What a week we had last week! The summer doldrums actually ended on Wednesday of the prior week (August 19), with every trading day since then (with one exception, Friday 8/28/2015) presenting huge intraday moves, ending mostly towards the downside. The Dow Industrial Stock Average declined 300+ on 8/20, 500+ on 8/21 & 24, then a “mere” 200+ on 8/25, then the market reversed course, and the same stock average advanced 600+ on 8/26, and another 300+ on 8/27. A number of pundits have suggested the Fed would likely hold off on a September rate increase in light of the market turmoil, but an unexpectedly strong Q2 GDP report on Thursday 8/27 might change that assessment.   

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

Kimberly Clark (KMB), 9/2/2015, yield 3.27%.

Pepsico (PEP), 9/2/2015, yield 3.00%.

Ensco PLC (ESV), 9/2/2015, yield 3.52%.

CenturyLink (CTL), 9/3/2015, yield 8.08%. The announcement was overdue, but it seems, for the moment at least, that a cut is not imminent.

Public Service Enterprise Group (PEG), 9/4/2015, yield 3.81%.

Triangle Capital (TCAP), 9/4/2015, yield 12.10%.

Earnings came out as scheduled last week for JM Smucker (SJM) and Prospect Capital (PSEC), with both firms reporting better than expected results.

For the week upcoming, there are two firms (that I follow) on the schedule to report again. Greif (GEF, GEF.B) and Medtronic (MDT), both on 9/3/2015.

It was a very slow week for upgrades / downgrades. Ratings coming out on my stocks were as follows:

Nestle S A (NSRGY) was upgraded from Hold to Buy at Kepler.

Royal Dutch Shell (RDS.B) was upgraded from Hold to Buy at Jeffries.

Chevron (CVX) upgraded from UnderPerform to Neutral at BofA/Merrill.

Plains All American Pipeline LP (PAA) was initiated at Sector OutPerform at Scotia Howard Weil.

Eaton (ETN) was upgraded to Buy at Vertical Research.

Emerson Electric (EMR) was also upgraded to Buy at Vertical Research.

Spectra Energy (SE) was upgraded to Buy at UBS.

Ares Capital (ARCC) was upgraded from Market Perform to OutPerform at Raymond James.

Intel (INTC) was Resumed at Sector Perform at RBC Capital Markets.

It will be interesting to see what happens this coming week. I had several orders entered before the open Monday, as the futures indicated stocks would begin with a huge decline, which did happen. But my limit order was too low, in all cases but one, to get filled. I added to my position in Exxon Mobil (XOM) at a little over $67, while my buy order for Procter & Gamble (PG), at a little over $66, was a no go. In hindsight, I wish I had bought more XOM, but certainly the trade was fortuitous, at least at this juncture, as the stock has gained to slightly above $75 as of Friday’s close. Before I beat myself up too much for excess timidity, when I consider how it looked Monday morning, I will give myself some credit for buying at least a few shares at a steal price.

JT

Last week started off with a minimal gain on Monday, then saw losses from Tuesday on, accelerating towards the downside each day, with the final day of the week posting a 531 point decline in the Dow. The rout is on, so it seems. It seemed like 2008 again Thursday and Friday. The primary catalyst appears to be a slowdown in China, with numerous other negative influences contributing to the sell-off. The question now is whether this was just a bad week, or rather the start of the long-predicted major decline.

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

NextEra Energy (NEE), 8/26/2015, yield 2.88%.

Diebold (DBD), 8/26/2015, yield 3.63%.

Northrop Grumman (NOC), 8/27/2015, yield 1.94%.

Prospect Capital (PSEC), 8/27/2015, yield 13.79%. PSEC pays monthly.

Enerplus (ERF), 8/27/2015, yield 8.68%. ERF pays $.05 CAN monthly, which converts to $.038 US. The yield, after conversion, is roughly 8.68%.

McDonalds (MCD), 8/28/2015, yield 3.50%.

Kellogg Co (K), 8/28/2015, yield 2.96%.

Realty Income (O), 8/28/2015, yield 4.79%. O pays monthly.

Safety Insurance Group (SAFT), 8/28/2015, yield 5.10%.

Three firms on my lists that appear to be late in announcing the next dividend are Unilever (UL), CenturyLink (CTL), and Statoil (STO).

UL went ex-dividend 8/5/2015, per the firm’s website, with the quarterly amount being $.328, a slight increase, with a yield of 3.2%. So, no problem there, just a problem with my prime resource (ETrade) not showing the information.

CTL concerns me, in that the recent earnings report released August 5 was decidedly negative, followed up a few days later with job cuts being announced. CTL slashed the dividend notably back in March 2013, and the delay in the announcement is not a good sign.

STO is hopefully just another ETrade problem, as TD Ameritrade shows an ex-dividend date of 8/13/2015, with an amount of $.221, and a yield of 6.0%. STO’s dividend does fluctuate, both as to the amount and regularity, which is one reason I sold my shares.

As for earnings from last week, Wal-Mart (WMT) reported as scheduled, with so-so results, but reduced guidance, which guaranteed the stock a seat on last week’s down bound train. PSEC did not report last week, but rather announced that fiscal year results will be released after the close on 8/26/2015, with an earnings call planned for the following morning.

The only other earnings news on my stocks is that JM Smucker (SJM) will report on 8/27/2015.

My prediction for a dull week last week was only true for the level of upgrades / downgrades seen, as it appears analysts were too hypnotized by the glowing red screens to do much stock research. Ratings out for stocks I track were as follows:

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

Greif (GEF, GEF.B) was upgraded from Neutral to Buy at DA Davidson.

American Electric Power (AEP) was initiated at Buy at Mizuho.

Frontier Communications (FTR) was initiated at Neutral at Mizuho.

JM Smucker was upgraded from Neutral to OutPerform at Credit Suisse.

Kimberly Clark (KMB) was initiated at Hold at Societe Generale.

Legacy Reserves LP (LGCY) was downgraded to Neutral at UBS.

Noble Corp PLC (NE) was upgraded from Accumulate to Buy at Global Hunter.

Predictably, the major financial sites currently feature an abundance of articles related to the current sell-off, with various predictions and musings as to what it all means. It wasn’t actually all that sudden, as the major averages have been trending down since May, with the exception of the NASDAQ, which actually peaked in July before beginning it’s slide. Of course, the energy sector has been in an extreme bear market for much longer, with the decline starting a year ago. While few expect this to develop into a 2008 style meltdown, most pundits do expect the slide to continue for a while longer, with at least a garden-variety correction being recorded before it ends. I’m selectively picking up a “bargain” here and there, but mostly I’m conserving cash, just in case this is the long-predicted “big one”.

JT

Last Monday stocks surged, then promptly gave it back the next day, after which the market mostly churned in place the rest of the week. We are definitely into the summer doldrums. If it wasn’t for Trump and Hillary’s email scandal, there would be nothing in the news to talk about. Earnings season is mostly wrapped up, with the results being nothing to write home about in the aggregate, but still probably better than expected. The bias seems to be more to the downside lately, even though the major averages are only slightly off their recent highs.

Meanwhile, my dividend payers just keep on delivering cash, at least in most cases. Upcoming ex-dividend dates for the week ahead are as follows:

Chevron (CVX), 8/17/2015, yield 4.98%.

Walgreens Boots Alliance (WBA), 8/17/2015, yield 1.56%.

MicroSoft (MSFT), 8/18/2015, yield 2.64%.

Gladstone Investment (GAIN), 8/18/2015, yield 9.42%. GAIN pays monthly.

Main Street Capital (MAIN), 8/18/2015, yield 7.10%. MAIN also pays monthly.

3M Co (MMM), 8/19/2015, yield 2.77%.

Johnson & Johnson (JNJ), 8/21/2015, yield 3.04%.

In addition to the five stocks listed last week as scheduled to report, another of my stocks reported as well; Nestle (NSRGY) came out with their half-year results on 8/13/2015. For details on all reports, see the firm’s websites, the financial press, brokerage websites, or from the site I consider the most convenient, Seeking Alpha (http://seekingalpha.com).

As for this week, only two stocks on my lists are scheduled to report earnings; Prospect Capital (PSEC) on 8/17/2015, and Wal-Mart (WMT) on 8/18/2015.

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

Magellan Midstream Partners LP (MMP) was upgraded from Hold to Buy at Stifel.

Blackstone Group LP (BX) was initiated at Buy at Goldman.

American Capital Agency (AGNC) was upgraded from Neutral to Buy at Nomura.

Annaly Capital Management (NLY) was also upgraded from Neutral to Buy at Nomura.

Legacy Reserves LP (LGCY) was downgraded from Perform to UnderPerform at Oppenheimer.

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

American Capital Agency (AGNC) was upgraded from Neutral to Buy at Compass Point. Annaly Capital Management (NLY) was upgraded from Neutral to Buy at Compass Point.

MicroSoft was upgraded from Hold to Buy at Stifel.

Spectra Energy Partners LP (SEP) was upgraded from Neutral to OverWeight at JP Morgan.

Memorial Production Partners LP (MEMP) was downgraded from OverWeight to Neutral at JP Morgan.

Breitburn Energy Partners LP (BBEP) was upgraded to Neutral at UBS.

Merck (MRK) was upgraded to OutPerform at BMO Capital.

Newmont Mining (NEM) was initiated at OutPerform at BMO Capital.

Newmont Mining (NEM) was upgraded to Buy at Deutsche Bank.

Pan American Silver (PAAS) was upgraded to Buy at Deutsche Bank.

Eaton (ETN) was downgraded from OverWeight to Neutral at Atlantic Equities.

The week ahead looks like dullsville at this point, with nothing (known at least) on the horizon expected to excite the markets. One interesting article I read this weekend was the latest “Thoughts from the Frontline” e-letter from economist and author John Mauldin. The gist of the article was that crude oil in the fifties or less may be the “new normal” for oil prices, as a technological revolution in shale oil production continues to lower the costs and increase the recoverable reserves. This, as John notes, is in contrast to the recent cover of Barron’s, which suggests that it’s time to buy energy stocks, that a rebound is due. Although he (Mauldin) makes a case for why a price rebound is not coming, at least not like it has after previous swoons, another reason to beware of the Barron’s recommendation is the “magazine cover phenomenon”, whereby when a viewpoint is so widely held that it graces the cover of a magazine, it is best to ignore the advice, at least if you believe in the “contrarian” approach. John reminds readers that he never bought in to the “peak oil” viewpoint, which seems pretty much discredited at this point. One of the tenets of the “peak oil” faith was that technology could not save the day, while it has done just that, in John’s opinion. Although it doesn’t bode well for my over-exposure to energy stocks, I must admit that there is the possibility that John’s analysis is correct.

JT

Stocks posted a down week last week, with the Dow Industrials declining every day, while the S & P 500 and NASDAQ indexes were down four out of five days. Still, the declines were not huge. Only one day saw the Dow down by triple digits, and keep in mind a low triple digit decline on a 17000+ index is not what it used to be, when the Dow was under 10000. While the debates were, and still are, the major news story, the resumption of the decline in West Texas Intermediate (WTI) was the news that got my attention. That crude oil benchmark has dropped from $60 in June to under $45 last week, and may well slip under the $40 level soon. It’s definitely nail-biting time for energy firms, especially those who leveraged up to expand during the boom.

Before I list the stocks on my lists going ex-dividend this week, I will note a couple that actually went ex-dividend last week that I missed. That can happen when firms wait until the last minute to announce the dividend. The stragglers were:

Energy Transfer Equity LP (ETE), 8/4/2015, yield 3.87%.

Energy Transfer Partners LP (ETP), 8/4/2015, yield 8.83%.

Buckeye Partners LP (BPL), 8/6/2015, yield 6.83%.

Now, moving on, upcoming ex-dividend dates, listed in order by date, with yield indicated, are:

8/10/2015

Spectra Energy (SE), 5.07%.

8/11/2015

Exxon Mobil (XOM), 3.80%.

Boardwalk Pipeline Partners LP (BWP), 2.99%.

Entergy (ETR), 4.73%.

Linn Energy LLC (LINE), 39.57%. That’s not a typo. LINE’s earnings call announcement on 7/30/2015 that the dividend would be suspended after the 3^rd quarter has caused a cataclysmic sell off in the shares. LINE pays monthly, so the number shown is the annualized yield. Unfortunately, it will only be paid for two more months, at best.

8/12/2015

Emerson Electric (EMR), 3.82%.

GlaxoSmithKline (GSK), 5.55%.

Royal Dutch Shell (RDS.B), 6.40%.

Smucker JM Co (SJM), 2.44%.

Exelon (EXC), 3.82%.

Spectra Energy Partners LP (SEP), 5.10%.

Fifth Street Finance (FSC), 11.78%. FSC pays monthly.

8/13/2015

Southern Co (SO), 4.77%.

United Parcel Service (UPS), 2.86%.

Hercules Technology Growth Capital (HTGC), 10.42%.

Moving on to earnings, I have another straggler, in that a firm reported last week that was not listed in last week’s posting of upcoming earnings reports expected. The firm, Universal Corp (UVV), is a tobacco wholesaler, and reported on 8/6/2015. See last week’s posting for the rather lengthy list of the other stocks I track that reported. As per my new earnings reporting approach, in lieu of repeating information abundantly available elsewhere, I refer readers wanting specifics to other resources. Details are available from the firm’s websites, the financial press, brokerage websites, or from the site I consider the most convenient, Seeking Alpha (http://seekingalpha.com), which frequently makes available transcripts of earnings conference calls, along with other summations and articles. The week had a lot of energy names, several of which reported better results than expected. But, as I’ve said before, the doom and gloom isn’t because of the immediate results, but more because of fear of the future if oil prices don’t recover soon, or worse yet, continue to drop.

Now, moving on once again, as earnings season begins to wind down, I have a shorter list than last week of upcoming reports:

Kraft Heinz (KHC), Sysco (SYY), and Fifth Street Finance (FSC), 8/10/2015.

Pan American Silver (PAAS), 8/13/2015.

Cisco Systems (CSCO), 8/14/2015.

As usual, there were a number of upgrades / downgrades out last week on my stocks:

Linn Energy LLC (LINE) was downgraded from UnderPerform to Sector Perform at RBC Capital Markets. Sector Perform for the upstream energy production sector is by definition an Underperform, based on the sector. I really don’t get the difference here. I guess they just couldn’t bear to say Sell, Avoid, Reduce, Bail, or whatever.

Cisco Systems (CSCO) was initiated at UnderPerform at Macquarie.

ConocoPhillips (COP) was downgraded from OutPerform to Perform at Oppenheimer.

Frontier Communications (FTR) was Resumed at OverWeight at J Morgan. FTR and it’s twin Windstream (WIN) have both been doing well lately, considering they were both given up for dead not too long ago.

TICC Capital (TICC) was downgraded from Buy to Hold at Maxim Group.

Kellogg (K) was upgraded from Sell to Hold at Societe Generale, and from Neutral to Buy at Citigroup.

Hercules Technology Growth Capital (HTGC), was upgraded from Market Perform to OutPerform at Keefe Bruyette & Woods, and from Hold to Buy at MLV & Co.

Intel (INTC) was downgraded from Buy to Hold at Drexel Hamilton.

Coca Cola (KO) was reinstated at Equal Weight at Barclays.

Alliant Energy (LNT) was downgraded from OutPerform to Peer Perform at Wolfe Research.

Emerson Electric (EMR) was downgraded from Buy to Hold at Argus.

Plains All American Pipeline LP (PAA) was downgraded from Buy to Hold at Wunderlich, and from OutPerform to Neutral at Robert W Baird.

Sysco was initiated at Sell at Pivotal Research Group. That’s a strange one. Usually firms initiate coverage on stocks they like.

Memorial Production Partners LP (MEMP) was downgraded from OutPerform to Sector Perform at RBC Capital Markets.

Plains All American Pipeline LP (PAA) was downgraded to Hold at Goldman.

ConocoPhillips (COP) was initiated at OutPerform at Bernstein.

It could be another rough week for energy investors. One tiny ray of hope was discerned from Breitburn Energy Partners LP (BBEP), which reported late last Thursday. The company’s hedges are saving the day for now, and a feared redetermination of borrowing capacity that had been scheduled for October is now deferred to April 2016, as a result of a $1 billion investment recently received from EIG and others. Touting the currently adequate coverage ratio, BBEP at this time has no plans to suspend the dividend. Certainly that can change, but for now, the 16%+ yield continues. I finally made the plunge last week and started a new position in Exxon Mobil (XOM) at less than $78, just in time to get paid, as XOM goes ex-dividend 8/11/2015. I’ll buy more if it drops further. The XOM dividend will likely be the last energy company dividend to be cut, if it ever happens. Of course, I see the chance of that happening as remote. Not impossible, but remote.

JT

After a down week the week before last, stocks rebounded modestly last week, although they did not regain all of the ground given up the prior week. The energy sector, which has grown considerably in recent years as a percentage of the overall market, continues to weigh on the averages, as the carnage continues. The modest recovery in oil prices that occurred earlier this year has given way to a new decline, as supply continues to overwhelm demand. The contract drillers and E & P (upstream) firms have mostly cut or eliminated their dividends, and investors have to be wondering if the majors will be next. Certainly, a lot of debts and dividends predicated on an $80+ oil price are at risk.

While they last, here is this week’s list of stocks on my lists going ex-dividend, which is dominated by energy firms. Shown is the date and current yield. Note the high yields of a number of energy firms, reflecting the severe share price declines.        

8/03/2015

Memorial Production Partners LP (MEMP), 21.07%.

8/04/2015

Williams Partners LP (WPZ), 7.37%,

8/05/2015

Intel (INTC), 3.32%.

Pfizer (PFE), 3.11%.

Wal-Mart Stores (WMT), 2.72%.

Magellan Midstream Partners LP (MMP), 4.20%.

Norfolk Southern (NSC), 2.80%.

Crestwood Midstream Partners LP (CMLP), 16.42%.

Martin Midstream Partners LP (MMLP), 10.60%.

NuStar Energy LP (NS), 7.74%.

8/06/2015

American Electric Power (AEP), 3.75%.

Amerigas Partners LP (APU), 8.02%.

HCP Inc (HCP), 5.85%.

Exterran Partners LP (EXLP), 11.01%.

8/07/2015

Health Care REIT (HCN), 4.76%.

Breitburn Energy Partners LP (BBEP), 16.50%.

A number of my stocks reported last week. See the prior posting for the report dates. In lieu of repeating information abundantly available elsewhere, I refer readers wanting specifics to other resources. Details are available from the firm’s websites, the financial press, brokerage websites, or from the site I consider the most convenient, Seeking Alpha (http://seekingalpha.com), which frequently makes available transcripts of earnings conference calls, along with other summations and articles. Most results followed a pattern of minor misses or if exceeding estimates, only minimally so. The environment remains challenging for all stocks, not just the energy sector.

Earnings season will continue unabated this week, as the avalanche of earnings reports is ongoing. Stocks on my lists that will be reporting are listed as follows, by date:

8/03/2015

NextEra Energy (NEE), Amerigas Partners LP (APU), Boardwalk Pipeline Partners LP (BWP), Kayne Anderson Energy Development (KED), MFA Inc (MFA), Frontier Communications (FTR).

8/04/2015

Emerson Electric (EMR), Kellogg (K), Westar Energy (WR), Entergy (ETR), HCP Inc (HCP), Health Care REIT (HCN), ONEOK Partners (OKS), Plains All American Pipeline (PAA), Ares Capital (ARCC), Solar Capital LTD (SLRC), TICC Capital (TICC), Medical Properties Trust (MPW), Exterran Partners LP (EXLP).

8/05/2015

Alliant Energy (LNT), Energy Transfer Equity LP (ETE), Energy Transfer Partners LP (ETP), National Health Investors (NHI), Spectra Energy (SE), Spectra Energy Partners LP (SEP), Transocean LTD (RIG), Triangle Capital (TCAP), PennantPark Investment (PNNT), Annaly Capital Management (NLY), CenturyLink (CTL), Calumet Specialty Products Partners LP (CLMT), Crestwood Midstream Partners LP (CMLP), Memorial Production Partners LP (MEMP).

8/06/2015

Magellan Midstream Partners LP (MMP), Molson Coors (TAP), Hercules Technology Growth Capital (HTGC), Main Street Capital (MAIN), Consolidate Communications (CNSL), Windstream Holdings (WIN), Breitburn Energy Partners LP (BBEP).

8/07/2015

Safety Insurance Group (SAFT), Enerplus (ERF).

The upgrade / downgrade action was fairly light again last week, at least as far as my stocks are concerned. Notable ratings coming out were as follows:

AT&T (T) was resumed at Neutral at Goldman.

Waste Management (WM) was upgraded from Hold to Buy at Argus.

Entergy (ETR) was downgraded to Sell at Goldman.

Raytheon (RTN) was upgraded to Buy at Bank of America.

Altria (MO) was downgraded from Buy to OutPerform at Credit Suisse.

Linn Energy LP (LINE) was downgraded from OutPerform to Market Perform at Raymond James.

General Dynamics (GD) was downgraded from Buy to Hold at Drexel Hamilton.

CenturyLink (CTL) was upgraded to Hold at Jeffries.

Diebold (DBD) was upgraded to OutPerform at Wedbush.

Linn Energy LLC (LINE) was downgraded to UnderPerform at Credit Suisse, and to UnderWeight at JP Morgan.

Norfolk Southern (NSC) was downgraded from Buy to Hold at Argus.

The carnage in energy stocks continued last week, as Linn Energy LLC (LINE) announced on Friday that the dividend would be suspended, and the funds thus freed up would be used to buy back debt. While undoubtedly the right move given the circumstances, and widely expected, it was still a bitter pill to swallow for long-time holders, many of whom bought the stock at much higher levels than the $6 range it was trading at before the news. I had resolved that when this came along, I would sell a put and give myself an opportunity to add to my position at a real bargain price. I sold a $5 put for $0.81, which if exercised will have me buying 100 units at an effective price of $4.19, ignoring commissions. My self-congratulatory mood was dimmed somewhat when the stock dipped below my effective buy level, closing at $4.04, but it still I’m much better off than if I had entered the trade before the news. And I’m not one of those long-time holders who bought in at $30 or so, thank goodness!  I started my position when LINE became a “single digit midget” a few months ago, and added a bit more cautiously as it continued to drop. My LINE position has always been a speculation on an eventual oil price recovery. Between hedges and the suspension of the dividend, LINE is going to survive for at least a couple or three years, and if there is no recovery by then, I’ve got bigger problems than my LINE speculation not working out. No doubt this oil crash is much bigger and likely to last much longer than anyone expected when it first began, but I have to believe that eventually the relationship between price, supply, and demand will work to reduce supply, and then eventually lead to a price recovery. Oil usage is not declining, it’s just not growing faster than supply. It’s time to hunker down in the oil patch, the hurricane is raging. BBEP reports this week, and few will be surprised if the fellow traveler to LINE follows suit.

JT

Forget about the positive week ended 7/17/2015, as a slate of disappointing earnings and cautious outlooks generated significant stock market declines every day last week from Tuesday onward, while Monday was at best neutral. The result is that most of the major averages are below where they were when the month began. The NASDAQ is an exception, as positive reports from a couple of big names buoyed the index, which is affected in a major way by a few big tech names. Still, the NASDAQ declined four out of five days last week, just not as much as the blue chip averages. Firms’ dependent upon commodity pricing, particularly energy and mining stocks, are getting killed, dragging the market averages down as they decline. While precipitous commodity declines in the oil patch are nothing new, the current crash may set new records, and end up as the worst ever if it keeps going down.

The best medicine to alleviate this pain is to note the companies on my lists going ex-dividend this week, listed below by date, with current yield indicated:

7/28/2015

ConAgra (CAG), 2.29%. 

Enerplus (ERF), 7.10% est. ERF pays $0.05 CAD monthly, which is roughly $0.04 US at current exchange rates.

7/29/2015

Alliant Energy (LNT), 3.71%.

Enterprise Products Partners LP (EPD), 5.55%.

Kinder Morgan (KMI), 5.62%.

Plains All American Pipeline (PAA), 6.88%.

Molson Coors (TAP), 2.34%.

Prospect Capital (PSEC), 13.93%. This BDC pays monthly.

American Capital Agency (AGNC), 12.88%. This MREIT also pays monthly.

Legacy Reserves LP (LGCY), 16.75%.

7/30/2015

Eaton (ETN), 3.60%.

Realty Income (O), 4.84%. O pays monthly.

Paychex (PAYX), 3.64%.

ONEOK Partners LP (OKS), 10.44%.

Noble Corp PLC (NE), 12.23%. So far, this offshore drilling contractor has held steady on the dividend, but one has to wonder, for how much longer?

7/31/2015

Calumet Specialty Products Partners LP (CLMT), 10.10%.

Stocks on my lists that were scheduled to report last week all did so as planned. While most played the game well, as far as meeting or beating the analysts’ consensus predictions for EPS and revenue, which are usually set as low as they can get away with and still maintain some credibility, the guidance and outlook proffered is what really causes the stocks to react. And in most cases the outlook is viewed as “challenging”, to put it mildly. Especially so for energy stocks. In lieu of repeating information abundantly available elsewhere, I refer readers wanting specifics to other resources. Details are available from the firm’s websites, the financial press, brokerage websites, or from the site I consider the most convenient, Seeking Alpha (http://seekingalpha.com), which frequently makes available transcripts of earnings conference calls, along with other summations and articles. Three long-time dividend favorites, all big names, which seem to be facing intractable, long-term declines are McDonalds (MCD), MicroSoft (MSFT), and Intel (INTC). MCD is under stress from declining popularity and strong competition, as their mostly unhealthy fare is becoming increasingly out of favor. MSFT and INTC are facing the fading of the “WinTel” monopoly that has long been the mainstay of both firms’ profits, as Windows PCs with “Intel Inside” are in an irreversable sales decline in favor of tablets and smartphones, and the trend seems ever more unlikely to swing back in favor of PCs. 

Earnings season will reach a zenith this week, as an avalanche of earnings reports will be released. Stocks on my lists that will be contributing to that avalanche are listed as follows, by date:

7/27/2015

Norfolk Southern (NSC), RPM International (RPM), Gladstone Investment (GAIN).

7/28/2015

Merck (MRK), Pfizer (PFE), Statoil (STO), United Parcel Service (UPS), Kimco Realty (KIM), Potlatch (PCH), Reynolds American (PCH).

7/29/2015

Eaton (ETN), General Dynamics (GD), Altria (MO), Northrop Grumman (NOC), Realty Income (O), Southern Company (SO),  Exelon (EXC), Total S A (TOT), Williams Partners LP (WPZ), Mid America Apartment Communities (MAA), BlackRock Capital (BKCC), Martin Midstream Partners LP (MMLP), Noble Corp PLC (NE).

7/30/2015

Conoco Phillips (COP), Colgate Palmolive (CL), Royal Dutch Shell (RDS.B), SCANA (SCG), Digital Realty (DLR), Diebold (DBD), Enterprise Products Partners LP (EPD), Home Properties (HME), Linn Energy LLC (LINE), Ensco PLC (ESV).

7/31/2015

Chevron (CVX), Public Service Enterprise Group (PEG), Exxon Mobil (XOM).

It will be interesting to hear what several of the energy stocks’ management teams have to say about the outlook going forward and the prospects for their respective firms.

Considering last week was in the middle of earnings season, the upgrade / downgrade action was fairly light, at least as far as my stocks are concerned. Notable ratings coming out were as follows:

General Mills (GIS) was upgraded from Sector Perform to OutPerform at RBC Capital Markets.

Mid America Apartment Communities (MAA) was initiated at Buy at Sun Trust Robinson Humphrey.

Coca Cola (KO) was initiated at Buy at Sterne Agee.

Colgate Palmolive (CL) was initiated at Buy at Sterne Agee.

DrPepper Snapple (DPS) was initiated at Buy at Sterne Agee. 

Kimberly Clark (KMB) was initiated at Neutral at Stern Agee.

Pepsico (PEP) was initiated at Buy at Sterne Agee.

Procter & Gamble (PG) was initiated at Neutral at Stern Agee.

Kimco Realty (KIM) was initiated at Buy at Canaccord Genuity.

Enterprise Products Partners LP (EPD) was initiated at Buy at DA Davidson.

Realty Income (O) was initiated at Buy at Da Davidson.

Spectra Energy Partners LP (SEP) was upgraded from Hold to Buy at Jeffries, and was initiated at Buy at Da Davidson.

Newmont Mining (NEM) was initiated at Sector OutPerform at CIBC. It wouldn’t be saying much to OutPerform the metals mining sector these days.

Yamana Gold (AUY) was initiated at Sector Perform at CIBC.

Well, I must ponder what action, if any, I might consider this week. Certainly, the energy and precious metals sell off has turned out much worse than I originally expected when it first started, and numerous “bargains” that I jumped on turned out to be premature. To my credit, I sold several names at or near the highs, most notably BBEP at $23.50, but then I went back in too quickly, again with BBEP as an example, at $8.50. It’s pretty much “baked into the cake” that BBEP and LINE will have to cut their dividends further, or even more likely, eliminate them entirely. But if you can add more at truly depressed levels, say BBEP under $3, or LINE under $5, and are willing to hold on, it might be a great speculation. If the firms survive, they will reinstate payouts at some point in the future, and the share prices will recover as well, although it may be a long while getting back near their recent highs. Another speculation is Legacy Reserves (LGCY), which I judge to be slightly less distressed than BBEP and LINE, but still facing a grim outlook, as are all energy stocks. As for the majors, the energy report that came out a couple of weeks ago from Goldman cited Exxon Mobil (XOM) as the best bet. It will be awhile before XOM is a “single digit midget” like the three upstream MLPs just mentioned, but if it can be bought below $80, it should turn out well as an investment. With the energy prospects being what they are just now, I would take an incremental acquisition approach even with XOM, it certainly may fall further, if WTI (West Texas Intermediate) dips below $40, which some are predicting. For energy stocks, we are definitely at or at least approaching the moment when it is time to buy, as per the famous Rothschild quote, “Buy When There’s Blood in the Streets”. And frankly, in that scenario, it probably would be smarter to buy XOM in lieu of BBEP, LINE, or LGCY.

JT