Since I am now posting only once a week, it is much more convenient for me to post on Sunday night instead of Monday morning, so I will be following that script most weeks from now on. As for next week, I will either skip posting entirely, or delay by an extra day, since I will be traveling and not able to post per my normal schedule.

Stocks gained four out of five days last week, and even with a dip on Friday, the venerable Dow Industrials index managed to close above 17000 on the week, reaching that level for the first time this week since July 24^th. We have not seen the S & P 500 close above 2000 yet, but it is getting close. Several stocks on my lists that were not too extended as the mini-correction was under way have long since moved back out of range, so for the first time in a while I made no buys or sells all week.

Stocks on my lists going ex-dividend the last week of August, by date, are as follows:

8/27/2014

NextEra Energy (NEE), yield 2.97%.

Molson Coors (TAP), yield 2.00%.

Prospect Capital (PSEC), yield 12.15%. The BDC pays a monthly dividend.

CenturyLink (CTL), yield 5.29%. I own CTL, and I sold a $35 October call against the shares some time ago. With CTL well above $40, it was obviously not a good move. This illustrates the major downside of the strategy. I suspect I’ll never see this dividend. It will likely be called away before the ex-dividend date.

8/28/2014

McDonald’s (MCD), yield 3.43%.

Kellogg (K), yield 3.05%.

Northrop Grumman (NOC), yield 2.19%.

Realty Income (O), yield 4.86%. The “monthly dividend company” pays accordingly.

Safety Insurance Group (SAFT), yield 5.11%.

A couple of my stocks reported last week:

Medtronic (MDT) reported on Tuesday 8/19/2014 that FQ1 EPS was $0.93, beating by a penny. Revenue of $4.27B, up 4.7% Y/Y, beat by $20M.

J. M. Smucker (SJM) reported on Wednesday 8/20/2014 that FQ1 EPS was $1.34, missing by three cents. Revenue of $1.32B, down 2.2% Y/Y, missed by $50M.

With SJM and MDT sporting yields of 2.53% and 1.92%, respectively, I ask myself, as a dividend-focused investor, why are they on my lists? They, along with several others, will likely be dropped when I do my next purge. At this time, I’m not sure when that will be, but no stock is going to reach my recommended buy-under price with a yield under 3%.

Stocks on my list scheduled to report this week are:

Prospect Capital (PSEC), 8/25/2014, after the close. PSEC is a week delayed from the date given a week earlier by E*Trade’s web site.

Roche Holdings LTD (RHHBY), 8/25/2014, per E*Trade’s web site. But the RHHBY web site says the “half-year” report was issued by the Swiss Pharmaceutical firm on 7/24/2014. One drawback of investing in foreign firms is they generally provide less information, as well as less-regularly, than U.S. firms. The “half-year” report, per the firm’s web site, stated that RHHBY posted a “solid sales performance”, with the HER2 franchise up +20%, Avastin up +6%, and Professional Diagnostics up +9%. Core EPS growth was up 7%, and operating free cash flow was up 11%. With an annual dividend providing a yield of barely 3%, I’m wondering if RHHBY is worth the effort to keep up with it.

Moving on, Seadrill (SDRL) will report on 8/27/2014, before the open, while Grief (GEF, GEF.B) will report on that date also, after the close.

The “dog days of August” are certainly upon us here in Austin, with temperatures routinely up to triple digits (degrees Fahrenheit). The market seems over-heated as well, as stocks continue to climb the proverbial “wall of worry”, with national and international events providing plenty for market participants to worry about. There will be an extended sell off somewhere along the way, but who can say when? Until then, I will watch and wait. If a Warren Buffet “fat pitch” (defined as an outstanding investment opportunity) should come along, I will take a swing. Until then, I’ll just be an observer.  

JT

Stocks managed to eke out minimal gains last week, with the major averages finishing at least a little ahead of the prior week closing levels. While certainly unimpressive from a bullish standpoint, it was notable in that the results confirmed that the correction that we seemed to be having as the month began effectively concluded after a week or so into the month. The week ahead should consist of more of the same, as the end of summer doldrums continue. Notable economic releases on tap are the latest CPI readings and a couple of reads on the state of housing, which has slowed down lately.

No doubt the big news of the week, as far as my stocks are concerned, was the bombshell dropped by Rich Kinder and friends, as it was announced that The Kinder Morgan group will consolidate into the C-corp entity, KMI, with the three other MLP entities ceasing to exist after all is said and done. This was indeed a shocker, as Kinder Morgan was one of the pioneers of the MLP structure. Numerous analyses have been published explaining what it all means and why it makes sense, and the initial market response was quite favorable, as all of the Kinder Morgan entities posted substantial gains last week. My personal holdings of KMI and related MLPs comprised my second largest holding (GE being my largest), so I was affected. After some reflection, I remembered my rule, which I noted a few postings ago that I had regretfully failed to apply in the case of WPZ after a one-day jump. The rule is, “when the market gives you a gift, take it”. I still believe in the Kinder Morgan story, but I decided to sell all of my MLP holdings in the group, which wasn’t a lot since I had previously sold all of my KMP, and I only had a small position in EPB, and I also sold 20% of my KMI holdings. I will hold the remainder in KMI, which will still be my second largest holding overall.

Moving on to more mundane matters, stocks on my lists going ex-dividend this week are:

Main Street Capital (MAIN), 8/18/2014, yield 6.12%.

Microsoft (MSFT), 8/19/204, yield 2.50%.

Walgreens (WAG), 8/19/2014, yield 2.19%.

3M Co (MMM), 8/20/2014, yield 2.41%.

Diebold (DBD), 8/20/2014, yield 3.13%.

Transocean (RIG), 8/20/2014, yield 7.66%.

Pan American Silver (PAAS), 8/21/2014, yield 3.52%.

Johnson & Johnson (JNJ), 8/22/2014, yield 2.77%.

With the exceptions of MAIN and RIG, nothing to get excited about with these yields. I added to my RIG position last week, as the drillers all swooned on the recent decline in crude prices.

One ex-dividend I missed last week was Hercules Technology Growth Capital (HTGC), a BDC specializing, presumably, in technology companies. HTGS went ex-dividend on 8/14/2014, yielding 7.85%. An occasional miss can occur when firms do not announce until just before the ex-dividend date, since I only review my stocks, looking for upcoming ex-dividend dates, once a week, each weekend.

A few earnings season stragglers on my lists reported last week:

Sysco (SYY) reported 8/11/2014 that FQ4 EPS was $0.50, in-line. Revenue of $12.3B, up 6.0% Y/Y. beat by $160M.

Cisco (CSCO) reported on 8/13/2014 that FQ4 EPS was $0.55, beating by two cents. Revenue of $12.4B, flat Y/Y, beat by $260M. While the earnings were pretty decent, the stock sold off after the conference call, as the firm issued cautious guidance, and announced that 6000 jobs would be eliminated.

Pan American Silver (PAAS) reported 0n 8/13/2014 that Q2 EPS was $0.01, missing by two cents. Revenue of $200.8M, up 14.4% Y/Y, beat by $4.89M. I sold out of PAAS some time ago for a quick gain, expecting to get back in as silver prices remain under pressure. But even as silver prices indeed dropped again, PAAS never declined back to the lows where I had bought earlier. I may pick up some PAAS this week ahead of the ex-dividend, as a contrarian play that also pays out a small consolation in the form of a dividend. Of course, like all miners, that dividend is subject to being cancelled if things get bad enough for the business.

Wal-Mart (WMT) reported 8/14/2014 that Q2 EPS was $1.21, in-line. Revenue of $120.12B, up 2.8% Y/Y, beat by 1.12B. Lately the news on WMT has indicated the giant is wobbling a bit. Maybe so, but the numbers are good, and the stock, while down to $74 or so from $80, has not come down all that much. Even with a yield under 3%, I would be a buyer if it would come down just a little more, considering the available opportunities elsewhere (NOT) these days.

Three more stragglers on my lists will report this week:

Prospect Capital (PSEC), 8/18/2014, after the close.

Medtronic (MDT), 8/19/2014, before the open.

Smucker J M Co (SJM), 8/20/2014, before the open.

While not on my current lists, Hewlett Packard (HPQ) will report on Monday 8/18/2014, after the close. HPQ is a tech bellwether, sort of anyway, and it will be interesting to see how the results come in, and whether the recovery under Meg Whitman continues. HPQ has surprised a number of folks, myself included, with its progress, considering the generally acknowledged slowdown in the traditional PC hardware business, which is primarily the business that HPQ is in. 

Barring some sort of new geopolitical shock, I don’t expect much to be going on with stocks this week, as we move deeper into the “Dog Days of August”. I will be watching, as sometimes an outsized move in a given stock can occur because of a thin market, on news that normally wouldn’t have much effect.

JT

Last week had two up days, two down days, and one flat day, with the end result being a slight net gain. Unless the decline resumes in a big way this coming week, it appears that the pullback has ended like all the others in recent memory – somewhat less than a meaningful correction. Last week was a light week for economic data releases, so the market was driven mostly by earnings, as the results from Q2 continue to come in, and also affecting the mood, the always present, and always depressing, geopolitical news.

Several of my stocks will be going ex-dividend this week:

Exxon Mobil (XOM), 8/11/2014, yield 2.77%.

Boardwalk Pipeline Partners LP (BWP), 8/12/2014, yield 2.08%. Even though I no longer count BWP as a recommended stock, I will continue to track it as long as it is a viable entity. BWP has recovered a large part of the decline of a few weeks ago, but with this low yield, it has no attraction for me, even if the recovery continues.

Entergy (ETR), 8/12/2014, yield 4.57%.

Emerson Electric (EMR), 8/13/2014, yield 2.74%.

Royal Dutch Shell (RDS.B), 8/13/2014, yield 4.44%.

Smucker J M Co (SJM), 8/13/2014, yield 2.51%.

Exelon (EXC), 8/13/2014, yield 3.86%.

Fifth Street Finance (FSC), 8/13/2014, yield 10.16%. FSC pays monthly.

United Parcel Service (UPS), 8/14/2014, yield 2.79%.

Spectra Energy Partners LP (SEP), 8/14/2014, yield 4.31%.

Chevron (CVX), 8/15/2014, yield 3.35%.

Stocks on my lists receiving upgrades / downgrades last week were:

American Electric Power (AEP) was downgraded from OverWeight to Equal Weight at Morgan Stanley.

Chevron (CVX) was downgraded from OverWeight to Equal Weight at Morgan Stanley.

Ensco PLC (ESV) was downgraded from Hold to Sell at Deutsche Bank, as was Transocean (RIG). Energy-related stocks have been hit by a decline in oil prices lately, with the deep water contract drillers leading the way down. On my lists, that would be ESV, RIG, and Seadrill (SDRL). Note that all three are on my Tier3 list, my highest risk grouping. I have small positions in these stocks, and I may add more soon. While I don’t believe any of these is an immediate dividend cut risk, that will not be the case if business falls off materially over the next year or so. Even if that happens, it won’t be a total disaster, as I also believe these firms will survive any oil price retreat that is likely to occur. 

Reynolds American (RAI) was upgraded from UnderWeight to Equal Weight at Morgan Stanley.

National Health Investors (NHI) was upgraded from UnderPerform to Neutral at Hilliard Lyons.

NextEra  Energy (NEE) was upgraded from Neutral to Buy at ISI Group.

Annaly Capital Management (NLY) was upgraded from Neutral to Buy at Sterne Agee.

Walgreen (WAG) was upgraded from Sell to Hold at Cantor Fitzgerald. WAG dropped over 8% last week after reporting that the firm would not be pursuing an acquisition / tax inversion strategy. I took a look at it, but even with the drop, the shares are too expensive to tempt me, as evidenced by the mere 2.22% yield.

Triangle Capital (TCAP) was upgraded from Market Perform to OutPerform at Raymond James.

Exelon (EXC) was initiated at Neutral at Tigresse Financial.

Earnings reports continued to come in at a furious pace last week, as the peak of earnings season was reached. One report that I missed was Sanofi (SNY), which reported on 7/31/2014 that Q2 EPS was €1.17, while revenue was €8.08B, up 1.0% Y/Y. Reports from last week, by day, were as follows:

Monday, 8/4/2014

Boardwalk Pipeline Partners (BWP) reported Q2 EPS of $0.23, beating by eight cents. Revenue of $293.4M, up 1.6% Y/Y, beat by $32.31M.

National Health Investors (NHI) reported Q2 AFFO of $0.94, missing by a penny. Revenue of $44.16M, up 63.0% Y/Y, beat by $1.11M.

Solar Capital (SLRC) reported Q2 EPS of $0.40, in-line. Revenue of $28.04M, down 28.4% Y/Y, missed by $3.51M.

Tuesday, 8/5/2014

Exterran Partners (EXLP) reported Q2 EPS of $0.30, beating by ten cents. Revenue of $145.69M, up 16.1% Y/Y, beat by $7.04M.

Emerson Electric (EMR) reported FQ3 EPS of $1.03, missing by three cents. Revenue of $6.3B, down 0.6% Y/Y, missed by $150M.

HCP Inc. (HCP) reported Q2 FFO of $0.75, in-line. Revenue of $536.12M, up 4.7% Y/Y, beat by $12.62M.

Magellan Midstream Partners LP (MMP) reported Q2 EPS of $0.70, missing by a penny. Revenue of $496.44M, up 11.8% Y/Y, missed by $6.83M.

Ares Capital (ARCC) reported Q2 EPS of $0.34, missing by three cents. Revenue of $224.93M, up 9.1% Y/Y, missed by $6.57M.

ONEOK Partners LP (OKS) reported Q2 EPS of $0.54, missing by thirteen cents. Revenue of $3.06B, up 10.5% Y/Y, missed by $0.10M.

PennantPark Investment (PNNT) reported FQ3 Core NII of $0.28, missing by a penny. Revenue of $35.47M, up 5.2% Y/Y, missed by $1.75M.

Frontier Communications (FTR) reported Q2 EPS of $0.05, in-line. Revenue of $1.15B, down 3.4% Y/Y, was also in-line with expectations. One thing I can say for FTR, doomed as it is in the declining rural telecom sector, is that FTR isn’t going down without a fight.

Wednesday, 8/6/2014

Diebold (DBD) reported Q2 EPS of $0.47, beating by seven cents. Revenue of $733.45M, up 3.7% Y/Y, missed by $2.16M.

Safety Insurance Group (SAFT) reported Q1 EPS of $0.79, beating by four cents. Revenue of $191.08M was up 5.1% Y/Y.

Spectra Energy (SE) reported Q2 EPS of $0.22, missing by eight cents. Revenue of $1.25B, up 2.5% Y/Y, missed by $40M.

Spectra Energy Partners LP (SEP) reported Q2 EPS of $0.59, missing by two cents. Revenue of $531M, up 7.9% Y/Y, missed by $29.12M.

Molson Coors Brewing (TAP) reported Q2 Net Income of $445.7M. Revenue of $2.2B, up 1.9% Y/Y, beat by $1.02B.

Memorial Production Partners LP reported Q2 EPS of -$1.86, which management noted may not be comparable to consensus of $0.40. Revenue of $123.31M, up 36.8% Y/Y, beat by $8.21M.

Alliant Energy (LNT) reported Q2 EPS of $0.56, missing by four cents. Revenue of $750.3M, up 4.5% Y/Y, beat by $32.88M.

Westar Energy (WR) reported Q2 EPS of $0.41, missing by ten cents. Revenue of $612.67M, up 7.6% Y/Y, beat by $15.09M.

Energy Transfer Equity (ETE) Q2 EPS of $0.30, missing by four cents. Revenue of $14.14B, up 17.2% Y/Y, beat by $1.12B.

Energy Transfer Partners LP (ETP) reported Q2 EPS of $0.79, beating by fifteen cents. Revenue of $13.03B, up 12.8% Y/Y, beat by $1.04B.

Plains All American Pipeline LP (PAA) reported Q2 EPS of $0.50, in-line. Revenue of $11.19B, up 8.6% Y/Y, beat by $680M.

Triangle Capital (TCAP) reported Q2 EPS of $0.53, beating by a penny. Revenue of $24.9M, down 8.7% Y/Y, beat by $0.11M.

Annaly Capital Management (NLY) reported Q2 EPS of $0.30, beating by three cents. Q2 core earnings of $300.4M, $0.30 per share vs. $239.7M and $0.23 in Q1, and $294.2M and $0.29 a year ago. Book value per share of $13.23 was up from $12.30 at end of Q1. Net interest spread of 1.26% gained 36 basis points from Q1.

CenturyLink (CTL) reported Q2 EPS of $0.72, beating by eight cents. Revenue of $4.54B, up 0.4% Y/Y, beat by $40M.

Transocean (RIG) reported Q2 EPS of $1.61, beating by forty-nine cents. Revenue of $2.33B, down 2.9% Y/Y, beat by $60M.

Main Street Capital (MAIN) reported Q2 distributable net investment income of $24.6M or $0.56 per share, up 33% from a year ago. NAV per share of $21.03 was up 6% from the start of the year.

Calumet Specialty Products LP (CLMT) reported Q2 EPS of -$0.17, which management noted may not be comparable to consensus of $0.18. Revenue of $1.43B, up 5.9% Y/Y, beat by $200M.

Thursday, 8/7/2014

Medical Properties Trust (MPW) reported Q2 FFO of $0.26, in-line. Revenue of $76.6M, up 34.2% Y/Y, missed by $0.9M.

Nestle S.A. (NSRGY) reported First Half EPS of CHF 1.45. Revenue of CHF 42.98B was up 4.7% Y/Y. Note that the CHF designation stands for Swiss Franks. Switzerland, where NSRGY is headquartered, is not on the Euro.

TICC Capital (TICC) reported Q2 NII of $0.28, missing by a penny. Total Investment Income of $29.9M, up 17.6% Y/Y, missed by $0.63M.

Windstream (WIN) reported Q2 EPS of $0.04, missing by four cents. Revenue of $1.47B, down 2.6% Y/Y, missed by $10M.

Linn Energy LLC (LINE) reported Q2 EPS of $0.56, beating by fourteen cents.

Universal (UVV) reported FQ1 EPS of -$0.13. Revenue of $271.5M was down 37.4% Y/Y.

Hercules Technology Growth Capital (HTGC) reported Q2 EPS of $0.30, in-line. Revenue of $34M, down 1.5% Y/Y, missed by $0.92M.

Fifth Street Finance (FSC) reported FQ3 NII of $0.25, missing by a penny. Total Investment Income of $74.3M, up 28.0% Y/Y, missing by $1.77M.

Friday, 8/8/2014

Enerplus (ERF) reported Q2 EPS of $0.20, missing by fifteen cents. Revenue of $504.5M, up 24.6% Y/Y, beat by $13.13M.

Looking ahead to the week coming up, there are still a few more earnings reports due, as the season winds down:

Sysco (SYY) will report on Monday, 8/11/2014, before the open.

Cisco Systems (CSCO) will report on Wednesday, 8/13/2014, after the close.  

Pan American Silver (PAAS) will also report on Wednesday, 8/13/2014, after the close. 

Wal-Mart (WMT) will report on Thursday, 8/14/2014, before the open.

The key for this week is to determine whether the correction that began a little over two weeks ago is really over. If it is, anything even remotely in range needs to be bought before it is too late, if it isn’t already too late. If that should be the case, what we had will go down as just another tease designed to frustrate the value investor.

JT

Finally, a week with some action came along to make things interesting. Stocks continued the decline which began the previous week, with a significant one-day drop on Thursday exceeding 300 Dow points, making for the largest one-day drop seen in many months. Still, from peak to trough, the S&P 500 is only down a little over 3% from the all-time high set just a little over one week ago, on July 24. This may evolve into the significant correction that has been predicted for eons. Only time will tell. Meanwhile, a deluge of economic data on top of a deluge of earnings reports came down last week, but I did not see anything in the mix that I could explicitly blame for the selloff. The Payrolls report was about as good as it could be for the market – showing continued progress, but not really good enough to force the Fed to accelerate the promised return to “normal” monetary policies ahead of the relaxed schedule that seems to be the plan currently. Likewise, some earnings were good, some not so good, but earnings in the aggregate are not the cause of the selloff either, I don’t believe. As for the recent increase in geopolitical issues in the news, that may account for some of the unease, but then the news from that front is always bad, and it hasn’t much bothered the market before, why should now be different. I think rather than a single catalyst, it is just time for a pull-back. Stocks are over-valued, investors are (or at least were) too bullish, and the market has been too calm for too long.

Lest I get too distracted, time to re-focus on what matters, at least as far as stocks are concerned – dividends and earnings. Stocks on my lists going ex-dividend this week, by date, are:

8/04/2014   

NuStar Energy LP (NS), yield 6.93%.

8/05/2014 

Intel (INTC), yield 2.60%. INTC was one of many “accidental high-yielders” that emerged during the financial crisis. While the current yield is decent by INTC standards historically, the chip maker likely will not be yielding over 4% again anytime soon.

Martin Midstream Partners LP (MMLP), yield 8.06%.

QR Energy LP (QRE), yield 9.85%. QRE pays monthly. It has been announced that QRE is being acquired by Breitburn LP (BBEP). QRE holders are slated to receive .9856 units of BBEP for each QRE unit held. Both stocks rose on the news, and I took advantage to sell both at or near all-time highs. I sold based on valuation, not because I have a negative opinion of prospects going forward. I may re-acquire units of BBEP if the selloff brings the price down enough.

8/06/2014  

American Electric Power (AEP), yield 3.82%. AEP is a top-rated utility, but as you can see from the yield, pricey at the moment.

GlaxoSmithKline (GSK), yield 5.53%. GSK reported disappointing results July 23, and also lowered guidance, with the result being a drop in the stock price of around eight dollars from the May highs. Bargain hunters apparently swooped in Friday after the opening quotations were barely above $47.50, resulting in a $.50 or so recovery from that point. I’m leery of “big pharma”, frankly. Someday the hammer is going to fall on these prime suspects who have contributed mightily to our health care financial crisis. But if one is inclined to discount that risk, picking up shares of GSK at the current price might be a winning bet.

Unilever PLC (UL), yield 3.50%.

Wal-Mart Stores (WMT), yield 2.61%. WMT is the company people love or love to hate, sometimes simultaneously. While the yield is uninspiring, if it drops below $70 in a general market decline, it would be a safe pickup.

8/07/2014  

Amerigas Partners LP (APU), yield 7.84%. This propane distributor is as safe a bet in the MLP space as there is. About the only risk I see is the potential for tax law changes adverse to MLPs. In the interest of balance, I note that some see APU differently, with concerns over declines in propane use. See Seeking Alpha articles for more information.

HCP Inc. (HCP), yield 5.22%.

Health Care REIT (HCN), yield 4.92%.

Breitburn Energy Partners LP (BBEP), yield 9.57%. BBEP pays monthly. BBEP is set to become the largest upstream energy MLP, with the acquisition of QRE. While subject to a degree of commodity price risk, which makes upstream more risky than the “toll-taker” (i.e., pipeline) MLPs, the risk is minimal in my opinion. Plus, as seen recently with Boardwalk Pipeline (BWP), pipeline assets can become less valuable rather quickly if production or consumption patterns shift.

Exterran Partners LP (EXLP), yield 7.90%. EXLP provides natural gas contract services, and is a different type of business than most energy MLPs. I would have to concede it is a higher risk than most MLPs as well.

8/08/2014

Buckeye Partners LP (BPL), yield 5.55%.

Spectra Energy (SE), yield 3.30%.

Before moving on to earnings, next I will list last week’s upgrades / downgrades on stocks I follow:

Cisco Systems (CSCO) was downgraded from OutPerform to Sector Perform at Pacific Crest.

NextEra Energy (NEE) was initiated at OverWeight at Barclays.

NuStar Energy LP (NS) was upgraded from Neutral to OutPerform at Credit Suisse.

Pfizer (PFE) was downgraded from OutPerform to Market Perform at BMO Capital.

QR Energy LP (QRE) was Upgraded from Hold to Buy at Wunderlich.

American Capital Agency (AGNC) was upgraded from Hold to Buy at Wunderlich. Just like Mark Twain, the deaths of the Mortgage REITs have been greatly exaggerated. Of course, he is gone now, so the preceding statement does not mean these entities will last forever.

Breitburn Partners LP (BBEP) was downgraded from Buy to Neutral at Citigroup.

Eaton (ETN) was downgraded from OverWeight to Neutral at JP Morgan.

Frontier Communications (FTR) was downgraded from Buy to Neutral at Nomura.

Seadrill (SDRL) was downgraded from Buy to Accumulate at Global Hunter. Don’t ask me what the difference is between Buy and Accumulate.

Verizon (VZ) was downgraded from OutPerform to Neutral at Macquarie.

Windstream (WIN) was upgraded from Reduce to Neutral at Nomura, from Neutral to Buy at DA Davidson, and from Sell to Neutral at UBS, while Raymond James downgraded the stock from OutPerform to Market Perform. This doomed rural telecom seems to have, temporarily at least, appeased the market gods with a proposal to break itself up into two companies, one of which will be a REIT, to “create value”. It’s still the same declining business, it seems to me, but the market seems to have bought the story. And oh, by the way, the dividends of the new entities added together will be $.70 per quarter, which compares to the current $1.00 per quarter. Windstream’s stock rose on this news. Go figure.

Earnings season either reached a crescendo last week or will reach it this week, but either way, there are a ton of reports to recap. I will only list the bare minimum here. As always, I recommend readers go to Seeking Alpha for transcripts of earnings calls, more details, still in summary form, and articles by contributors for more. Results, by date, as reported:

7/28/2014

RPM International (RPM) reported FQ4 EPS of $0.80, beating by two cents. Revenue of $1.28B, up 9.4% Y/Y, beat by $40M.

Gladstone Investment (GAIN) reported FQ1 NII of $0.18, in-line. Revenue of $9.83M, up 32.8% Y/Y, beat by $0.3M.

American Capital Agency (AGNC) reported Q2 adjusted EPS of $0.87, beating by nineteen cents. Book value per share was $26.26, up 7.2% from June 30 book value of $24.49, compares to Friday’s close of $23.26. As for correlation with the market, AGNC rose Thursday and Friday, both big market down days. Plus, the 11.18% dividend isn’t too bad, either.

MFA Financial (MFA) reported Q1 EPS of $0.20, beating by a penny. Revenue of $80.25M, down 2.8% Y/Y, missed by $0.85M.

 7/29/2014

Eaton (ETN) reported Q2 EPS of $1.11, in-line. Revenue of $5.76B, up 2.9% Y/Y, missed by $20M.

Merck (MRK) reported Q2 EPS of $0.85, beating by four cents. Revenue of $10.93B, down 0.7% Y/Y, beat by $330M.

NextEra Energy (NEE) reported Q2 EPS of $1.43, missing by a penny. Revenue of $4.03B, up 5.2% Y/Y, missed by $40M. This over-loved utility, down over seven dollars from its June high, is still far above the Morningstar fair value price.

Pfizer (PFE) reported Q2 EPS of $0.58, beating by a penny. Revenue of $12.77B, down 1.5% Y/Y, beat by $280M.

United Parcel Service (UPS) reported Q2 EPS of $1.21, missing by four cents. Revenue of $14.27B, up 5.6% Y/Y, beat by $170M.

Waste Management (WM) reported Q2 EPS of $0.60, beating by a penny. Revenue of $3.56B, up 0.8% Y/Y, missed by $50M.

AmeriGas Partners (APU) reported FQ3 EPS of a minus $0.47, missing by eight cents. Revenue of $613.2M, up 5.4% Y/Y, missed by $14.46M.

Digital Realty Trust (DLR) reported Q2 FFO of $1.21, beating by a penny. Revenue of $401M, up 10.3% Y/Y, beat by $5.48M. DLR fell out of favor in 2013, but since the beginning of this year, it has rebounded steadily, although still below the levels attained in early 2013. It was a great pick up below $50 last December.

Entergy (ETR) reported Q2 EPS of $1.11, beating by a penny. Revenue of $2.99B, up 9.1% Y/Y, beat by $40M.

Kimco Realty (KIM) reported Q2 FFO of $0.35, in-line. Revenue of $260.24M, up 14.6% Y/Y, beat by $19.39.

Reynolds American (RAI) reported Q2 EPS of $0.89, beating by two cents. Revenue of $2.16B, down 0.9% Y/Y, missed by $30M. A recent $23B judgment awarded to a widow of a smoker will likely be substantially reduced upon appeal, but it still reminds investors in “big tobacco” of the always present litigation risk of these stocks. I don’t own any as a matter of principle, but I also don’t believe they are good long-term investments. Declining business, shrinking customer base, litigation risk, regulatory risk, what is there to like? Oops, I missed the dividend. Yes, the dividend yields are high, but someday this ride will come to a halt.

Newmont Mining (NEM) reported Q2 EPS of $0.20, beating by a penny. Revenue of $1.77B, down 11.9% Y/Y, was in-line. With the dividend indexed to the price of gold, NEM has exposed the risk of a complacent “I’m being paid to wait” approach when investing in a stock or sector in decline. I recognized going in that this could happen, which is why I limited my holdings in NEM. I’m holding on for the long-term, as I believe NEM will survive until the next gold renaissance, but I sure can’t claim that I’m being “paid while I wait”, with a $0.025 dividend. NEM is a pure speculation in a gold price recovery at this point. 

7/30/2014

Kraft Foods (KRFT) reported Q2 EPS of $0.80, missing by two cents. Revenue of $4.75B, up 0.6% Y/Y, missed by $110M. If the price would come down such that a yield of 4% could be obtained, I would start a position in KRFT. The requisite buy price would be $52.5.

Public Service Enterprise Group (PEG) reported Q2 EPS of $0.49, missing by two cents. Revenue of $2.24B, down 3.0% Y/Y, was in-line.

Southern Company (SO) reported Q2 EPS of $0.68, beating by two cents. Revenue of $4.47B, up 5.2% Y/Y, beat by $150.

Total S A (TOT) reported that Q2 adjusted net profit tumbled 12% Y/Y to $3.1B. TOT has been hammered on several fronts lately – unrest in Libya, sanctions expectations for Russia, and refining margin compression. The Russia situation is the most serious issue, as Russia accounted for nearly 10% of TOT’s production last year. I sold at $73, and I’m glad I did. Now may be time to buy, which I did Thursday, below $65. We’ll have to wait a while to see how that works out.

Williams Partners (WPZ) reported Q2 EPS of $0.11, missing by twenty cents. I own WPZ, and when it shot up $4 in mid-June on the strength of an acquisition viewed favorably, I was tempted to sell, but I didn’t want to give up the dividend. My rule, which I failed to follow, is “when the market gives you a gift, take it, it does not happen often”. If I had done so, I could now buy it back for just above $50, which is near where I bought it originally.

Martin Midstream Partners (MMLP) reported Q2 EPS of $0.37, missing by a penny. Revenue of $418.9M, up 16.9% Y/Y, missed by $11.67M.

7/31/2014

ConocoPhillips (COP) reported Q2 EPS of $1.61, in-line. Revenue of $14.7B, up 4.0% Y/Y, missed by $680M. If I ever buy back in to COP, somebody please stop me if I make any move to sell. Do you hear a twinge of regret there?

Colgate-Palmolive (CL) reported Q2 EPS of $0.73, in-line. Revenue of $4.35B, up 0.2% Y/Y, missed by $60M.

Kellogg (K) reported Q2 EPS of $1.02, in-line. Revenue of $3.68B, down 0.8% Y/Y, missed by $50M.

Royal Dutch Shell (RDS.B) reported Q2 EPS of $1.94. Revenue of $115.27B, up 0.8% Y/Y, missed by $9.71B.

SCANA (SCG) reported Q2 EPS of $0.68, beating by six cents. Revenue of $1.03B, up 1.0% Y/Y, beat by $47M.

Exxon Mobil (XOM) reported Q2 EPS of $2.05, beating by nineteen cents. Revenue of $111.64B, up 4.7% Y/Y, beat by $3.26B.

Exelon (EXC) reported Q2 EPS of $0.51, beating by a penny. Revenue of $6.19B, up 5.3% Y/Y, beat by $550M.

Enterprise Products Partners (EPD) reported Q2 EPS of $0.68, missing by six cents. Revenue of $12.52B, up 12.3% Y/Y, missed by $360M.

BlackRock Kelso Capital (BKCC) reported Q2 EPS of $0.23, beating by a penny. Revenue of $33.76M, down 6.6% Y/Y, beat by $1.94.

Consolidated Communications Holdings, Inc. (CNSL) reported Q1 EPS of $0.25, beating by four cents. Revenue of $149.6M, down 4.3% Y/Y, beat by $0.58M.

Ensco (ESV) reported Q2 EPS of $1.58, beating by twenty six cents. Revenue of $1.2B, up 6.2% Y/Y, missed by $20M.

8/01/2014

Chevron (CVX) reported Q2 EPS of $2.98, beating by thirty-one cents. Revenue of $57.94B, up 1.0% Y/Y, beat by $560M.

Procter & Gamble (PG) reported FQ4 EPS of $0.95, beating by four cents. Revenue of $20.16B, down 0.7% Y/Y, missed by $320M. I was very close Thursday to deciding to add to my position in PG, but decided to let it come down just a little bit more. Bad decision. Although earnings were only OK but not great, PG announced a brand consolidation plan that was well-received, and the stock gained over two dollars Friday. All I can say is ARGH!

Health Care REIT (HCN) reported Q2 FFO of $1.06, beating by four cents. Revenue of $826.45M, up 21.8% Y/Y, beat by $19.28M.

Whew! And it ain’t over yet! My high school English teacher, one of the great ones I hasten to add, would be all over my case if she saw what I just wrote. But anyway, moving on, earnings reports expected this week are presented following, by date. Note that the releases will be in the AM, before the start of trade, unless otherwise noted.

8/04/2014

Boardwalk Pipeline Partners LP (BWP), Exterran Partners LP (EXLP), National Health Investors (NHI), and Solar Capital LTD (SLRC). No time was specified for NHI and SLRC.

8/05/2014

Emerson Electric (EMR), HCP Inc. (HCP), Magellan Midstream Partners LP (MMP), Ares Capital (ARCC), ONEOK Partners LP (OKS), PennantPark Investment (PNNT), Frontier Communications (FTR), and Safety Insurance Group (SAFT). OKS, PNNT, and FTR will all report after the bell. SAFT did not specify a time.

8/06/2014

Diebold (DBD), Spectra Energy (SE), Spectra Energy Partners LP (SEP) Molson Coors (TAP), and Memorial Production Partners LP (MEMP) before the open. Then, after the close, Alliant Energy (LNT), Westar Energy (WR), Energy Transfer Equity LP (ETE), Energy Transfer Partners LP (ETP), Plains All American Pipeline (PAA), Triangle Capital (TCAP), Annaly Capital (NLY), CenturyLink (CTL), and Transocean LTD (RIG). Further, with no time specified, Main Street Capital (MAIN) and Calumet Specialty Products Partners LP (CLMT).

8/07/2014

TICC Capital (TICC), Windstream (WIN), and Linn Energy LLC (LINE), before the open. After the close, Universal (UVV) and Hercules Technology Growth Capital (HTGC) will report. With no time specified, reports expected are Sanofi (SNY), headquartered in France, and Fifth Street Finance (FSC).

8/08/2014

Enerplus (ERF), at one time the premier Canadian Royalty Trust, now a corporation. Still producing oil and gas and paying a decent dividend.

The question on investor’s minds this week is - will the recent hiccup develop into a bona fide correction of 10% or more, or is it just another tease to disappoint value investors once again? I’m ready with orders either in or ready to be entered. If prices pull back to the indicated levels, I will add to positions as follows. Kraft Foods (KRFT) under $52, Paychex (PAYX) under $36, Public Service Enterprise Group (PEG) under $35, Procter & Gamble (PG) under $76, Chevron (CVX) under $110, and General Mills (GIS) under $50. I realize these prices do not jive with my buy under prices in my tables, and in fact  my tables are woefully in need of an update. Frankly, I’ve been so disgusted with this bubble market that I have not felt like raising my prices further – better to pass than pay too much. Once we get a real correction, I will update the tables, weed out a couple of stocks and add a couple of stocks, and come up with buy prices that are not totally from La La Land, as far as any possibility of being able to buy at the indicated price. Time to post and get ready for, hopefully, a week with some opportunities.

JT

Stocks lost ground four out of five days last week, ending with declines on all the major averages. It seems to me that a combination of factors finally weighed on the market: geopolitical events, mostly uninspiring earnings reports, equally uninspiring economic data releases, and perhaps a sense of unease that nothing ever gets done about anything. Adding to that is a realization by most market followers that stocks are extended and due for a pullback. I have thought that for some time, and thus far have been waiting in vain for an opportunity to acquire some quality stocks at a reasonable price.

The week ahead will see the usual economic releases, culminating in the Payroll numbers to be released Friday. Last week saw a very disappointing reading on new home sales, which no doubt contributed to the market’s foul mood. If the Payroll data fails to meet expectations, the long-awaited correction very well may begin.

The one thing that can cheer me up, just as it did (so legend has it) John D. Rockefeller, is to contemplate upcoming dividends scheduled to be paid by stocks I own. For the week beginning today, that would be as follows:

7/29/2014    

Alliant Energy (LNT), yield 3.47%.

Enterprise Products Partners LP (EPD), yield 3.65%.

Kinder Morgan Inc. (KMI), yield 4.54%.

Kinder Morgan Energy Partners LP (KMP), yield 6.59%.

El Paso Pipeline Partners LP (EPB), yield 7.24%.

Prospect Capital (PSEC), yield 12.05%. PSEC pays monthly.

7/30/2014

Paychex (PAYX), yield 3.59%.

Pfizer (PFE), yield 3.44%.

Norfolk Southern (NSC), yield 2.12%.

Plains All American Pipeline LP (PAA), yield 4.34%.

Williams Partners LP (WPZ), yield 6.91%.

Realty Income (O), yield 4.91%. As you would expect from a firm that bills itself as “The Monthly Dividend Company”, O pays monthly.

7/31/2014

Eaton (ETN), yield 2.53%.

Energy Transfer Equity LP (ETE), yield 2.54%.

Energy Transfer Partners LP (ETP), yield 6.47%.

Southern Company (SO), yield 4.69%.

ONEOK Partners LP (OKS), yield 5.27%.

Calumet Specialty Products Partners LP (CLMT), yield 8.30%.

8/01/2014

Enerplus (ERF), yield 4.55%, give or take a fraction of a percentage point. ERF pays nine cents Canadian monthly, so yield is slightly affected by exchange rates.

It was a fairly active week for upgrades / downgrades on my stocks. Don’t you wish those analysts would issue their downgrades before the companies report a disappointing quarter, not to mention perhaps an upgrade or two prior to a positive earnings surprise?

Dr Pepper Snapple (DPS) was initiated at Neutral at ISI Group.

Exelon (EXC) was upgraded from Neutral to OutPerform at Macquarie.

Digital Realty (DLR) was upgraded from Hold to Buy at Deutsche Bank.

McDonald’s (MCD) was downgraded from OutPerform to Neutral at Robert W. Baird.

Health Care REIT (HCN) was initiated at Neutral at Mizuho.  

HCP Inc. (HCP) was initiated at Buy at Mizuho.

Ventas (VTR) was initiated at Buy at Mizuho.

McDonald’s (MCD) was downgraded from OverWeight to Equal Weight at Stephens & Co.

McDonald’s (MCD) was downgraded from Positive to Neutral at Susquehanna.

McDonald’s (MCD) was downgraded from Buy to Neutral at Sterne Agee.

MicroSoft (MSFT) was upgraded from UnderPerform to Neutral at BAC.

Raytheon (RTN) was downgraded from OutPerform to Market Perform at Bernstein.

Freeport-McMoran (FCX) was downgraded from Buy to Neutral at BAC.

Magellan Midstream Partners LP (MMP) was downgraded from Buy to Neutral at Goldman. This has to be valuation, as this stellar MLP has run so far up in price, the yield is at risk of going below 3%.

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

Pepsico (PEP) was upgraded from Hold to Buy at Stifel.

Exxon Mobil (XOM) was Downgraded from Equal Weight to UnderWeight at Barclays.

Now that the preliminaries are concluded, let’s move on to earnings. First, reporting last week, by date, were the following:

7/22/2014

Altria (MO) reported Q2 EPS of $0.65, missing by a penny. Revenue of $4.57B, up 0.9% Y/Y, missed by $30M.

Coca-Cola (KO) reported Q2 EPS of $0.64, beating by a penny. Revenue of $12.57B, down 1.4% Y/Y, missed by $250M.

Kimberly-Clark (KMB) reported Q2 EPS of $1.49, missing by a penny. Revenue of $5.34B, up 1.3% Y/Y, beat by $20M.

McDonald's (MCD) reported Q2 EPS of $1.40, missing by four cents. Revenue of $7.18B, up 1.4% Y/Y, missed by $100M.

Verizon (VZ) reported Q2 EPS of $0.91, beating by a penny. Revenue of $31.48B, up 5.7% Y/Y, beat by $380M.

Microsoft Corporation (MSFT) reported FQ4 EPS of $0.55, missing by six cents. Revenue of $23.38B, up 17.3% Y/Y, beat by $270M.

7/23/2014

Freeport-McMoRan (FCX) reported Q2 EPS of $0.46, missing by three cents. Revenue of $5.52B, up 28.7% Y/Y, beat by $280M.

General Dynamics (GD) reported Q2 EPS of $1.88, beating by eleven cents. Revenue of $7.47B, down 4.6% Y/Y, missed by $60M.

Norfolk Southern (NSC) reported Q2 EPS of $1.79, beating by five cents. Revenue of $3.04B, up 8.6% Y/Y, beat by $40M.

Northrop Grumman (NOC) reported Q2 EPS of $2.04, missed by eighteen cents. Revenue of $6.04B, down 4% Y/Y, beat by $80M.

PepsiCo (PEP) reported Q2 EPS of $1.32, beating by nine cents. Revenue of $16.89B, up 0.5% Y/Y, beat by $100M.

AT&T (T) reported Q2 EPS of $0.62, missing by a penny. Revenue of $32.57B, up 1.5% Y/Y, missed by $840M.

Potlatch (PCH) reported Q2 EPS of $0.40, in-line. Revenue of $143.9M, up 8.0% Y/Y, beat by $3.97M.

7/24/2014

Unilever (UL) reported first half EPS of €0.78. Revenue was €24.1B, down 5.5% Y/Y.

3M (MMM) reported Q2 EPS of $1.91, in-line. Revenue of $8.13B, up 4.9% Y/Y, beat by $40M.

Dr Pepper Snapple (DPS) reported Q2 EPS of $1.06, beating by sixteen cents. Revenue of $1.63B, up 1.2% Y/Y, beat by $10M.

Nucor (NUE) reported Q2 EPS of $0.46, beating by six cents. Revenue of $5.29B, up 13.3% Y/Y, beat by $80M.

Raytheon (RTN) reported Q2 EPS of $1.41, missing by eighteen cents. Revenue of $5.7B, down 6.9% Y/Y, beat by $120M.

Realty Income (O) reported Q2 AFFO of $0.64, in-line. Revenue of $228.6M, up 24.0% Y/Y, beat by $4.42M.

7/25/2014

NuStar (NS) reported Q2 EPS of $0.58, beating by thirteen cents. Revenue of $749.74M, down 16.9% Y/Y, missed by $93.3M. Notably, NS announced with the release that DCF was adequate to cover the distribution, which has not been the case since 3^rd QTR 2011.

American Electric Power (AEP) reported Q2 EPS of $0.80, beating by five cents. Revenue of $4B, up 11.7% Y/Y, beat by $80M.

Statoil (STO) reported Q2 EPS of NOK3.74, and revenue of NOK142.6B, down 3.0% Y/Y. Further, Q2 earnings before interest and taxes totaled NOK32B, missing analyst expectations of NOK37.7B, and oil and gas production fell 9% Y/Y.

Now, as the flood of earnings reports approaches the zenith, we have the following reports scheduled, by date. Note that earnings will be released before the start of trade on the indicated date, unless otherwise noted.

7/28/2014

Exelon (EXC), RPM International (RPM), Gladstone Investment (GAIN), American Capital Agency (AGNC), and MFA Financial (MFA). AGNC will report after the close, and GAIN had no time specified.

7/29/2014

Eaton (ETN), Merck (MRK), NextEra Energy (NEE), Pfizer (PFE), United Parcel Service (UPS), Waste Management (WM), Amerigas Partners LP (APU), Digital Realty (DLR), Entergy (ETR), Kimco Realty (KIM), Reynolds American (RAI), and Newmont Mining (NEM). APU, DLR, KIM, and NEM all report after the close.

7/30/2014

Kraft Foods (KRFT), Public Service Enterprise Group (PEG), Southern Company (SO), Total SA (TOT), Williams Partners LP (WPZ), and Martin Midstream Partners LP (MMLP). KRFT reports after the close. Neither TOT nor MMLP specified a time. TOT will be reporting from Paris, France. 

7/31/2014

ConocoPhillips (COP), Colgate Palmolive (CL), Kellogg (K), Royal Dutch Shell (RDS.B), SCANA (SCG), Exxon Mobile (XOM), Enterprise Products Partners LP (EPD), BlackRock Kelso (BKCC), Consolidated Communications (CNSL), and Ensco PLC (ESV). ESV will report after the close, while no time was specified for RDS,B, reporting from The Hague, Netherlands.

8/01/2014

Chevron (CVX), Procter & Gamble (PG), and Health Care REIT (HCN).

It will be a busy week, with earnings season at the peak, a monthly Jobs report on tap, and multiple geopolitical crises continuing to rage on. It may afford a buy opportunity here and there. There haven’t been many lately.

JT