Get Defense and Growth at the Same Time
Looks can be deceiving. The market appears to be rolling along just like it has for more than two years. But big changes are occurring beneath the surface.
This bull market has rallied 70% since it began in October of 2023. But until last summer, the market was almost entirely driven higher by a handful of big technology stocks. Returns for the rest of the market were barely positive. In fact, from the end of 2022 through last month, the “Magnificent 7” accounted for 55% of the market returns.
But things are changing.
The rally broadened out last summer as utility and real estate stocks came on strong. After the election, cyclical stocks and energy soared. So far this year, finance and healthcare are the top performers. In fact, 10 of the 11 S&P stock sectors are higher YTD. And technology is the lone sector in negative territory.
Other stocks are picking up the slack while technology is wobbling. The grossly lopsided performance couldn’t last to the recent degree. And there’s more to the story than just sector rotation. Earnings are catching up. In 2024, the average earnings growth rate of the “Magnificent 7” exceeded that of the other 493 companies by 28%. That difference is expected to fall to just over 7% in 2025.
I’m still bullish on the portfolio AI stocks. But other sectors of the market are overdue for stronger relative performance. Even though the market is high, it’s high because of AI, which has earnings growth to justify higher valuations. For the rest of the market, valuations aren’t high, and the rally may just be getting started.
Healthcare is perhaps the best of all sectors that aren’t technology. It’s an all-weather industry that offers a very seldom-found combination of safety and growth. It’s like having a supermodel wife who’s a great cook too. The industry is defensive because people go to the doctor and take medication regardless of the economy. But the growth side of the story is more exciting.
I’ve often talked about megatrends. These trends are defined as an emerging force likely to have a significant impact on the kinds of products consumers will buy in the foreseeable future. Investing in front of a megatrend makes everything easier. It makes a good stock a great stock and a great stock possibly the investment of a lifetime. One of the most profound megatrends right now is the aging population.
The human population is older than it has ever been. And the species continues to grow still older at warp speed in this country and the rest of the world. How old are we?
Between 2011 and 2029, about 76 million baby boomers will turn 65. Over that period, an estimated 10,000 partiers will turn 65 every single day. That’s about 3.6 million per year. It is estimated that the number of Americans over the age of 65 will hit 72 million by 2030, more than double the number in 2000. Aging is even more pronounced in other parts of the world.
The main industry beneficiary of the aging population is healthcare, for obvious reasons. In 2012, total healthcare expenditures in the United States were $2.8 trillion. Since then, spending in the sector has increased 75% and now accounts for a staggering 20% of total U.S. GDP. Spending is likely to increase at a similar rate going forward.
In this issue, I highlight four healthcare stocks currently in the portfolio. Despite the lopsided bull market returns so far, a couple of these stocks have been among the very best performers. And now they should be poised for a strong run in 2025.
What to Do Now
The market has leveled off since November. It dipped in December and recovered in January. I don’t know about this month yet. But most of the portfolio stocks are well positioned.
The stocks that got clobbered from the DeepSeek news in late January are recovering. Broadcom (AVGO) was upgraded to a “BUY” rating after it fell over 18% in one day. It’s been recovering nicely since. The midstream energy stocks are also moving higher again, albeit more slowly. They are still worth buying at current prices as it should be a good year for natural gas production and demand.
The best bargains in the portfolio are utility stocks NextEra Energy (NEE) and Brookfield Infrastructure Partners (BIP). Those stocks are still cheap after a rough couple of years. The only problem is they are slaves to the interest rate narrative. And I’m not sure how that will go over the next few months. The other bargain stocks are Ally Financial (ALLY) and UnitedHealth Group (UNH). And those two appear to be more attractive in the near term.
ALLY has overcome the loan delinquency problem that was holding it back, and it has some catching up to do with its peers. UNH has taken an unholy barrage of bad news, and it is more likely that things get better for the stock going forward. Plus, it’s healthcare, a sector that not only can endure any economy or disturbance but also has some upward momentum.
I like the four healthcare stocks featured below the best right now.
Recent Activity
January 15
Toll Brothers, Inc. (TOL) – Rating change “BUY” to “HOLD”
January 29
Broadcom Inc. (AVGO) – Rating change “HOLD” to “BUY”
Featured Action
Buy AbbVie Inc. (ABBV)
AbbVie is a U.S.-based biopharmaceutical company formed in 2013 as a spinoff from Abbott Laboratories (ABT). AbbVie is a research-based pharmaceutical company that specializes in small-molecule drugs. It’s a cutting-edge company with a terrific pipeline.
AbbVie became an industry giant because of its mega-blockbuster drug Humira. It’s an autoimmune medication that became the world’s best-selling drug with annual sales of $20 billion. But the tremendous success of that drug became a problem as Humira lost its patent overseas a few years ago, and it lost its U.S. patent in 2023.
Because of shrinking Humira sales, AbbVie posted lower year-over-year revenues in 2023 and the first half of 2024. But the company is turning it around. AbbVie has long planned for this eventuality and has done a stellar job launching new drugs capable of replacing the diminishing Humira revenue.
Despite the steep patent cliff (Humira accounted for 75% of revenue a few years ago), the stock has still performed well. The patent cliff was well known by investors, yet ABBV has returned 49% over the past three years and 148% over the last five versus returns for the S&P 500 of 39% and 94% over the same periods respectively. That’s because even impatient investors realize that the company has stellar new drugs and a pipeline capable of overcoming Humira.
AbbVie’s new immunology drugs, Skyrizi and Rinvoq, have already replaced Humira’s peak revenues. In the fourth quarter, Skyrizi and Rinvoq, collectively, delivered $5.61 billion in revenue. Those drugs alone have replaced the Humira revenue which peaked at a little over $20 billion annually. The company also raised revenue forecasts on the two drugs by $4 billion to $31 billion a year by 2027. The company also has dozens of promising drugs in the late-stage pipeline.
The earnings report showed Abbvie has replaced the Humira revenue and is well on track to strong earnings growth in the years ahead. The patent cliff had been holding the stock back but that’s gone now. And the company has guided for 21% revenue growth in 2025.
Buy Eli Lilly and Company (LLY)
Eli Lilly and Co. (LLY) is a pharmaceutical giant that has delivered staggering returns. Since it was added to the portfolio in August of 2020, LLY has gained over 500%. LLY delivered an average annual return of 49% since being in the portfolio. It has a beta of just 0.43, meaning it is less than half as volatile as the S&P 500.
Indiana-based Eli Lilly is a global pharmaceutical company with over $40 billion in annual revenue, 41,000 employees, and sales in 110 countries. Founded in 1876, Lilly is noteworthy for its unusually high focus on research and development (R&D), where it allocates over 25% of sales compared to an average of high teens for the industry.
The R&D focus pays off, as Lilly has arguably the very best pipeline and lineup of recently launched drugs in the industry. The recent catalyst for the stock is two new potential mega-blockbuster drugs. Its new weight-loss drug Zepbound delivers better results than anything on the market for weight loss. And the Alzheimer’s disease drug donanemab also has mega-blockbuster potential.
LLY had a rare price dip after an earnings miss in the third quarter. The company also preannounced lower-than-expected earnings ahead of the fourth-quarter report as demand for weight-loss drugs has been less than previously anticipated. LLY fell to a six-month low after the announcement. However, LLY has moved up over 20% from the recent low in January.
The market liked the fourth-quarter earnings report and the stock has been moving higher since. Although sales of weight-loss drugs were less than previously anticipated, Zepbound and Mounjaro generated a whopping $5.4 billion in the fourth quarter alone. The company reported revenue growth of 45% for the quarter and EPS growth of 102%. For the full year, revenue grew 32% and earnings grew 101%.
Lilly also has other potential strong drugs in the pipeline. The company also raised guidance and anticipated 30% revenue growth and 90% earnings growth for the year. With that level of growth, the stock price still has room to run. LLY is a buy under 900.
Buy McKesson Corporation (MCK)
The pandemic aftermath made us acutely aware of the importance of supply chains, as disruptions caused short supplies and skyrocketing prices. Efficient distribution is what makes this whole consumer economy work.
McKesson Corporation (MCK) is a leading domestic wholesaler of branded, generic, and specialty pharmaceutical products. The company operates a supply chain that delivers products from 1,300 drug manufacturers to over 180,000 points of dispensation throughout the country. It supplies about one-third of the U.S. drug distribution market.
McKesson buys drugs from manufacturers, delivers them, and resells them to retailers at a profit. Established in 1833, the company has been honing the process for nearly two centuries. Naturally, it has strategic partnerships with companies like CVS (CVS), Walmart (WMT), and Rite Aid (RAD).
The extensive distribution network and enormous scale give McKesson tremendous bargaining leverage with suppliers and customers that can’t be easily duplicated by would-be competitors. That’s why the business is an oligopoly. McKesson, along with Cencora Inc. and Cardinal Health, account for 90% of the drug wholesale distribution market in the United States. In addition, there are very high switching costs among the providers, so they rarely lose business to the other two companies.
MCK has a stellar track record over the last several years. Over the last three- and five-year periods, MCK has returned 119% and 281% respectively, compared to 39% and 94% for the S&P over the same periods. But the stock has recently endured a rare stumble.
It has been languishing for the past six months. The stock peaked last August. It then pulled back and recovered. It’s still lower since November but has been trending higher this year.
The stock pulled back last quarter after lower-than-expected earnings because of supply disruptions in weight-loss drugs. There have also been some issues with rising costs. However, the company grew revenue 18% and EPS 57% from the year-ago period. It also raised guidance for 2025.
The dividend yield is small, but the payout has grown annually by double digits for the past 10 years. It’s easy for a company to grow when the market for its products grows all by itself because of the aging population. MCK is a BUY under 650.
Buy UnitedHealth Group Incorporated (UNH)
UnitedHealth Group is a Dow Jones component that is America’s largest insurer and one of the world’s largest private health insurers. It’s a goliath with $390 billion in annual revenues that serves 149 million members in all 50 states and 33 countries. That’s a lot of monthly insurance premiums!
The group provides services at just about every step of the healthcare process and the full-scale operation provides a powerful alignment of incentives that helps clients control costs better than competitors, which is a massive issue in the industry.
It’s also a huge company and operation. Scale is hugely important in this industry. It enables UnitedHealth Group to keep costs down by virtue of volume, have cash for acquisitions, and wield significant power to adjust rates as prices increase. That’s a huge benefit during inflation.
This stock also has a stellar longer-term track record, but it has languished over the past couple of years. More recently, it’s been one thing after another for this health insurer. The stock was down 16% in December and returned -4.74% in 2024. UNH initially fell because of trepidation over the RFK nomination. Then the CEO was assassinated. Then, President-elect Trump made comments about “eliminating the middleman” in the healthcare industry. But it has been trending higher so far this year.
Health insurance isn’t going away. It’s a massive industry with built-in growth and UNH is a dominant player. The stock also tends to rally when the rest of the market struggles. It’s a good stock to own as a hedge.
UNH currently pays a quarterly dividend of $2.10 per share, or $8.40 annualized, which translates to a 1.6% yield at the current price. The payout is well supported with just a 30% payout ratio, and the dividend is likely to grow. In fact, the quarterly payout has grown 94% over the past five years, from $1.08 in 2019 to the current $2.10.
Portfolio Recap
High Yield Tier | ||||||||||
| Security (Symbol) | Date Added | Price Added | Div Freq. | Indicated Annual Dividend | Yield On Cost | Price on Close 2/10/25 | Total Return | Current Yield | CDI Opinion | Pos. Size |
| AGNC Investment Corp. (AGNC) | 14.20% | 10 | 6% | 14.90% | BUY | |||||
| Brookfield Infrastructure Ptnrs. (BIP) | 6.80% | 33 | 68% | 5.00% | BUY | |||||
| Cheniere Energy Partners, L.P. (CQP) | 6.70% | 64 | 24% | 5.10% | BUY | |||||
| Enterprise Product Partners (EPD) | 7.60% | 33 | 84% | 6.50% | BUY | |||||
| FS KKR Capital Corporation (FSK) | 14.40% | 23 | 32% | 12.10% | BUY | |||||
| Main Street Capital Corp. (MAIN) | 9.00% | 61 | 41% | 6.80% | BUY | |||||
| ONEOK Inc. (OKE) | 7.50% | 99 | 132% | 4.20% | BUY | |||||
| The Williams Companies, Inc. (WMB) | 8/10/22 | 33 | Qtr. | 1.9 | 5.80% | 56 | 93% | 3.70% | BUY | 1 |
| Current High Yield Tier Totals: | 9.00% | 60% | 7.30% | |||||||
Dividend Growth Tier | ||||||||||
| AbbVie (ABBV) | 190 | 222% | 3.70% | BUY | ||||||
| Ally Financial Inc. (ALLY) | 38 | -1% | 3.10% | BUY | ||||||
| Broadcom Inc. (AVGO) | 235 | 473% | 1.20% | BUY | ||||||
| Cheniere Energy, Inc. (LNG) | 7/10/24 | 175 | Qtr. | 2 | 1.10% | 223 | 28% | 0.90% | BUY | 1 |
| Constellation Enery Corp. (CEG) | 8/14/24 | 186 | Qtr. | 1.41 | 1.00% | 322 | 73% | 0.40% | HOLD | 1 |
| Digital Realty Trust, Inc. (DLR) | 166 | 48% | 2.90% | HOLD | ||||||
| Eli Lilly and Company (LLY) | 869 | 502% | 0.70% | BUY | ||||||
| McKesson Corporation (MCK) | 603 | 33% | 0.50% | BUY | ||||||
| Qualcomm (QCOM) | 171 | 128% | 1.90% | BUY | ||||||
| Toll Brothers, Inc. (TOL) | 125 | -17% | 0.60% | HOLD | ||||||
| UnitedHealth Group Inc. (UNH) | 533 | 5% | 1.60% | BUY | ||||||
| Current Dividend Growth Tier Totals: | 3.00% | 136% | 1.60% | |||||||
Safe Income Tier | ||||||||||
| 70 | 82% | 3.00% | BUY | |||||||
| U.S. Bancorp Depository Shares (USB-PS) | 10/12/22 | 19 | Qtr. | 1.13 | 6.10% | 20 | 22% | 5.70% | BUY | 1 |
| 4.50% | 75 | 4% | 5.20% | BUY | ||||||
| 5.10% | 36% | 4.60% | ||||||||
AGNC Investment Corporation (AGNC – yield 14.9%) – The mortgage REIT has been trending higher for nearly a year until it ran into a buzzsaw this past fall when the interest rate narrative soured. But the narrative and stock performance have been improving this year and AGNC has rallied to over 10 per share, the highest level since last fall. The REIT reported solid earnings last week. Numbers were better for the full year but a little worse for the quarter as the environment took a slight step back. Spreads are still higher as the Fed Funds rate has already been cut 1% and longer rates are higher. AGNC should be set up for a much better 2025. BUY
AGNC Investment Corp. (AGNC)
Next ex-div date: February 28, 2025, est.
Brookfield Infrastructure Partners (BIP – yield 5.0%) – The infrastructure partnership reported earnings last month that beat expectations with 8% FFO (funds from operations) growth for 2024 over the prior year and 10% minus exchange rates. Brookfield also announced a 6% distribution increase, marking the 16th consecutive year of payout increases. BIP jumped 4.5% on the day following the report. It’s more good news that Brookfield reflected confidence in future earnings. The business is delivering but the stock price isn’t. BIP returned a lame 6.3% over the last year while the market was up about 20%. It continues to be a slave to the interest rate narrative and likely won’t break out until interest rates do. But it does deliver a solid income in the meantime and provides an element of defense to the portfolio. (This security generates a K1 form at tax time). BUY
Brookfield Infrastructure Partners (BIP)
Next ex-div date: February 28, 2025, est.
Cheniere Energy Partners, L.P. (CQP – yield 5.1%) – This high-yielding liquid natural gas export partnership has pulled back over the last week. But it still looks great. CQP is still 27% higher since the election. The natural gas trade got clobbered last month but it has been recovering, and the issues of concern don’t really apply to CQP. The demand for U.S. exports is likely to continue to grow strongly even without the anticipated level of data center spending. The Trump administration is highly encouraging of natural gas exports and Cheniere is the country’s largest exporter. The longer-term situation was always strong and now the short-term situation is improving. (This security generates a K1 form at tax time.) BUY
Cheniere Energy Partners (CQP)
Next ex-div date: May 10, 2025, est.
Enterprise Product Partners (EPD – yield 6.5%) – The partnership reported solid earnings last week with 7% earnings growth for the year and a 5% distribution hike, marking the 26th consecutive year of increases. Natural gas demand is booming, and Enterprise will continue to benefit. While most midstream energy companies took a hit last month on fears that AI energy demand will be less than anticipated, those fears are waning, and the midstream stocks are coming right back. It looks like EPD might be moving back to the high. EPD is still below the all-time high set in 2014 and can certainly move beyond that, especially with much higher earnings now. (This security generates a K1 form at tax time.) BUY
Enterprise Product Partners (EPD)
Next ex-div date: April 30, 2025, est.
FS KKR Capital Corp. (FSK – yield 12.1%) – Business confidence is high, and this Business Development Company (BDC) is acting like it. Even with the massive yield, the price is still up about 5% YTD and over 15% since the election. It’s currently within pennies of the 52-week high. FSK is a strong beneficiary of the Trump victory. The perception of high economic growth going forward is powering the more cyclical stocks. FSK has a portfolio of smaller companies that tend to be economically sensitive. It has returned 34% over the past year and the prognosis is strong going forward. BUY
FS KKR Capital Corp. (FSK)
Next ex-div date: March 4, 2025, est.
Main Street Capital Corporation (MAIN – yield 6.8%) – As a BDC, this story is very similar to that of FSK. Main’s portfolio of companies not only makes high-interest loans, but it also takes equity stakes. The equity stakes are the primary reason the total returns have been better than just about every other BDC. MAIN is currently near the 52-week high. MAIN was a rare stock that didn’t have a December swoon. It just keeps on inching higher. It has returned 47% over the last year and the improving economic outlook leaves room for further appreciation. BUY
Main Street Capital Corp. (MAIN)
Next ex-div date: March 7, 2025
ONEOK Inc. (OKE – yield 4.2%) – This more volatile midstream energy company stock is about even for the year after two stellar years in 2023 and 2024. OKE is still nearly 20% below the high from late November. It has been bouncing around for the last couple of months. Although it has been moving up for the past few days, the last bounce is lower following the DeepSeek news last month. But natural gas demand is likely to remain strong and OKE is still in a great position with reduced regulation, encouragement of oil and gas production, and growing demand for electricity. The market loves the new acquisitions of Medallion Midstream and Enlink Midstream (ENLC), as the new additions are accretive immediately. BUY
ONEOK Inc. (OKE)
Next ex-div date: May 3, 2025, est.
The Williams Companies, Inc. (WMB – yield 3.6%) – This midstream energy company took the biggest hit of any in the portfolio on the January 27 selloff, down 8.43%. WMB still hasn’t recovered much but it returned 70% over the last year. Sure, the selloff was overblown, and electricity demand will still rise strongly, but the stock was probably rising too fast and needed consolidation. Things are still good for all the reasons mentioned above. Natural gas has a lot going for it and Williams will likely find lasting upside traction in the weeks and months ahead. BUY
Williams Companies, Inc. (WMB)
Next ex-div date: March 14, 2025
AbbVie (ABBV – yield 3.7%) – The biotech company surged after a strong earnings report last month. ABBV has moved 12.5% higher since January 22. The company beat earnings forecasts, but the main driver was the performance of its immunology drugs Skyrizi and Rinvoq, which collectively delivered $5.61 billion in revenue for the quarter. Those drugs alone have replaced the Humira revenue which peaked at a little over $20 billion annually. The company also raised revenue forecasts on the two drugs by $4 billion to $31 billion a year by 2027. The earnings report showed Abbvie has replaced the Humira revenue. The patent cliff had been only the stock back but that’s gone now. Hopefully, the stock can keep rising beyond the 52-week high set in the fall. BUY
AbbVie Inc. (ABBV)
Next ex-div date: April 15, 2025, est.
Ally Financial Inc. (ALLY – yield 3.1%) – I’m waiting for this online banking stock to bust a move like some of its peers have in recent months. The last earnings report eased concerns about rising auto loan delinquencies, and that was the main issue holding ALLY back. While the big move hasn’t happened yet, the stock is still trending higher. It’s up 6.5% YTD as the overall environment for financial stocks has been strong as big bank earnings have been stellar, and the regulatory environment has gotten a lot friendlier. Hopefully, there’s a nice upside down the road. Analysts are expecting earnings growth of 40% in 2025. BUY
Ally Financial Inc. (ALLY)
Next ex-div date: April 30, 2025, est.
Broadcom Inc. (AVGO – yield 1.2%) – The AI powerhouse has already recovered most of the dubbing it took on January 27th with the DeepSeek news. The selloff roiled AI-related stocks, especially those that had rallied the most, and AVGO was a prime offender. Investors are increasingly adopting the view that even if the DeepSeek threats are justified, Broadcom will still fare very well. Its AI chips are likely to stay in high demand with massive revenue growth in the years ahead. AVGO has moved nicely higher since it was upgraded to “BUY” two weeks ago following the selloff. We’ll see if it climbs back to the high and beyond in the weeks ahead. BUY
Broadcom Inc. (AVGO)
Next ex-div date: March 20, 2025, est.
Cheniere Energy, Inc. (LNG – yield 0.9%) – This natural gas exporter has pulled back 14% from the high made less than a month ago. It tends to move with the ebb and flow of energy prices in the near term. There could also be some angst about tariffs. The natural gas trade was red hot and bound to cool off. But things still look very good going forward. Natural gas demand is soaring in the U.S. and abroad. Cheniere stands to benefit from a friendlier regulatory environment, more natural gas production, cheaper domestic prices, and encouragement of natural gas exports. BUY
Cheniere Energy. Inc. (LNG)
Next ex-div date: May 8, 2025, est.
Constellation Energy Corporation (CEG – yield 0.4%) – This nuclear power, and now natural gas too, company stock continues to recover from the 20% one-day plunge two weeks ago. It’s still up over 41% YTD and may continue to climb. The DeepSeek news called into question data center energy demand, which had been driving deals with technology companies and the rise in CEG. We’ll see if any weaker data center and electricity demand actually materializes. There is a sense that last month’s news was overdone, and Constellation is brilliantly positioned ahead of electricity demand that is certain to grow. The recent consolidation was probably overdue given the performance of the stock. But things are still good. HOLD
Constellation Energy Corporation (CEG)
Next ex-div date: February 15, 2025, est.
Digital Realty Trust, Inc. (DLR – yield 2.9%) – This data center REIT has been a great investment since it was added to the portfolio. But it has certainly been floundering of late. DLR spent December and January falling 16% from the late-November high. It was doing OK last month until it got clobbered by the DeepSeek news and possible negative repercussions on data center demand. DLR had benefitted mightily from the data center expansion prospects and was in the line of fire. The stock probably got a little too high, too fast. But the future still looks extremely bright and DLR should recover going forward. Data center growth will continue and continue to be a trend this year as the recent troubles probably fade into memory. HOLD
Digital Realty Trust, Inc. (DLR)
Next ex-div date: March 12, 2025, est.
Eli Lilly and Company (LLY - yield 0.7%) Earnings – The pharmaceutical juggernaut reported strong earnings last week and the stock has rallied 7% since. Although sales of weight-loss drugs were less than previously anticipated, Zepbound and Mounjaro generated a whopping $5.4 billion in the fourth quarter alone. The company reported revenue growth of 45% for the quarter and EPS growth of 102%. For the full year, revenue grew 32% and earnings grew 101%. Lilly warned in January of lower-than-expected weight-loss drug sales and the stock fell to a six-month low. The market liked the earnings report, and the stock is up 20% from last month’s low.
Lilly also has other potential strong drugs in the pipeline. The company also raised guidance and anticipates 30% revenue growth and 90% earnings growth for the year. With that level of growth, the stock price still has room to run. BUY
Eli Lilly and Company (LLY)
Next ex-div date: February 14, 2025
McKesson Corporation (MCK – yield 0.5%) Earnings – McKesson reported earnings last week that slightly missed estimates but guided higher for 2025. MCK is at about the same price it was before the report. There was nothing game-changing about the earnings. It just wasn’t good enough to excite investors and raise the stock price. Pharmaceutical sales were slightly lower than expected because of an emphasis on higher-margin specialty drugs. But the good story remains. Sales will grow because it serves a market that grows all by itself because of the aging population. BUY
McKesson Corporation (MCK)
Next ex-div date: March 3, 2025
Qualcomm Inc. (QCOM – yield 2.0%) Earnings – The mobile device chip company delivered earnings with strong quarterly results and raised guidance for 2025. And the stock still floundered. Revenue rose 17% for the quarter and EPS rose 24%. Both easily exceeded expectations. There was solid growth in just about every segment including iPhone sales. And guidance was raised for this year. So why the disappointing stock performance? It is likely because there wasn’t evidence of a strong AI smartphone upgrade cycle. And that’s really what the market is looking for. Several analysts expect an upgrade cycle to ignite sometime this year. And that could really move the stock higher. But it isn’t happening yet. BUY
Qualcomm Inc. (QCOM)
Next ex-div date: March 6, 2025
Toll Brothers, Inc. (TOL – yield 0.6%) – The luxury home-builder company stock had a nice move higher in January but lost all those gains so far this month. After a tough couple of months, TOL moved convincingly off the recent bottom. The recent better news about the likely direction of mortgage rates was the main catalyst. TOL was downgraded to HOLD last month as a glum interest rate outlook combined with the inflation report presented a high level of short-term risk. But the outlook has improved, and mortgage rates have been falling. The recent rebound was a very welcome change for TOL. We’ll see if the recent selloff is just a bounce of something more. HOLD
Toll Brothers, Inc. (TOL)
Next ex-div date: April 10, 2025, est.
UnitedHealth Group Inc. (UNH – yield 1.6%) – UNH took another hit last month when the market wasn’t thrilled with the earnings report and the FTC accused the company, along with others, of overcharging for life-saving drugs. Earnings were mixed as revenue missed and earnings beat. However, the company also reiterated 2025 guidance, and the stock has been moving higher again. It’s been one thing after another with this one. The strong track record of outperformance leads me to believe this stock can make a move at some point. It also holds up very well in rough markets. Hopefully, the recent upside traction can last. BUY
UnitedHealth Group Inc. (UNH)
Next ex-div date: March 9, 2025, est.
NextEra Energy (NEE – yield 3.0%) – The regulated and clean energy utility stock continues to languish near the lowest levels of the recent range. It didn’t get a benefit from the electricity trade, and it barely recovered when the interest rate narrative improved. Operational results have been good with earning growth of 8.2% and a reiterated outlook through 2027. But the utility also announced plans to restart its Duane Arnold nuclear plant and a collaboration with GE Vernova to develop natural-gas-fired projects across the U.S. The utility is taking advantage of the soaring electricity demand and the projects are likely to deliver more revenue and stronger growth going forward. But I’m running out of patience with this one. BUY
NextEra Energy Inc. (NEE)
Next ex-div date: February 22, 2025, est.
USB Depository Shares (USB-PS – yield 5.7%) – Longer-term interest rates had been soaring and pressuring the price. But better news last month reversed the trend. The ten-year fell from 4.8% to about 4.5% and fixed income rallied. This preferred stock has endured a tough bond market very well and should likely continue to hold its own. Plus, rates are more likely to trend lower from here in the year ahead. BUY
Vanguard Long-Term Corp. Bd. Index Fund (VCLT – yield 5.2%) – Ditto for VCLT. The long-term corporate bond ETF loves falling interest rates and hates rising ones. There will be more price pressure if rates continue to rise and vice versa. But the situation over the course of the year should be good. BUY
Vanguard Long-Term Corp. Bd. Index Fd. (VCLT)
Next ex-div date: March 1, 2025, est.
Dividend Calendar
Ex-Dividend Dates are in RED and italics. Dividend Payments Dates are in GREEN. Confirmed dates are in bold, all other dates are estimated. See the Guide to Cabot Dividend Investor for an explanation of how dates are estimated.
The next Cabot Dividend Investor issue will be published on March 12, 2025.
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