JT’s DAILY (WEEKLY as of 12/9/2013) BLOG for Month Of September 2017

Note: All previous month's posts are available in the archives, as noted above. 

All postings for the month are available here, sorted in descending order - i.e. most recent at the top.

1st Posting for Week Beginning Monday 09/18/2017

Posted Sunday 09/17/2017 08:00 PM

Stocks resumed their climb after the minimal setback of a couple of weeks ago, as the Dow Industrials and the NASDAQ indexes both set new record highs. North Korea, hurricanes, $20 trillion national debt, whatever, nothing seems to discourage stock buyers. It will end someday, no doubt, but apparently not for a while yet.

In reviewing last week’s update, I realized that I had been off a whole week, reporting upcoming earnings and dividends for the week ahead based on a starting date of September 18, not September 11. At my age, I sometimes forget what year it is, or what month we’re in, but never what week is coming up! Further, I will be out of town next weekend, so this posting will look ahead two weeks instead of just one, as is my usual practice, and thus this will be my last posting for the month of September 2017. So with all that said, here are the ex-dividend dates on stocks I follow that I missed reporting last week, plus the known ex-dividend dates coming up for my stocks in the next two weeks.

Ventas (VTR), 9/11/2017, yield 4.50%.

Newmont Mining (NEM), 9/13/2017, yield 0.59%. 

Dr Pepper Snapple Group (DPS), 9/13/2017, yield 2.53%. 

Medical Properties Trust (MPW), 9/13/2017, yield 7.35%. 

Fifth Street Finance (FSC), 9/14/2017, yield 5.07%. 

Frontier Communications (FTR), 9/14/2017, yield 18.58%. 

Ares Capital (ARCC), 9/14/2017, yield 9.64%. 

Potlatch (PCH), 9/14/2017, yield 3.13%. 

TICC Capital (TICC), 9/14/2017, yield 12.07%. 

Coca Cola (KO), 9/14/2017, yield 3.21%. 

Iron Mountain (IRM), 9/14/2017, yield 5.62%.

Merck (MRK), 9/14/2017, yield 2.84%. 

Altria Group (MO), 9/14/2017, yield 4.24%. 

Greif Cl A (GEF), 9/15/2017, yield 2.96%. 

General Electric (GE), 9/14/2017, yield 4.00%. GE has declined over $7 since the first of this year, for no good reason that I have seen. When GE yields 4% or more, it is in buy territory, in my opinion.

That’s it for the dividends that should have been noted in last week’s post. Now, looking ahead two weeks, here are the payouts currently scheduled.

Eni S p A (E), 9/18/2017, yield 4.79%. E pays twice a year. Note that the yield is before Italy’s 28% withholding. Actual yield based on what you actually receive is about 3.50%. If held in a non-retirement account, the amount withheld is potentially eligible for the foreign tax credit on a US Tax Return. If held in an IRA, no tax credit is allowed.

Gladstone Investment (GAIN), 9/19/2017, yield 8.33%. GAIN pays monthly.

PennantPark Investment (PNNT), 9/19/2017, yield 9.49%.

Horizon Technology Finance (HRZN), 9/19/2017, yield 11.15%. HRZN pays monthly.

Apollo Investment (AINV), 9/20/2017, yield 9.98%.

Main Street Capital (MAIN), 9/20/2017, yield 5.70%. MAIN pays monthly.

Total S A (TOT), 9/21/2017, yield 5.02%. Note that the yield is before France’s 30% withholding. Actual yield based on what you actually receive is about 3.50%. Same situation as Eni, above.

Phillip Morris International (PM), 9/26/2017, yield 3.67%. A tobacco stock yielding less than 4% is a no go in my opinion.

MFA Financial (MFA), 9/27/2017, yield 9.21%.  

AGNC Investment (AGNC), 9/28/2017, yield 10.29%. AGNC is a monthly payer.

STAG Industrial (STAG), 9/28/2017, yield 5.01%. STAG pays monthly.

Prospect Capital (PSEC), 9/28/2017, yield 10.71%. PSEC is another monthly payer.

Annaly Capital (NLY), 9/28/2017, yield 9.80%.

Nucor (NUE), 9/28/2017, yield 2.80%.

Realty Income (O), 9/29/2017, yield 4.28%. O is the most famous monthly payer of all.  

As for earnings, none of my stocks reported last week. General Mills (GIS) is still scheduled to report 9/20/2017, as noted in last week’s post. As for the following week, Darden Restaurants (DRI) is scheduled to report on 9/26/2017, and ConAgra (CAG) on 9/28/2017.

It was another slow week for upgrades / downgrades, other than for the Macquarie Group.  Stocks on my lists receiving attention from analysts last week are noted following. As I frequently remind readers, these recommendations are presented for informational purposes only, and are not to be considered actionable advice.

ONEOK (OKE) was resumed at Neutral at JP Morgan.

Energy Transfer Equity L P (ETE) was reiterated at Buy at Jeffries.

Nucor (NUE) was downgraded from OverWeight to Equal Weight at Morgan Stanley, and upgraded from Neutral to Buy at Citigroup.

Southern Co (SO) was upgraded from Neutral to Buy at Guggenheim.

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

Coca Cola (KO) was initiated at Neutral at Macquarie.

Dr Pepper Snapple (DPS) was initiated at Neutral at Macquarie.

Pepsico (PEP) was initiated at OutPerform at Macquarie.

Procter & Gamble (PG) was initiated at OutPerform at Macquarie.

Kimberly Clark (KMB) was initiated at Neutral at Macquarie.

Freeport-McMoRan (FCX) was initiated at Sector OutPerform at CIBC.

Like many investors, I have a sense of impending doom about the markets, and the country as a whole. The latest weekly update from John Mauldin presenting the dire condition of local and state government pension funding is sobering reading indeed, especially if you are retired or approaching retirement from any governmental position. Of course, part of the problem is the many abusive practices that would never be allowed by a responsible pension sponsor, such as inflating the final benefit by counting overtime pay or bonuses in the formula. A “hard money” newsletter I subscribe to has presented the best summarization of the root problem I have ever read. I don’t have room to reproduce it completely, but I will try to do it justice by condensing it as follows:

“The larger problem is that we have been going socialistic for over a hundred years, and the result is an intractable problem caused by money and credit expansion, and the fact that it cannot be corrected or even slowed down without an economic depression that would likely end what’s left of the American experiment in representative democracy and limited government. That is because the social welfare system has created a huge population of criminals, addicts, crazies, governmental dependents, and people of low character that are sympathetic to the goals of the far left, and who would certainly support the end of the constitution and the rule of law in pursuit of their social goals.”

You can see it getting worse daily, as formerly outrageous behavior becomes increasingly tolerated and accepted by apologists of all stripes.   

It is hard to stay focused on the minutiae of earnings, dividends, economic releases, and market swings with the backdrop as described unfolding. If the free market disappears, none of these data points will much matter.

JT  

1st Posting for Week Beginning Monday 09/11/2017

Posted Sunday 09/10/2017 10:00 AM

Stocks declined significantly Tuesday, then moved very little the rest of the week, as the Gulf Coast flooding from Harvey and the impending assault on Florida by Irma dominated the headlines. Dealing with North Korea seems to be on hold until we get past these storms.

This week’s list of stocks I follow going ex-dividend is a short one.

Eni S p A (E), 9/18/2017, yield 4.79%. E pays twice a year. Note that the yield is before Italy’s 28% withholding. Actual yield based on what you actually receive is about 3.50%. If held in a non-retirement account, the amount withheld is potentially eligible for the foreign tax credit on a US Tax Return. If held in an IRA, no tax credit is allowed.

Gladstone Investment (GAIN), 9/19/2017, yield 8.28%. GAIN pays monthly.

Horizon Technology Finance (HRZN), 9/19/2017, yield 11.26%.

Apollo Investment (AINV), 9/20/2017, yield 10.03%.

Main Street Capital (MAIN), 9/20/2017, yield 5.84%.

As for earnings, none of my stocks reported last week. Only one is slated to report this week, General Mills (GIS) on 9/20/2017. GIS reports quarterly like most all US corporations, but has always reported outside of the normal quarterly cycle. GIS is the poster child for a huge, mega-cap lumbering giant, struggling to adjust to changing consumer habits and to maintain market share, as well as margins. The share price is in the $55 range now, after being above $70 in July 2016, reflecting these challenges. Management, like me, must wonder what’s wrong with today’s kids, they are just not eating Cheerios like we did as kids!

It was another slow week for upgrades / downgrades. Stocks on my lists receiving attention from analysts last week were as follows:

Statoil (STO) was upgraded from Sell to Hold at Deutsche Bank.

Calumet Specialty Products Partners L P (CLMT) was downgraded from Buy to Neutral at Janney Capital. With no dividend, CLMT is on my non-recommended Tier4 list. However, I do think CLMT will survive, and perhaps resume distributions at some point, so if I owned it, I would just hold.

MicroSoft (MSFT) was initiated at Neutral at MoffettNathanson. MSFT is a successful firm, no doubt, but the stock is sky-high just now, way beyond any price I would be willing to pay. 

ExxonMobil (XOM) was upgraded from Sell to Neutral at UBS. While well off the highs of 2014 and the rebound of 2016, I’m not seeing XOM as a terrific bargain just now. I will say that the dividend is safe for the time being. The question is the future of oil prices, which is to say the future of demand.

Nucor (NUE) was initiated at Neutral at Macquarie.

Freeport-McMoRan (FCX) was also initiated at Neutral at Macquarie.

NextEra Energy (NEE) was resumed at OverWeight at JP Morgan.   

Mid America Apartment Communities (MAA) was upgraded from Neutral to Buy at BTIG Research.

Pepsico (PEP) was downgraded from OutPerform to Neutral at Credit Suisse.

Hercules Capital (HTGC) was upgraded from Neutral to Buy at Compass Point.

GlaxoSmithKline (GSK) was downgraded from Equal Weight to UnderWeight at Morgan Stanley.

It looks like yet another week will be dominated by severe weather events. The economic impact of the destruction will be felt in the US economy going forward. But perversely, GDP may even be boosted by the recovery activity, with the huge losses not being reflected in the figures. Still, with this much devastation, to communities and to people at a personal level, some activity that would have occurred absent the weather event will certainly not be occurring. So it’s hard to say how it will all balance out in the economic statistics, and what the impact will be on the financial markets.

JT

1st Posting for Week Beginning Tuesday 09/05/2017

Posted Monday 09/04/2017 10:00 AM

Stocks sleepwalked through the final days of August last week, as well as the first day of September, posting a modest gain for the week. The Houston flooding in the aftermath of Harvey dominated the news cycle all week, only being bumped from the headlines over the weekend as the latest outrage from North Korea took center stage. The markets have basically ignored the downside potential of the North Korea situation, but that may change in the coming days, as it is starting to look really serious.

Meanwhile, in the spirit of “get it while you can”, a Janis Joplin standard, stocks on my lists going ex-dividend this week are as follows:

Waste Management (WM), 9/7/2017, yield 2.20%.

Public Service Enterprise Group (PEG), 9/7/2017, yield 3.67%.

Kimberly Clark (KMB), 9/7/2017, yield 3.15%.

Ensco (ECV), 9/8/2017, yield 0.94%. With a yield that low, you have to wonder, “why bother”?

SCANA (SCG), 9/8/2017, yield 4.06%.

Ventas (VTR), 9/11/2017, yield 4.53%.

As expected, two of my stocks reported last week, Prospect Capital (PSEC) on 8/28/2017, and Greif (GEF) on 8/30/2017. PSEC also announced a 28% dividend cut to 6 cents per month, which was widely expected, as earnings have not supported the dividend for some time. The stock, still yielding over 10%, dropped $0.50 over the week, after actually gaining back 10 cents or so on Friday. The question for holders of this BDC is “will the company be able to cover the reduced dividend”? Some say NO. See articles and commentary on Seeking Alpha for more information.

None of my stocks are scheduled to report this week.

It was a slow week for upgrades / downgrades. Stocks on my lists receiving attention from analysts last week were as follows:

Plains All American Pipeline L P (PAA) was upgraded from OutPerform to Strong Buy at Raymond James. I have to concur, as PAA is looking much better these days. Unfortunately, the market also concurs, and my buy order at under $20 is going nowhere fast, as PAA went up by $1.50 last week, closing at $21.84, sporting a yield above 10%.

Plains All American Pipeline L P (PAA) was also upgraded to OutPerform at BMO Capital, and reiterated at Hold at Stifel Nicolaus.

SCANA (SCG) was upgraded from UnderPerform to Neutral at Mizuho.

Kimco Realty (KIM) was downgraded from Buy to Hold at Argus.

Triangle Capital (TCAP) was upgraded from Neutral to OutPerform at Robert W Baird.

American Midstream Partners L P (AMID) was downgraded from OutPerform to Sector Perform at RBC Capital Markets. Yielding over 14%, AMID would seem to be a screaming BUY, if one has confidence that the distribution is sustainable.

Sanofi (SNY) was upgraded from Reduce to Hold at HSBC. I guess “Reduce” means sell some of your position, but not all, and is thus not as low of a rating as “Sell”.

Transocean (RIG) was upgraded from Equal Weight to OverWeight at Capital One.

Mid America Apartment Communities (MAA) was initiated at Hold at Stifel.

Greif (GEF) was downgraded from Buy to Neutral at HSBC Securities.

Enterprise Products Partners L P (EPD) was reiterated at Buy at Jeffries.

A holiday-shortened week is usually a quiet week, but the week ahead may be anything but, as the stand-off with North Korea grows ever more intense. General MacArthur’s words from long ago ring louder than ever, “there’s no substitute for victory”. The North Korea “problem” is a classic example of “kicking the can down the road”, as successive US administrations since the 50’s have failed to deal with the threat. But now, with the progress of the odious regime towards their weapons goals seemingly accelerating the last couple of years, it is now clear we are running out of time. The market recently has basically ignored this situation, but that may change, as early as the coming week. Now more than ever, keep plenty of ‘dry powder”, i.e. investible cash, on hand, a shock event may be coming which will present some terrific bargains, if anyone is still around to take advantage of them.

JT

1st Posting for Week Beginning Monday 08/28/2017

Posted Monday 08/28/2017 07:30 AM

Stocks managed a decent relief rally on Tuesday, then held on to finish the week with a gain. As the week-end drew near, the weather became the primary topic of conversation, as Houston experienced the worst flooding ever from hurricane Harvey’s soaking aftermath.

Dividends are the primary objective of my investment approach. Here are this week’s batch of ex-dividend dates:

AGNC Investment (AGNC), 8/28/2017, yield 9.97%. AGNC pays monthly.

STAG Industrial (STAG), 8/29/2017, yield 5.05%. STAG also pays monthly.

Enerplus (ERF), 8/29/2017, yield 1.09%. The one-time Canadian high-yield trust, no longer yielding much of anything, pays monthly.

Prospect Capital (PSEC), 8/29/2017, yield 13.91%. PSEC pays monthly.

Kellogg (K), 8/30/2017, yield 3.18%.

Realty Income (O), 8/30/2017, yield 4.41%. The “monthly dividend company” pays, you guessed it, monthly.

Safety Insurance Group (SAFT), 8/30/2017, yield 4.47%.

McDonalds (MCD), 8/30/2017, yield 2.37%.

Pepsico (PEP), 8/30/2017, yield 2.77%.

CenturyLink (CTL), 8/31/2017, yield 10.77%.

Triangle Capital (TCAP), 8/31/2017, yield 13.39%.

Both firms listed last week as being scheduled to report did so as scheduled. That would be JM Smucker (SJM) and Seadrill (SDRL). For earnings details, see the firms’ press releases, articles on the mainstream financial media, brokerage compilations, or my preferred resource, Seeking Alpha. The consensus is that SDRL is done, will be declaring bankruptcy soon, and the common holders will end up with nothing. SDRL is a case-study of a high-flying, high-yielding stock, and what happens when things go south. It is also a case study of the likely outcome in rank speculation, in this case picking up shares of a former high-flyer for peanuts, hoping for a big gain if any kind of recovery occurs, and experiencing what you get when no recovery is possible.  

As for this week, two firms on my lists will be reporting, Prospect Capital (PSEC) on 8/28/2017, and Greif (GEF) on 8/30/2017.

My weekly round-up of upgrades / downgrades of stocks on my lists is next:

Plains All American Pipeline L P (PAA) was upgraded from Hold to Buy at Jeffries.

Horizon Technology Finance (HRZN) was upgraded from Sell to Neutral at Compass Point.

Eni S p A (E) was downgraded from Equal Weight to UnderWeight at Barclays.

Statoil (STO) was downgraded from Equal Weight to UnderWeight at Barclays.

Total S A (TOT), was downgraded from OverWeight to Equal Weight at Barclays.

Horizon Technology Finance (HRZN) was upgraded from Hold to Buy at Maxim Group.

Frontier Communications (FTR) was reiterated at Equal Weight at Morgan Stanley.

CenturyLink (CTL) was reiterated at Equal Weight at Morgan Stanley.

JM Smucker (SJM) was downgraded from OverWeight to Neutral at JP Morgan.

Hershey Co (HSY) was reiterated at Neutral at Susquehanna.

ONEOK (OKE) was reiterated at Buy at Argus.

JM Smucker (SJM) was reiterated at UnderWeight at Morgan Stanley.

Transocean (RIG) was upgraded from UnderPerform to Sector Perform at RBC Capital Markets.

Noble Corp PLC (NE) was upgraded from UnderPerform to Sector Perform at RBC Capital Markets.

As the end of summer approaches, there are ominous clouds on the horizon, both literally (in Houston and all along the Gulf Coast) and figuratively (government shutdown risk, just one of many). The correction that seemed to be starting before last week has evidently been cancelled, or perhaps has just been delayed. Certainly now is not the time to go “all in” on anything! Conserve cash and be cautious, maybe even paranoid, is my recommendation.

JT