exposed to these trends as many other retail REITs. I sold O too early in June 2016 at $66, as I typically do, and watched as it soared to a high of $72, and I have been waiting for a chance to get back in ever since. That opportunity came along last Wednesday with the latest REIT sell off, when I was able to buy O at $53, starting a new position in the stock. Again, as is typical, I wish I had bought more than I did, as the stock reversed course and closed Friday at $54.20. Still, I see O as a buy below $55, and with the next ex-dividend coming up on 5/30/2017, I plan to buy more this week, assuming it doesn’t take off like a rocket and soar out of my preferred buy range. Of all the stocks I track, O is about the only buy I can recommend just now.

JT

Regular followers of this blog may have noticed that I missed posting last week, as a spur-of-the-moment ski trip took priority over my blog report. If there ever was a good time to skip a week, last week was it. Over the last 10 trading days, the averages have barely moved, as evidenced by the headline Dow Industrials index logging only one day changing by more than 50 points, a 55 point gain on 5/5/2017. As you might expect, the VIX has reflected the complacency of these times, as several pundits have noted.

I will post a complete list of stocks I track that have announced ex-dividend dates since my last post, even though it obviously is too late to buy and still get the dividend for ex-dividend dates of 5/15/2017 or earlier.

Energy Transfer Partners L P (ETP), 5/8/2017, yield 9.35%.

Amerigas Partners L P (APU), 5/8/2017, yield 8.65%.

Energy Transfer Equity L P (ETE), 5/8/2017, yield 6.14%.

Paychex (PAYX), 5/8/2017, yield 3.22%.

American Electric Power (AEP), 5/8/2017, yield 3.49%.

Boardwalk Pipeline Partners L P (BWP), 5/9/2017, yield 2.20%.

Entergy (ETR), 5/9/2017, yield 4.62%.

Pfizer (PFE), 5/10/2017, yield 3.87%.

Smucker JM Co (SJM), 5/10/2017, yield 2.40%.

Wal-Mart Stores (WMT), 5/10/2017, yield 2.68%.

Emerson Electric (EMR). 5/10/2017, yield 3.30%.

Exxon Mobil (XOM), 5/10/2017, yield 3.73%.

Hercules Capital (HTGC), 5/11/2017, yield 9.68%.

Spectra Energy Partners L P (SEP), 5/11/2017, yield 6.44%.

United Parcel Service (UPS), 5/11/2017, yield 3.19%.

ConocoPhillips (COP), 5/11/2017, yield 2.24%.

Southern Co (SO), 5/11/2017, yield 4.66%.

Sanofi  (SNY), 5/11/2017, yield 3.42%. SNY only pays once a year, so if you missed it this time around, you will be waiting awhile to realize any income from SNY.

Exelon (EXC), 5/11/2017, yield 3.91%.

Statoil (STO), 5/11/2017, yield 3.98%. Note that the yield is before foreign tax withholding.

Buckeye Partners L P (BPL), 5/11/2017, yield 7.53%.

Valero (VLO), 5/15/2017, yield 4.22%.

MicroSoft (MSFT), 5/16/2017, yield 2.28%.

Gladstone Investment (GAIN), 5/17/2017, yield 8.41%. GAIN pays monthly.

3M Co (MMM), 5/17/2017, yield 2.39%.

Chevron (CVX), 5/17/2017, yield 4.07%.

Main Street Capital (MAIN), 5/17/2017, yield 5.81%. MAIN pays monthly.

Horizon Technology Finance (HRZN), 5/17/2017, yield 10.79%. HRZN is also a monthly payer.

Duke Energy (DUK), 5/17/2017, yield 4.12%.

Royal Dutch Shell PLC (RDS.B), 5/17/2017, yield 6.56%.

Pan American Silver (PAAS), 5/19/2017, yield 0.60%. Holding PAAS is a speculation on silver. It obviously is not owned because of the dividend.

Stocks on my list reporting last week were as follows, by reporting date:

5/8/2017

Sysco (SYY), TICC Capital (TICC), PennantPark Investment (PNNT).

5/9/2017

Plains All American Pipeline L P (PAA), Duke Energy (DUK), National Health Investors (NHI), Pan American Silver (PAAS), Prospect Capital (PSEC).

5/10/2017

Spectra Energy Partners (SEP).

For earnings details, see the firm’s press releases, articles on the mainstream financial media, brokerage compilations, or my preferred resource, Seeking Alpha.

As for the week ahead, only three stocks in the universe of stocks I follow will be reporting, as earnings season ends:

5/17/2017

Cisco Systems (CSCO).

5/18/2017

Apollo Investment (AINV), Wal-Mart Stores (WMT).

A tally of upgrades/downgrades, reiterations, and initiations/resumptions of coverage from the previous two weeks on stocks I track is presented following. For upgrades/downgrades, the previous rating is given, if available from my source.

Freeport-McMoRan (FCX) was reiterated at Market Perform at FBR & Co.

Energy Transfer Partners L P (ETP) was downgraded to Neutral at Credit Suisse.  

Frontier Communications (FTR) was downgraded to Market Perform at Cowen & Co, to Neutral at UBS, and from Sell to Neutral at Citigroup.

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

Magellan Midstream Partners L P (MMP) was upgraded from UnderPerform to Neutral at Credit Suisse.

Kellogg (K) was reiterated at Neutral at UBS, and at Sector Perform at RBC Capital Markets.

Buckeye Partners L P (BPL) was upgraded from Hold to Buy at Stifel.

Transocean (RIG) was reiterated at Buy at R F Lafferty.

MFA Financial (MFA) was upgraded from UnderPerform to Market Perform at Wells Fargo.

Energy Transfer Partners L P (ETP) was upgraded from Hold to Buy at Robert W Baird and also at Stifel, plus was upgraded to OutPerform at Credit Suisse.

AT&T (T) was upgraded from UnderPerform to Neutral at Tigress Financial.

Wal-Mart Stores (WMT) was initiated at Buy at Gordon Haskett.

Nucor (NUE) was initiated at Neutral at Longbow.

Sysco (SYY) was reiterated at Equal Weight at Barclays, and at Sector Perform at RBC Capital Markets.

Calumet Specialty Products Partners L P (CLMT) was upgraded from Market Perform to OutPerform at Wells Fargo.

General Dynamics (GD) was downgraded from OutPerform to Market Perform at Bernstein.

Energy Transfer Partners L P (ETP) and Energy Transfer Equity L P (ETE) were both upgraded from Market Perform to OutPerform at Bernstein.

Plains All American Pipeline L P (PAA) was reiterated at Hold at Stifel.

Main Street Capital (MAIN) was downgraded from Market Perform to UnderPerform at Raymond James.

Prospect Capital (PSEC) was downgraded from OutPerform to Market Perform at FBR & Co.

Exxon Mobil (XOM) was upgraded from Neutral to Buy at BofA/Merrill.

Sanofi (SNY) was downgraded from Buy to Hold at Berenberg.

ConocoPhillips (COP) was downgraded from Buy to Neutral at BofA/Merrill.

PennantPark Investment (PNNT) was downgraded from Market OutPerform to Market Perform at JMP Securities.

Pan American Silver (PAAS) was reiterated at Market Perform at FBR & Co.

Williams Partners (WPZ) was upgraded from Neutral to OutPerform at Credit Suisse.

The immediate outlook is for more of the same, as far as investor complacency is concerned. There is a general consensus that stock prices are high just now, and that entry at these levels will generate negligible returns, if not actual losses. Further, with a looming governmental debt/entitlements crisis brewing, a major decline at some point is likely. What to do? I am holding at a cash position of around 30%, a five-year high for me. I will only sell out of remaining decently-yielding positions if a gain equating to five or more years’ worth of dividends can be gleaned. I refuse to buy at multi-year highs, but will initiate or add to existing positions (assuming my maximum allocation to a position has not been reached) when pull-back opportunities are presented. Even though a crash is possible, no one can predict when it will occur. If going long, go with quality, and plan on holding for a long time. If going short, you may come up with a big score, but more likely, you will see minimal results as the market continues holding up, thereby refusing to do what it “should” do. Above all, remain diversified.

JT  

Stocks gained early last week, with Monday and Tuesday posting triple-digit gains on the venerable Dow Industrials index, then mostly marked time the rest of the week. The reason for the upsurge was that the Sunday French election result was perceived to be a win for European stability. The geopolitical news continues to dominate the headlines, which is generally a negative for the markets.

Meanwhile, dividend payers just keep on paying. Stocks on my lists going ex-dividend this week are as follows:

Williams Partners UNT (WPZ), 5/2/2017, yield 5.86%. WPZ is being dropped from the Cushing 30 MLP Index, the Cushing MLP High Income Index, and the Cushing MLP Market Cap Index as a consequence of a distribution cut from $.85 / unit to $.60 / unit.

Eaton (ETN), 5/3/2017, yield 3.14%.

Intel (INTC), 5/3/2017, yield 2.91%.

Unilever PLC (UL), 5/3/2017, yield 2.78%.

NuStar Energy L P (NS), 5/4/2017, yield 8.99%. Incidentally, NS is replacing WPZ in the Cushing MLP indexes.

Crestwood Equity Partners L P (CEQP), 5/4/2017, yield 9.54%.

HCP Inc (HCP), 5/4/2017, yield 4.70%.

Martin Midstream Partners L P (MMLP), 5/4/2017, yield 10.18%.

Welltower (HCN), 5/5/2017, yield 4.82%.

Amerigas Partners L P (APU), 5/8/2017, yield 8.39%.

Paychex (PAYX), 5/8/2017, yield 3.07%.

American Electric Power (AEP), 5/8/2017, yield 3.47%.

Earnings reports are coming out at a furious pace, as we reach the peak of earnings season. Last week, 39 stocks I follow reported. See last week’s post for the names and dates. For earnings details, see the firm’s press releases, articles on the mainstream financial media, brokerage compilations, or my preferred resource, Seeking Alpha. As for the week ahead, another 47 stocks in the universe of stocks I follow will be reporting, as follows:

5/1/2017

Boardwalk Pipeline Partners L P (BWP), Amerigas Partners L P (APU), Safety Insurance Group (SAFT).

5/2/2017

Altria (MO), ConocoPhillips (COP), Crestwood Equity Partners L P (CEQP), Eaton (ETN), Emerson Electric (EMR), Enterprise Products Partners L P (EPD), HCP Inc (HCP), Merck (MRK), Pfizer (PFE), Pitney Bowes (PBI), Frontier Communications (FTR), Horizon Technology Finance (HRZN), ONEOK Partners L P (OKS), STAG Industrial (STAG). Note that PBI, a noted “buggy whip” firm, is a new addition to my Tier3 high-yield group. While I concede PBI is certainly in a declining business, I like it under $13, with a yield nearly 6%.

5/3/2017

Ares Capital (ARCC), Magellan Midstream Partners L P (MMP), Reynolds American (RAI), TICC Capital (TICC), Alliant Energy (LNT), Annaly Capital Management (NLY), BlackRock Capital Investment (BKCC), CenturyLink (CTL), Energy Transfer Equity L P (ETE), Legacy Reserves L P (LGCY), Transocean (RIG), Triangle Capital (TCAP).

5/4/2017

Archrock Partners L P (APLP), Consolidated Communications Holdings (CNSL), Diebold Nixdorf (DBD), Kellogg (K), Medical Properties Trust (MPW), MFA Financial (MFA), Royal Dutch Shell (RDS.B), Windstream Holdings (WIN), Main Street Capital (MAIN), Noble Corp PLC (NE), Statoil (STO).

5/5/2017

Buckeye Partners L P (BPL), Enerplus (ERF), Exelon (EXC), Senior Housing Properties Trust (SNH), Welltower (HCN), Memorial Production Partners L P (MEMP).  

With a couple of the ill-fated energy production MLPs scheduled to report, specifically LGCY and MEMP, it continues to amaze me how these firms could collapse so completely. LGCY and MEMP appear slated to join fellow travelers Linn Energy L P (LINE) and Breitburn Energy Partners L P (BBEP) in bankruptcy soon. The off shore drillers, such as Transocean (RIG), Ensco (ESV), and Noble Corp PLC (NE), are down, but not out, with strong balance sheets at the outset of the crisis and contracted business allowing them to hold on to some extent. Seadrill (SDRL) will likely not last much longer, but even that firm has held on better than the production MLPs. Granted, no one predicted an extended price collapse caused by an oil glut, but certainly these firms should have had a strategy to cope better than they have if it should happen. I bought into all of the above at “bargain” prices, expecting a one to two year drought, followed by a gradual recovery. At two years and counting, it doesn’t look good, but if crude can get back up to $60 or so, the offshore drillers will probably survive. Unfortunately, it looks like all four of the production MLPs I bought into will fail, as two already have. Such is speculation.

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

General Electric (GE) was reiterated at OutPerform at RBC Capital Markets.

Nucor (NUE) was upgraded from UnderPerform to Neutral at Macquarie.

Welltower (HCN) was downgraded to UnderPerform at Evercore ISI Group.

HCP Inc (HCP) was downgraded from Inline to UnderPerform at Evercore ISI Group.

NuStar Energy L P (NS) was reiterated at Hold at Stifel.

General Electric (GE) was downgraded from Buy to Neutral at BofA/Merrill.

ConAgra (CAG) was downgraded from Neutral to Sell at UBS.

McDonalds (MCD) was reiterated at OutPerform at Telsey Advosory Group.

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

Valero (VLO) was reiterated at OutPerform at RBC Capital Markets.

McDonalds (MCD) was reiterated at OutPerform at RBC Capital Markets.

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

General Dynamics (GD) was reiterated at OutPerform at RBC Capital Markets, and at Hold at Stifel.

Cisco Systems (CSCO) was upgraded from UnderPerform to OutPerform at Credit Suisse.

MicroSoft was initiated at OutPerform at Credit Suisse.

General Dynamics (GD) and Procter & Gamble (PG) were both reiterated at Hold at Stifel.

MicroSoft was reiterated at OutPerform at BMO Capital.

Martin Midstream Partners L P (MMLP) was downgraded from Buy to Hold at Stifel.

The week ahead will likely have plenty of drama, with political news, geopolitical developments, and more earnings results. The major stock averages are somewhat extended once again. The likelihood of robust gains from here seems remote indeed, but a relief rally could ensue if there was just an eenie, teenie bit of positive news. I say don’t hold your breath waiting for it, you’ll probably asphyxiate yourself!

JT