After a down day Monday, stocks gained it all back and more over the remaining three trading days before Christmas, as perhaps a mini “Santa Claus” rally was ignited, for reasons unknown. While still down, but not by much, from the highs reached the prior months, a strong finish could see the market end the year almost all of the way back from the declines seen in mid-December.  

More important than the volatility over the short-term, at least in my opinion, is the income generated by my holdings. Stocks and CEFs on my lists going ex-dividend in my “look-ahead” period, the week ahead plus the following Monday, are listed following. The ex-dividend date and current yield, based on Friday’s close, are shown. Assume the dividend is paid quarterly unless otherwise indicated.

Prospect Capital (PSEC), 12/28/2021, 8.64%. PSEC is a monthly payer.

Chimera Investment (CIM), 12/29/2021, 8.57%.

AGNC Investment (AGNC), 12/30/2021, 9.45%. AGNC pays monthly.

Americold Realty Trust (COLD), 12/30/2021, 2.76%.

Innovative Industrial Properties (IIPR), 12/30/2021, 2.76%.

Spirit Realty Capital (SRC), 12/30/2021, 5.40%.

Algonquin Power & Utilities (AQN), 12/30/2021, 4.79%.

STAG Industrial (STAG), 12/30/2021, 3.21%. STAG pays monthly.

Ladder Capital (LADR), 12/30/2021, 6.63%.

Goldman Sachs BDC (GSBD), 12/30/2021, 9.36%.

New Residential Investment (NRZ), 12/30/2021, 9.54%.

MFA Financial (MFA), 12/30/2021, 9.98%. MFA collapsed from $8 to $2 during the worst of the Covid decline, and slashed the dividend, so was moved to my Tier4 list, no longer recommended. The stock price has only recovered about half of the decline, but the dividend has been restored. I sold, but if I hadn’t, I would be a “hold” for now.  

National Health Investors (NHI), 12/30/2021, 6.42%.

Annaly Capital Management (NLY), 12/30/2021, 10.81%.

Owl Rock Capital (ORCC), 12/30/2021, 8.67%.

Nucor (NUE), 12/30/2021, 1.76%. NUE has gone up from the $60’s to over $100 in the past year, out-pacing the dividend, and now yields less than 2%. I will be dropping NUE on my next update of stocks, and I would sell it if I owned it. NUE is an example of a great company, but an unattractive investment to be entering at today’s levels, considering the high price and the low yield.

Realty Income (O), 12/31/2021, 4.28%. O pays monthly. My rule on O is that it is a buy when yielding above 5%, and a sell when yielding under 4%. So at this time, it is a hold if owned, a wait for a higher yield, if not.

Ventas (VTR), 12/31/2021, 3.67%.

Main Street Capital (MAIN), 1/3/2022, 5.96%. MAIN pays monthly. This perennial out-performer continues to do just that, out-perform.

TotalEnergies SE (TTFNF), 1/3/2022, 5.88%. The yield is before France’s foreign tax withholding of 30%. There was a time when European oil companies were more attractive as energy investments than the (over-priced at that time) US-based oil majors. While the US oils are no longer screaming bargains, they are still a better bet for energy investments than the European oils at this time, in my view.

Only two of the sixteen CEFs I track will be going ex-dividend in my “look-ahead” period for this post. Both are monthly payers.

BlackRock Debt Strategies Fund (DSU), 12/30/2021, 6.27%.

First Trust Intermediate Duration Preferred & Income Fund (FPF), 1/3/2022, 6.09%.

None of my stocks will be reporting next week.

Upgrades/downgrades on my stocks from the short week just ended are listed below. As I frequently note, while it is always of interest to see how my stocks are viewed, I don’t consider the ratings as actionable advice.

AT&T (T) was upgraded from Equal Weight to OverWeight at Barclays.

HealthPeak Properties (PEAK) was upgraded from Neutral to OverWeight at JP Morgan.

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

McDonalds (MCD) was downgraded from Buy to Hold at Edward Jones.

Pfizer (PFE) was reiterated at OutPerform at Cowen.

AT&T (T) and Verizon (VZ) were both initiated at Neutral at Daiwa Securities.

To use an expression that dates me, I hate to sound like a broken record in my outlook, but I must. Stocks are over-valued, volatility is increasing, and the market may be waking up to the reality that the state of the union is not good. I remain convinced that better buy prices are coming, I’m content to wait for them. Even though that is my outlook, I wouldn’t be surprised if the mini-rally that started last Tuesday continued on for the final week of 2021. It very well might, unless some major event occurs to derail it.

JT

Stocks declined 4 of 5 trading days last week, punctuated by a Friday drop that was the largest decline so far this month. There are multiple causes for the slippage, but in my opinion the primary issue is the over-valued status of most stocks, plus numerous economic and geo-political concerns.

By missing posting last Monday, a number of stocks and CEFs that went ex-dividend last week have not been listed. Since my purpose in listing these dates is to alert readers who may be considering an acquisition of the date the stock or CEF must be owned (the day PRIOR to the ex-dividend date) if one is to receive the dividend, I have decided to skip a retroactive listing, since that purpose no longer applies.

The purpose does apply (excluding Monday 12/20/2021) for stocks / CEFs going ex-dividend in the upcoming week, I will pick up at that point. Thus, stocks and CEFs on my lists going ex-dividend in my “look-ahead” period, the week ahead plus the following Monday, are listed following. The ex-dividend date and current yield, based on Friday’s close, are shown. Assume the dividend is paid quarterly unless otherwise indicated.

General Electric (GE), 12/20/2021, 0.35%. This once-proud dividend payer only pays 8 cents per share per quarter, and that is after a 1:10 reverse split jacked up the stock price accordingly, so you haven’t missed much if you don’t own it as of the end of the day Friday, 12/17/2021.

Main Street Capital (MAIN), 12/21/2021, 5.95%. MAIN pays monthly.

PotlatchDeltic (PCH), 12/21/2021, 2.90%.

Washington Real Estate (WRE), 12/21/2021, 2.66%.

Gladstone Investment (GAIN), 12/22/2021, 5.47%. GAIN pays monthly.

VICI Properties (VICI), 12/22/2021, 5.21%.

Getty Realty (GTY), 12/22/2021, 5.20%.

Altria Group (MO), 12/22/2021, 7.46%.

Phillip Morris International (PM), 12/22/2021, 5.35%.

Only two of the sixteen CEFs I track will be going ex-dividend in my “look-ahead” period for this post. Both are monthly payers.

Eaton Vance Tax-Managed Diversified Equity Income Fund (ETY), 12/22/2021, 7.14%.

Miller Howard High Income Equity Fund (HIE), 12/22/2021, 5.70%.

Two of my stocks will be reporting next week, General Mills (GIS) on 12/21/2021, and Paychex (PAYX) on 12/22/2021.

I will report upgrades/downgrades on my stocks from the past two weeks. It is always of interest to see how my stocks are viewed, even though I don’t consider the ratings as actionable advice.

Southern Co (SO) was upgraded from UnderPerform to Neutral at Mizuho.

Rio Tinto PLC (RIO) was downgraded from OverWeight to Neutral at JP Morgan.

OGE Energy (OGE) was downgraded from Buy to Neutral at Mizuho.

Kraft Heinz Co (KHC) was downgraded from Buy to Neutral at Guggenheim.

Brookfield Renewable Partners LP (BEP) was upgraded from Neutral to OverWeight at JP Morgan.

Occidental Petroleum (OXY) was upgraded from UnderWeight to Neutral at JP Morgan.

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

Pfizer (PFE) was initiated at OverWeight at Wells Fargo.

Spirit Capital (SRC) was initiated at OutPerform at Wolfe Research.

Coca Cola (KO) was upgraded from Neutral to OverWeight at JP Morgan.

Pfizer (PFE) was upgraded from Neutral to Buy UBS.

Ventas (VTR) was upgraded from Neutral to Buy at Citigroup.

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

AT&T (T) was upgraded from Equal Weight to OverWeight at Morgan Stanley.

Brookfield Renewable Partners LP (BEP) was upgraded from Hold to Buy at TD Securities.

ONEOK (OKE) was downgraded from Overweight to Equal Weight at Wells Fargo.

Colgate Palmolive (CL) was initiated at Neutral at Redburn.

Williams Cos (WMB) was downgraded from Buy to Neutral at Citigroup.

3M Co (MMM) was initiated at Neutral at Mizuho.

Eaton (ETN) was initiated at Buy at Mizuho.

Emerson Electric (EMR) was initiated at Neutral at Mizuho.

Johnson & Johnson (JNJ) was initiated at Neutral at Goldman.

Pfizer (PFE) was initiated at Neutral at Goldman.  

Earlier this month it appeared that we might enjoy a “Santa Claus Rally”, as the generally positive vibes surrounding the holidays often has a positive effect on the markets. That seems to have evaporated this past week. There are any number of “grinches” I could name, or blame, to explain why the market has declined recently. But in lieu of that, I’ll just repeat what I’ve been saying for months now, that stocks are over-valued, volatility is increasing, and the market may be waking up to the reality that the state of the union is not good. I remain convinced that better buy prices are coming, I’m content to wait for them.

JT

Stocks continued to lose ground last week, after the shocking decline that surprised most everyone the prior Friday, November 26th. Following that selloff, last week had two positive days and three negative days, with the net decline over the five days still roughly only about half of the losses sustained on the huge down day of November 26. The market remains significantly over-valued, is trending down, and is increasingly volatile. To summarize, there is plenty to be concerned about if you are long equities.

In a market like this, the steady income provided by dividend payers becomes even more attractive. Stocks on my lists going ex-dividend in my “look-ahead” period, the week ahead plus the following Monday, are listed following. The ex-dividend date and current yield, based on Friday’s close, are shown. Assume the dividend is paid quarterly unless otherwise indicated.

Gladstone Investment (GAIN), 12/06/2021, 5.41%. GAIN pays monthly.

Kimco Realty (KIM), 12/08/2021, 2.94%.

Public Service Enterprise Group (PEG), 12/08/2021, 3.23%.

Medical Properties Trust (MPW), 12/08/2021, 5.26%.

Compass Minerals International (CMP), 12/09/2021, 1.19%. CMP blindsided investors with a surprise dividend cut from $0.72 to $0.15 per quarter, and is demoted to my Tier4 list, not recommended.

Williams Companies (WMB), 12/09/2021, 6.02%.

Golub Capital (GBDC), 12/09/2021, 7.79%.

Kimberly Clark (KMB), 12/09/2021, 3.43%.

Occidental Petroleum (OXY), 12/09/2021, 0.13%. This one-time high dividend stock now pays a whopping penny per quarter, earning a spot on my Tier4 list since that reduction.

Three of the sixteen CEFs I track will be going ex-dividend in my “look-ahead” period for this post, as per announcements. Three others probably will also, but have not announced as of yet. They are listed also, with the dividend date indicated as “est” for estimated. All are monthly payers.

PIMCO Corporate & Income Opportunity Fund (PTY), 12/10/2021, 8.49%.

BlackRock Debt Strategies Fund (DSU), 12/12/2021 est, 6.29%.

BlackRock Enhanced Equity Dividend Trust (BDJ), 12/12/2021 est, 6.16%.

Gabelli Utility Trust (GUT), 12/09/2021, 7.46%.

Gabelli Dividend & Income Trust (GDV), 12/09/2021, 5.10%.

BlackRock Energy and Resources Trust (BGR), 12/12/2021 est, 4.71%.

Only one of my stocks will be reporting next week, Greif (GEF) on 12/08/2021.

Ratings changes of interest regarding my stocks that came out last week are as follows.

United Parcel Service (UPS) was downgraded from Buy to Hold at Deutsche Bank.

Greif (GEF) was downgraded from OverWeight to Equal Weight at Wells Fargo.

Plains All American Pipeline (PAA) was initiated at Equal Weight at Barclays.

Chevron (CVX) was upgraded from Hold to Buy at Tudor, Pickering, Holt, & Co.

Vermilion Energy (VET) was upgraded from Hold to Buy at TD Securities. I own VET, the one-time high yield Canadian Trust, and I expect the dividend to be reinstated in 2022. If that happens, VET will move from Tier4 to Tier3.

Eni S p A (E) was upgraded from Hold to Buy at Berenberg.

Ares Capital (ARCC) was initiated at Buy at Janney.

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

As usual when volatility increases, there are any number of market pundits predicting a crash. One article I read noted the similarities between the recent market action and the market’s behavior prior to some of the most significant declines ever. The market is nervous, no doubt, with stretched valuations, excessive government and corporate debt, economic storm clouds, our political divide, and foreign threats. The usual end of year “holiday good feelings” may keep the market afloat through December, but after that, watch out. I’m ready, with a higher than usual cash position, that is the stance I’m comfortable with. My advice is to have a plan for what you are going to do if a major decline materializes in early 2022, like many are predicting.

Note that I won’t be posting again until the Monday before Christmas, as next weekend I will be away on a much-needed break, three days at Aspen. Hopefully some snow will arrive there before I do.

JT

Stocks declined Friday in a major way, with the headline Dow Industrials Index, the average most familiar to the general public, suffering its largest loss of 2021, over 900 points. While the mainstream financial press implied concerns over the new Covid Omicron variant was responsible, other pundits noted the prospect of the Fed tapering asset purchases and eventually allowing interest rates to rise, just as global growth is slowing and stocks are priced for perfection, implies the market is beginning to face the bitter reality. The Covid variant news was perhaps just the trigger for what occurred.

When capital gains are evaporating, the steady income provided by dividend payers becomes even more attractive. Stocks on my lists going ex-dividend in my “look-ahead” period, the week ahead plus the following Monday, are listed following. The ex-dividend date and current yield, based on Friday’s close, are shown. Assume the dividend is paid quarterly unless otherwise indicated.

AGNC Investment (AGNC), 11/29/2021, 8.98%. AGNC pays monthly.

Barrick Gold (GOLD), 11/29/2021, 1.86%.

STAG Industrial (STAG), 11/29/2021, 3.32%. STAG pays monthly.

Brookfield Renewable Partners LP (BEP), 11/29/2021, 3.34%.

Kellogg (K), 11/30/2021, 3.67%.

McDonalds (MCD), 11/30/2021, 2.15%.

Coca Cola (KO), 11/30/2021, 3.03%.

Realty Income (O), 11/30/2021, 4.18%. O pays monthly.

Safety Insurance Group (SAFT), 11/30/2021, 4.52%.

Pepsico (PEP), 12/02/2021, 2.63%.

Gladstone Investment (GAIN), 12/06/2021, 5.29%. GAIN is a monthly payer.

Two of the sixteen CEFs I track will be going ex-dividend in my “look-ahead” period for this post. Both are monthly payers.

First Trust Intermediate Duration Preferred & Income Fund (FPF), 12/01/2021, 6.17%.

AllianceBernstein Global High Income Fund (AWF), 12/22021, 6.35%.

Only one of my stocks will be reporting next week, Golub Capital (GBDC), on 11/29/2021.

Ratings changes of interest regarding my stocks that came out last week are as follows.

Kimco Realty (KIM) was upgraded from InLine to OutPerform at Evercore ISI, and from Hold to Buy at Stifel.

Ventas (VTR) was downgraded from OutPerform to Neutral at SMBC Nikko.

General Electric (GE) was initiated at Hold at Jeffries, and resumed at OverWeight at Morgan Stanley.                    

Chevron (CVX) was upgraded from Sector Perform to OutPerform at RBC Capital Markets.

That’s it, not much analyst rating activity during a short holiday week.

Whether Friday’s decline signals the start of the long-predicted correction, or just a one-day blip to the downside, it illustrates that we have a fragile market at this time. As I have postulated for some months now, stocks are over-valued by every traditional measure, even as the economy is starting to sputter and inflation is becoming a problem. The significant injections of stimulus into the economy during the Covid crisis, with the Fed juicing the economy more or less constantly since the 2008-2009 financial crisis, may have set us up for a decline of historical magnitude. The Fed has been able to “get away with it” because of long-term trends favoring deflation these past few years. But with inflation now becoming an issue, the Fed will be forced to act if it turns out to NOT be transitory, which is the current Fed stance. The policy conflict between controlling inflation vs propping up the economy and markets will make for great political theater in 2022, as the mid-terms approach and the political divide worsens. To paraphrase some sports enthusiasts, “get your popcorn ready, the show is coming in 2022”. Unfortunately, most (myself included) will not be able to enjoy the fireworks, because we will be directly affected by the twists and turns to come.

JT