The Dow, S&P and Nasdaq all closed at all-time highs last Wednesday, but the indexes have cooled off since then, with particularly large pullbacks in energy and industrial stocks. The price of a barrel of oil fell to $55 last week, as U.S. stockpiles rose and a slowdown in Chinese industrial production sparked fears of an economic slowdown there.
In the meantime, conservative sectors like consumer staples and utilities have pulled ahead. Utilities, in particular, are rejoicing ahead of the House vote on tax reform, which will hand them a big tax cut if it becomes law.
Elsewhere, the spread between two-year and 10-year Treasury yields shrunk to the lowest level in a decade last week. Short-term rates are rising in anticipation of the Fed’s December rate hike, but low inflation and high demand for safe investments are preventing longer-term rates from keeping up.
I don’t have any ratings changes today, but read on for updates on all our holdings, most of which are still rated Buy.
HIGH YIELD TIER
BUY – General Motors (GM 43 – yield 3.5%) – After pulling back to its 50-day moving average, GM bounced nicely last week and is trending up again. U.S. auto sales are stronger than expected, and GM continues to announce forward-looking initiatives like the luxury Cadillac “subscription service” launching in Dallas and L.A. this week. The company is also holding a webcast on autonomous vehicles on November 30, which will likely add to investors’ excitement. Risk-tolerant investors can buy GM right here.
Next ex-div date: December 7, 2017
BUY – ONEOK (OKE 51 – yield 5.8%) – OKE hasn’t done much over the past week, but investors looking for high current yield can still start positions in the pipeline company here.
Next ex-div date: January 2018
BUY – Pembina Pipeline (PBA 35 – yield 4.9%) – PBA’s latest attempt to break out past 36 was rebuffed last week. Still, the stock is trending slightly upward, earnings are strong, and the merger with Veresen is progressing on schedule. High yield investors can try to get in on a pullback toward 33.
Next ex-div date: November 21, 2017 est.
HOLD – Welltower (HCN 68 – yield 5.1%) – HCN has traded sideways since reporting earnings last Tuesday. The health care REIT remains on Hold until we get stronger confirmation that its downtrend is over.
Next ex-div date: February 2, 2018 est.
DIVIDEND GROWTH TIER
BUY – BB&T Corp (BBT 47 – yield 2.8%) – Financial stocks finally found some support on Monday, and BBT has stopped sliding. The stock’s pullback brought it just to its 200-day moving average. Sparked as it was by an industry selloff, I think the pullback is buyable.
Next ex-div date: February 2018
BUY – Broadridge Financial Solutions (BR 90 – yield 1.5%) – BR gapped up after last Wednesday’s estimate-beating earnings report, pulled back on Thursday, and then gained some of the ground back yesterday. It’s a little more volatility than we’re used to from Broadridge, but not a red flag. Dividend growth investors can buy a little here, or try to wait for a pullback to the stock’s 50-day moving average, currently around 83.
Next ex-div date: December 12, 2017 est.
HOLD – Carnival (CCL 66 – yield 2.7%) – Speaking of volatility, CCL has been all over the place during the past week, although volume isn’t particularly elevated. The ups and downs may be related to the Republicans’ still-developing tax plan, which has at times included language related to cruise companies. We’re still waiting for CCL to get back the momentum it lost after Hurricane Maria. Hold.
Next ex-div date: November 22, 2017
BUY – CME Group (CME 140 – yield 1.9%) – CME has been trending generally up since bouncing off its 50-day at the end of October. I think dividend growth investors can buy here or on pullbacks toward the 50-day, currently around 135.
Next ex-div date: December 7, 2017
BUY – Cummins (CMI 169 – yield 2.6%) – CMI dropped through its 50-day moving average during Thursday’s shakeout in industrial stocks. For now, this looks like a normal pullback in the sector, which saw huge gains in September and October. However, the exodus from GE, still a major component in most industrial indexes, could drag out the correction a bit longer. Long-term, this pullback is still a blip, so I’ll keep CMI on Buy for now, but use caution.
Next ex-div date: November 16, 2017
BUY – Wynn Resorts (WYNN 154 – yield 1.3%) – WYNN hit another 52-week high on Monday after breaking out past resistance two weeks ago. The stock is in a strong uptrend and earnings estimates are excellent. Wynn hasn’t hiked its dividend since Macau started to turn around, so investors likely have a big increase to look forward to. Dividend growth investors can buy here. WYNN trades ex-dividend today.
Next ex-div date: November 15, 2017
SAFE INCOME TIER
BUY – 3M (MMM 229 – yield 2.0%) – MMM wasn’t hit as hard by Thursday’s selloff in industrials as some peers, a testament to the stock’s resilience. MMM’s pullback from its post-earnings gap-up should be wrapping up soon, and safe income investors can buy some here.
Next ex-div date: November 22, 2017
HOLD – Consolidated Edison (ED 89 – yield 3.1%) – Utilities have been more responsive to rumors of tax cuts than anything else recently, and hopes of a big cut in corporate rates have driven ED to all-time highs. The situation could reverse just as quickly, so I’ll keep ED on Hold.
Next ex-div date: February 2018
HOLD – Ecolab (ECL 131 – yield 1.1%) – ECL continues to go nowhere … it’s boring, but the Dividend Aristocrat remains a good Hold for long-term safe income investors. This year’s results will be impacted somewhat by the unusually fierce hurricane season (Ecolab is based in Houston) but longer-term, growth estimates remain strong.
Next ex-div date: December 15, 2017 est.
BUY – Guggenheim BulletShares 2018 High Yield Corporate Bond ETF (BSJI 25 – yield 4.0%)BUY – Guggenheim BulletShares 2019 Corporate Bond ETF (BSCJ 21 – yield 1.8%)
BUY – Guggenheim BulletShares 2020 High Yield Corporate Bond ETF (BSJK 25 – yield 4.8%)
BUY – Guggenheim BulletShares 2021 Corporate Bond ETF (BSCL 21 – yield 2.3%)
Next ex-div dates: all December 1, 2017 est.
BUY – PowerShares Preferred Portfolio (PGX 15 – yield 5.6%) – PGX is an ETF that holds preferred shares. It doesn’t have capital appreciation potential, but trades in a low-volatility range between 14 and 16, and pays monthly dividends of about seven cents per share. It’s currently trading slightly under 15, so I’ll keep it on Buy for investors who want to add a source of reliable monthly income to their portfolios.
Next ex-div date: November 15, 2017 est.
HOLD – Xcel Energy (XEL 52 – yield 2.8%) – Like ED, XEL is at all-time highs thanks in part to hopes that Republicans will be able to get a big tax cut for corporations through Congress. Utilities typically pay the highest corporate tax rate, because they’re almost entirely domestic businesses. Hold for long-term gains and safe income.
Next ex-div date: December 19, 2017 est.
Closing prices as of November 14, 2017.
