Stocks managed a rebound last week, punctuated by an 800 plus point gain in the venerable Dow Industrials Average, with similar percentage gains in the other averages I track. While the gains last week still leaves the averages substantially down from the highs of January, it was a surprise, at least to me and other pundits. Nothing has really changed, so like most observers, I do not expect the gains to continue. But again, who knew this bullish week was coming?

I’m glad I made some buys here and there before last week, as some upcoming dividend payers were approaching bargain territory. The remainder of the month of June and the start of July will see a number of my stocks going ex-dividend, as listed following. The ex-dividend date and current annualized yield is presented for each stock. Assume frequency is quarterly unless otherwise indicated. 

Prospect Capital (PSEC), 6/27/2022, 10.43%. PSEC is a monthly payer.

AGNC Investment (AGNC), 6/29/2022, 12.89%. AGNC is also a monthly payer.

STAG Industrial (STAG), 6/29/2022, 4.70%. STAG is another monthly payer.

Algonquin Power & Utilities (AQN), 6/29/2022, 5.35%.

Ladder Capital (LADR), 6/29/2022, 8.64%.

Goldman Sachs BDC (GSBD), 6/29/2022, 10.60%.

Chimera Investment (CIM), 6/29/2022, 14.88%.

Annaly Capital Management (NLY), 6/29/2022, 14.40%.

National Health Investors (NHI), 6/29/2022, 5.91%.

B & G Foods (BGS), 6/29/2022,7.59%.

Owl Rock Capital (ORCC), 6/29/2022, 9.95%.

Park Hotels & Resorts (PK), 6/29/2022, 0.30%. PK is on my Tier4 list, no longer recommended. The current yield tells you the dividend is effectively gone, now only one cent per quarter.

Ventas (VTR), 6/30/2022, 3.60%.

Realty Income (O), 6/30/2022, 4.37%. O pays monthly.

Phillip Morris International (PM), 6/30/2022, 4.92%.

New Residential (NRZ), 6/30/2022, 10.68%.

Main Street Capital (MAIN), 7/1/2022, 6.91%. MAIN is a monthly payer.

Cisco Systems (CSCO),7/5/2022, 3.54%.

One of my stocks, General Mills (GIS), will be reporting next week, on 6/29/2022.

Of the 17 CEFs I follow, one will be going ex-dividend next week, and another likely will soon follow, but the date has not been announced as yet. Both are monthly payers.

First Trust Intermediate Duration Preferred & Income Fund (FPF), 7/1/2022, 8.45%.

AllianceBernstein Global High Income Fund, Inc. (AWF), ex-dividend date in the range 7/1/2022 to possibly as late as 7/5/2022, 8.15%.

Ratings changes reported by Etrade last week on my stocks were as follows:

Exxon Mobil (XOM) was upgraded from Neutral to Buy at Credit Suisse.

National Health Investors (NHI) was downgraded from OutPerform to Market Perform at BMO Capital Markets.

Kraft Heinz (KHC) was upgraded from Market Perform to OutPerform at BMO Capital Markets.

Welltower (WELL) was upgraded from Neutral to OverWeight at JP Morgan.

Medical Properties Trust (MPW) was downgraded from OverWeight to Neutral at JP Morgan.

Johnson & Johnson (JNJ) was initiated at OutPerform at Daiwa Securities.

Rio Tinto PLC (RIO) was downgraded from OverWeight to Equal Weight at Morgan Stanley.

Kimco Realty (KIM), Mid-America Apartment Communities (MAA), Realty Income (O), and Ventas (VTR) were all initiated at OutPerform at Credit Suisse.

Altria (MO) was upgraded from UnderWeight to Equal Weight at Morgan Stanley.

Iron Mountain (IRM) was initiated at OverWeight at Barclays.

The major question for the week ahead is, “will the rally continue?” My guess is that it will try to, but fail. But we will need some additional bad economic news to resume the decline in earnest. I will mostly stay on the sidelines until we get an average 30% decline from the January highs. At that point, I expect the bargains to be irresistible.

JT

Stocks declined four of the five trading days last week. The exception was Wednesday, when a short-lived relief rally occurred, amazingly, on the day the Fed announced a .75 rate increase. Go figure! While the financial press focuses on the S&P 500 index being more than 20% down from the post-Covid high (23.4% down, as of Friday’s close), it should be noted that the NASDAQ has been down more than 20% for some time, and in fact is now 33.4% down from it’s post-Covid high. Since the technology sector has been hit harder than most, this is really no surprise. The only sector under-performing the NASDAQ is the Crypto arena, with Bitcoin down more than 70% from it’s all-time high, now trading below $20000. So much for the Cryptos being a “store of value” refuge from declining fiat currencies plagued by inflation.

The good news is that many solid companies paying dividends are now becoming available at bargain prices. Stocks on my lists going ex-dividend in the week ahead on the date indicated are listed below, and the current annualized yield is presented. Assume frequency is quarterly unless otherwise indicated. 

Gladstone Investment (GAIN), 6/21/2022, 6.86%. GAIN pays monthly.

Main Street Capital (MAIN), 6/21/2022, 7.24%. MAIN also pays monthly.

SLR Investment (SLRC), 6/22/2022, 11.37%. SLRC switched to paying monthly in March of this year.

Getty Realty (GTY), 6/22/2022, 6.54%.

Prospect Capital (PSEC), 6/27/2022, 10.62%. PSEC is another monthly payer.

Four BDCs and a specialty REIT, that’s it for next week. BDCs are considered high risk, but what isn’t these days? Tech stocks are notoriously volatile, and one-time “widow and orphan” stocks, such as GE and AT&T, have proven to be anything but. I limit my allocation to BDCs and MREITs to a maximum of 20% (in total), and I have seen dividends pile up with some of these names to double or even more than my original cost basis. The same holds true for another disrespected asset class, closed end funds (CEFs). Some I have owned for 15 years or more are trading lower, no doubt, but when you consider the cumulative dividends received, my return would still be respectable, even if I sold immediately.

Speaking of CEFs, of the 17 I track, two went ex-dividend Friday, but were not listed last week because the ex-dividend date had not yet been announced when I posted last week’s update. Two more will be going ex-dividend this week. Most CEFs pay monthly, which is a positive thing – better to be paid monthly rather than quarterly, even if the total received is the same. All of the CEFs listed below pay monthly.

First, the two that went ex-dividend Friday are:

CBRE Global Real Estate Income Fund (IGR), 6/17/2022, 9.54%.

Tekla Healthcare Opportunities Fund (THQ), 6/17/2022, 7.45%.

Next, the two going ex-dividend this week are:

Eaton Vance Tax-Managed Diversified Equity Income Fund (ETY) 6/22/2022, 10.02%.

Miller/Howard High Income Equity Fund (HIE), 6/22/2022, 6.32%.

None of my stocks will be reporting this week.

Ratings changes reported by Etrade last week on my stocks were as follows:

New Residential Investment (NRZ) was downgraded from Neutral to UnderWeight at Piper Sandler. Currently yielding over 12%, NRZ has been a successful “triple play”. I bought it initially via a short put option, have collected several dividends, and have sold covered calls against it three times, each time with the desired result, the options expired worthless. It looked like the 3rd call was going to be “game over” for NRZ until just last week, when the stock declined below my $11 call price, and the option expired Friday, worth zero!

B&G Foods (BGS) was upgraded from UnderWeight to Neutral at Piper Sandler. BGS is on my Tier3 list, I have owned it off and on for years, but I don’t own it at the present time. I sold it in January 2021 at $34.75 when it spiked up suddenly. BGS closed at $23.59 Friday, and with the ex-dividend date of 6/29 coming up, I may start a new position, but very cautiously.

Digital Realty Trust (DLR) was upgraded from Hold to Buy at Deutsche Bank. Yielding 3.9%, closing Friday at $127.18, down from it’s post-Covid high of $178.22, I still can’t get excited about DLR at this time.

JM Smucker Co (SJM) was downgraded from Equal Weight to UnderWeight at Consumer Edge Research.

While not on my lists, since it does not pay a dividend, I note that Warner Bros Discovery (WBD), spun off by AT&T (T) (finally) in April, was resumed at Neutral at JP Morgan. I sold it as soon as the shares showed up in my account, on 4/13/2022 at $25.10. WBD closed Friday at $14.28. WBD may eventually recover, but with no dividend, it didn’t interest me, so I cashed out right away.

Like everyone else, I’m wondering if the sell-off will continue, or has the bottom been reached? I’m pretty much done with selling. In fact, I haven’t sold anything since 2022 began, other than energy stocks. I had known for a long time that I was overweight in energy, so when the sector began coming back to life early this year, I embarked upon a campaign to take advantage and reduce my exposure. Starting in February, I sold OXY, VET, ENB, WMB, SHEL, EPD, MMP, MPLX, and last, also least, HMLP. With the exception of HMLP, all were sold at break-even, or in some cases, much better. I hated to part with EPD, MMP, and MPLX, but I’ve decided to exit these MLPs while I had a nice gain. Even though I am a tax guru and K-1s have been my specialty, it seems to me that the publicly-traded partnership business organization is increasingly becoming out of favor, and so I cashed these out. I have been taking advantage (cautiously) of the sell-off to start new positions in some solid dividend payers, such as UL, VZ, MPW, AQN, and MAIN, to list a few. But as I stated previously, I won’t be “buying with both hands” until the S&P declines 30%. Even then, I’ll hold some level of cash, in case the decline keeps going, maybe to 50%. I actually hope it levels off somewhere between 30% and 40%, but I plan to be ready for whatever comes. My advice is to pay attention, and have a plan for what to do at various levels of gloom. That is, avoid panic selling, and make reasonable buys, recognizing that prices can always go lower.

JT  

Last week started out with two positive days, then declined three days in a row, with the decline accelerating each day from the one before. No one thing can be blamed for the dip, it is more of a multitude of concerns – inflation, shootings, lack of confidence in leaders, interest rises on the horizon, tempering business forecasts, the political divide, and a whole lot more. It remains to be seen if this decline will continue, but there are plenty of pundits forecasting that it will.

When capital gains turn into capital losses, dividends can be the only bright spot in the sea of investing gloom. Stocks on my lists going ex-dividend in the week ahead on the date indicated are listed below, and the current annualized yield is presented. Assume frequency is quarterly unless otherwise indicated. 

Ares Capital (ARCC), 6/14/2022, 8.69%.

Monroe Capital (MRCC), 6/14/2022, 9.94%.

Coca Cola (KO), 6/14/2022, 2.85%.

Altria (MO), 6/14/2022, 7.40%.

Iron Mountain (IRM), 6/14/2022, 4.73%.

Oaktree Specialty Lending (OCSL), 6/14/2022, 9.62%.

Apollo Investment (AINV), 6/15/2022, 8.60%.

Medical Properties Trust (MPW), 6/15/2022, 7.19%.

PennantPark Investment (PNNT), 6/16/2022, 8.37%.

PennantPark Floating Rate Capital (PFLT), 6/16/2022, 9.79%. PFLT pays monthly.

Horizon Technology Finance (HRZN), 6/16/2022, 10.08%. HRZN also pays monthly.

CEFs I follow that will be going ex-dividend next week are as follows. Assume dividends are paid monthly unless otherwise indicated.

Gabelli Dividend & Income Trust (GDV), 6/14/2022, 5.98%.

Dividend and Income Fund (DNIF), 6/14/2022, 10.35%. DNIF pays quarterly.

BlackRock Debt Strategies Fund (DSU), 6/14/2022, 7.59%. 

BlackRock Energy and Resources Trust (BGR), 6/14/2022, 3.54%. 

BlackRock Enhanced Equity Dividend Trust (BDJ), 6/14/2022, 6.51%.

Cohen & Steers Quality Income Realty Fund (RQI), 6/14/2022, 6.69%.

Nuveen Dow 30SM Dynamic Overwrite Fund (DIAX), 6/14/2022, 6.95%. DIAX pays quarterly.

Nuveen Nasdaq 100 Dynamic Overwrite Fund (QQQX), 6/14/2022, 7.80%. QQQX pays quarterly.

Nuveen Real Asset Income and Growth Fund (JRI), 6/14/2022, 8.21%.

Gabelli Utility Trust (GUT), 6/14/2022, 8.26%.

Cohen & Steers Total Return Realty Fund (RFI), 6/14/2022, 6.84%.

None of my stocks will be reporting next week.

Ratings changes reported by Etrade last week on my stocks were as follows:

Exxon Mobil (XOM) was upgraded from InLine to OutPerform at Evercore ISI.

Rio Tinto PLC (RIO) was upgraded from Hold to Buy at Jeffries.

Altria (MO) was downgraded from Equal Weight to UnderWeight at Morgan Stanley.

AGNC Investment (AGNC) was upgraded from Market Perform to OutPerform at Keefe Bruyette.

Annaly Capital Management (NLY) was upgraded from Market Perform to OutPerform at Keefe Bruyette.

Magellan Midstream Partners LP (MMP) was upgraded from Neutral to Buy at Goldman.

Next week will be interesting. After a couple of weeks respite, the downturn resumed in earnest last week. If it continues into next week, the premature headline a couple of weeks ago, proclaiming that the S&P 500 was in “bear market” territory (which it was, but only briefly intraday), will undoubtedly be seen again. Only this time, it likely won’t be just for a brief period intraday. My personal action ‘trigger” will be when the five market averages I track (collectively) indicate a 30% decline from the post-Covid highs. Upon that signal, I will begin buying stocks that are “on sale”. Not all at once, but over a period of weeks, as exceptional bargains present themselves. I will halt when I reach the point whereby my cash position has declined to 25%. If the decline reaches 50%, I will consider further acquisitions. By way of illustration, my cash position was barely 5% in early March 2009, when the decline associated with the “Great Recession” finally turned around. Needless to say, I hope it doesn’t get to that point this time around. Those were dark days indeed.

JT

Stocks declined three out of four trading days in the holiday week just ended, but the overall weekly decline was tempered somewhat by a strong positive day last Thursday. The news cycle was dominated by yet another shooting carried out by a lone gunman, which was possibly much worse than it should have been because of errors by the authorities in charge. Even though drowned out by the headline news events, economic warnings from various authorities had a negative effect on stocks. The consensus, if there is one, of economic leaders is that a 15 year period of rock-bottom interest rates following the 2008-2009 “Great Recession” is at an end, and the period just ahead will see considerable economic turmoil.

Sounds to me like a good time to invest in solid, “blue-chip”, dividend-paying stocks. Stocks on my lists going ex-dividend in the week ahead, and the current annualized yield, are listed following. Assume frequency is quarterly unless otherwise indicated. 

Kimco Realty (KIM), ex-dividend date 6/8/2022, yield 9.17%.

Public Service Enterprise Group (PEG), ex-dividend date 6/8/2022, yield 3.15%.

Williams Companies (WMB), ex-dividend date 6/9/2022, yield 4.50%.

Kimberly-Clark (KMB), ex-dividend date 6/9/2022, yield 3.52%.

That’s it for next week, only four stocks, with just two on my Tier1 ("blue chip") list, KMB and PEG.

Only one of my stocks will be reporting next week, JM Smucker Co (SJM), on 6/7/2022.

None of the CEFs I follow will be going ex-dividend next week.

Ratings changes reported by Etrade last week on my stocks were as follows:

Magellan Midstream Partners LP (MMP) and NuStar Energy LP (NS) were both upgraded from Equal Weight to OverWeight at Wells Fargo.

Park Hotels and Resorts (PK) was upgraded from Hold to Buy at Truist. PK is on my Tier4 list, no longer recommended, having cut their dividend to a penny per quarter. It has recovered somewhat from the Covid decline, and may resume a respectable dividend at some point, but no telling when. Truist definitely has a more sanguine view of PK than I do.

Crown Castle International (CCI) was downgraded from Equal Weight to UnderWeight at Wells Fargo. CCI has been a big winner the past five years, but is fully-valued at this point.

Capital One has weighed in on the health care REITs, initiating coverage at OverWeight on Ventas (VTR), Welltower (WELL), and National Health Investors (NHI), and initiating coverage at Equal Weight on Healthpeak Properties (PEAK) and Omega Healthcare (OHI).

The predicted market decline, whereby at least some of the major averages decline by 20% or more from their post-Covid highs reached in January, has stalled, at least temporarily. The major averages have in fact gained back some ground in the past two weeks. The consensus seems to be that the decline will resume shortly, but of course no one knows what is coming. My view is that a higher than usual cash position is appropriate, and any buys should be incremental, and only when a bargain seems to be available.

JT

Stocks had the best week in quite some time last week, with all of the major averages I track posting a gain for the week. I have been patiently waiting for the S&P 500 to decline 30% from the highs of January before committing capital, but after the prior week’s intraday dip representing a 20% decline, much ballyhooed at the time, the index now is only 12.2% below the January high. Sigh! It remains to be seen whether last week was a turning point or just a temporary aberration, but certainly some of my favorites approaching buy points have moved up out of range.

Stocks on my (updated) lists going ex-dividend in the week ahead and the current annualized yield are listed following. Assume frequency is quarterly unless otherwise indicated. 

Ex-dividend Date 5/31/2022:

K, Kellogg, 3.32%.

O, Realty Income, 4.35%. O is a monthly payer.

SAFT, Safety Insurance Group, 3.82%.

Ex-dividend Date 6/01/2022:

MAIN, Main Street Capital, 6.71%. MAIN pays monthly.

NEM, Newmont, 3.20%. NEM is a mining stock, now on my Tier4 list, but actually pays a decent dividend. But it is currently just below a 5 year high, if I owned it, I would sell on or shortly after the ex-dividend date.

Ex-dividend Date 6/02/2022:

PEP, Pepsico, 2.68%.

GBDC, Golub Capital, 8.40%.

Ex-dividend Date 6/03/2022:

MCD, McDonalds, 2.19%.

GAIN, Gladstone Investment, 5.92%. GAIN pays monthly.

Of the 17 CEFs I currently follow, only 2 will be going ex-dividend next week. Both are monthly payers.

FPF, First Trust Intermediate Duration Preferred & Income Fund, 7.85%.

AWF, AllianceBernstein Global High Income Fund, 7.68%.

None of my stocks are scheduled to report next week.

Ratings changes reported by Etrade last week on my current stocks were as follows:

Realty Income (O) was downgraded from OutPerform to Peer Perform at Wolfe Research.

Pfizer (PFE) was initiated at Market Perform at SVB Leerink.

Johnson & Johnson (JNJ) was resumed at OutPerform at SVB Leerink.

Prudential Financial (PRU) was initiated at Neutral at Citigroup.

Magellan Midstream LP (MMP) was upgraded from Neutral to OverWeight at JP Morgan.

Kraft Heinz (KHC) was downgraded from Neutral to Sell at UBS.

As noted, some stocks approaching attractive buy ranges moved up last week. One example was Main Street Capital (MAIN), sometimes referred to as a “blue chip” quality BDC, if there is such a thing. I have owned MAIN off and on through the years, and most recently purchased it at what later turned out to be the bottom of the Covid decline in March 2020. My record of investing brilliance should have ended at that point, but I fell into the trap of “wanting to ring the cash register” when I had a double in just a couple of months. I did so, then watched as MAIN continued to rise, underscoring that my sell was a mistake. It has declined a little since January, and with a nearly 7% yield, I intend to start a new position next Tuesday, the ex-dividend date. I’ll start with a small position, and add more if the stock and the market resumes the decline that seemed to be underway before last week. Such is the dilemma, when one has a respectable gain, should you stay or should you go? In the case of MAIN, I should have stayed, and ignored the siren song of a quick profit. The number one trait of a successful investor is to have patience, something I resolve to continue to work on.

JT