The Teetering Market Could Go Either Way
After falling into correction territory earlier this month, the S&P 500 came off the bottom and has been trending higher. Is that the end of the selling? I don’t think the market has decided yet.
Uncertainty about the tariffs certainly contributed to the recent correction. The tariffs are hitting an economy still struggling with stubborn inflation and diminished growth projections. But let’s face it. The market was due for a correction anyway. The bull market had rallied over 70% in a little more than two years. These selloffs are common and healthy in a bull market.
Plus, the market was driven lower by technology stocks. The sector is by far the largest of the eleven S&P 500 sectors. It accounts for about a third of the index. For comparison, the energy sector accounts for a little over 3% and real estate and utilities both account for less than 3%. Technology had driven the index higher for most of the bull market and those stocks were especially due for a comeuppance, especially the artificial intelligence beneficiaries.
In fact, most stocks aren’t having a terrible year. Eight of the eleven S&P sectors are higher YTD. Plus, the economic news is improving. The February CPI inflation report was better than expected. Retail sales showed the economy is slowing, but not too much. Those two things make Fed rate cuts more likely. But the market is unlikely to regain lasting upside traction and make a new high until there is more clarity on the tariff situation.
The tariff clarity could arrive soon. Stocks rallied strongly to start the week partially on news that pending tariffs will be more “targeted.” Technology stocks also rallied on the perception of higher-than-expected AI demand. But the market is very headline sensitive. And the headlines are likely to keep on coming.
If I had to bet, I would say the market probably made the bottom for now and is more likely to trend higher. But I don’t have a high degree of confidence right now. A couple of negative headlines could send stocks plunging to new lows.
There are some select stocks that are actually near the 52-week high. I’m more comfortable selling a covered call on a stock with recent strong performance than initiating a new stock position at this point. In this issue, I highlight a covered call for the biopharmaceutical company AbbVie Inc. (ABBV).
What to Do Now
While I don’t know what to expect from the market over the next several weeks, I’m still bullish over the rest of the year.
Artificial intelligence stocks have struggled since the DeepSeek news in late January exposed the possibility that AI spending projections might be too high. But that narrative is changing. It’s becoming a more common opinion among analysts that cheaper AI will make the technology proliferate even more than previously expected.
AI stocks will continue to be a strong growth catalyst for years to come. Those stocks will move higher again. And when they do, they can make up for lost time fast. That’s why a position was initiated in Broadcom (AVGO) in the January issue and the call on Constellation Energy (CEG) was bought back to get the possible upside. The selling in these stocks is likely overdone and the price should be a lot higher by the end of the year, although they might not be quite out of the woods yet.
It is also proving to be a strong market for energy stocks. That is the best-performing sector on the market YTD. Positions were initiated in Cheniere Energy (LNG) and ONEOK Inc. (OKE) in last month’s issue. The strong U.S. and global natural gas demand combined with likely increased oil and gas drilling and friendlier regulations should continue to propel those stocks higher.
ABBV could go either way. The stock typically pulls back after a surge to a new high. However, the company’s fortunes are improving. There is a chance the stock regains traction and soars higher. However, given the level of uncertainty in this market, it seems like a more prudent bet to bank the income for the covered call in case stock performance weakens in the near term.
Recent Activity
February 25th
Purchased Cheniere Energy, Inc. (LNG) - $216.04
Purchased ONEOK, Inc. (OKE) - $95.77
March 4th
Purchased CEG March 21st $260 call at $3.50 (BUY BACK)
March 21st
QCOM March 21st $160 call at $11 – Expired
CQP March 21st $60 call at $3.00 – Expired
Cheniere Energy Partners (CQP) – Called
March 25th
Sell ABBV June 20th $210 call at $9.50 or better
Featured Action
Sell ABBV June 20th $210 call at $9.50 or better
Expiration date: June 20th
Strike price: $210.00
Call price: $9.50
AbbVie Inc. (ABBV)
I love this stock over the rest of this year and beyond. The company has overcome the Humira patent, which had been holding the stock back for a long time. ABBV outperformed the market with the patent problem. Now that the problem is behind it, performance should be even better. But the stock rally has petered. And this stock has a long history of pulling back after that happens. In a “risk-off” environment like this, it makes sense to take the income by selling a call.
Here are the three scenarios.
1. The stock closes above the $210 strike price at expiration.
Call premium: $9.50
Dividends: $3.28
Appreciation: $34.62 ($210.00 strike price minus $175.38 purchase price)
Total: $47.40 (total return will be 27% in 6 months)
2. The stock price closes below but near our $210 strike price.
Call premium: $9.50
Dividends: $3.28
Total: $12.78 (total income of 7.3% in 6 months)
3. The stock price declines.
There will be $12.78 in income to offset the decline. Plus, the original purchase price is about $35 per share below the strike price.
Portfolio Recap
| Open Recommendations | Ticker Symbol | Entry Date | Entry Price | Recent Price | Buy at or Under Price | Yield | Total Return |
| AbbVie Inc. | ABBV | 12/17/24 | $175.38 | $210.01 | $200.00 | 3.12% | 20.89% |
| AGNC Investment Corp | AGNC | 9/24/24 | $10.47 | $10.17 | $12.00 | 14.17% | 4.48% |
| Ally Financial Inc. | ALLY | 11/26/24 | $39.42 | $36.44 | $45.00 | 3.29% | -6.85% |
| Broadcom Inc. | AVGO | 1/28/25 | $207.36 | $191.66 | $240.00 | 1.23% | -7.29% |
| Cheniere Energy, Inc. | LNG | 2/25/25 | $216.04 | $226.83 | $250.00 | 0.88% | 4.99% |
| Constellation Energy Corp. | CEG | 8/27/24 | $196.14 | $222.48 | $270.00 | 0.70% | 13.82% |
| NextEra Energy, Inc. | NEE | 4/25/23 | $77.50 | $70.88 | $80.00 | 3.20% | -3.44% |
| ONEOK, Inc. | OKE | 2/25/25 | $95.77 | $99.34 | $110.00 | 4.15% | 3.73% |
| Qualcomm Inc. | QCOM | 5/5/21 | $134.65 | $156.82 | $180.00 | 2.17% | 29.92% |
| Realty Income Corp. | O | 6/27/23 | $60.19 | $55.80 | NA | 5.77% | 2.29% |
| Toll Brothers, Inc. | TOL | 10/22/24 | $148.02 | $106.15 | NA | 0.94% | -28.15% |
| Open Recommendations | Ticker Symbol | Initial Action | Entry Date | Entry Price | Recent Price | Sell To Price or better | Total Return |
| ABBV June 20th $9.5 call | ABBV250620C00210000 | Sell Pending | $9.55 | $9.50 | 5.42% | ||
| as of close on 3/21/2025 | |||||||
| SOLD STOCKS | |||||||
| X | Ticker Symbol | Action | Entry Date | Entry Price | Sale Date | Sale Price | Total Return |
| Innovative Industrial Props. | IIPR | Called | 6/2/20 | $87.82 | 9/18/20 | $100.00 | 15.08% |
| Qualcomm | QCOM | Called | 6/24/20 | $89.14 | 9/18/20 | $95.00 | 7.30% |
| U.S. Bancorp | USB | Called | 7/22/20 | $36.26 | 9/18/20 | $38 | 3.42% |
| Brookfield Infras. Ptnrs. | BIP | Called | 6/24/20 | $41.92 | 10/16/20 | $45 | 8.49% |
| Starbucks Corp. | SBUX | Called | 8/26/20 | $82.41 | 10/16/20 | $88 | 6.18% |
| Visa Corporation | V | Called | 9/22/20 | $200.56 | 11/20/20 | $200 | 0.00% |
| AbbVie Inc. | ABBV | Called | 6/2/20 | $91.04 | 12/31/20 | $100 | 12.43% |
| Enterprise Prod. Prtnrs. | EPD | Called | 6/24/20 | $18.14 | 1/15/21 | $20 | 15.16% |
| Altria Group | MO | Called | 6/2/20 | $39.66 | 1/15/21 | $40 | 7.31% |
| U.S. Bancorp | USB | Called | 11/25/20 | $44.68 | 1/15/21 | $45 | 1.66% |
| B&G Foods Inc, | BGS | Called | 10/28/20 | $26.79 | 2/19/21 | $28 | 4.42% |
| Valero Energy Inc. | VLO | Called | 8/26/20 | $53.70 | 3/26/21 | $60 | 11.73% |
| Chevron Corp. | CVX | Called | 12/23/20 | $85.69 | 4/1/21 | $96 | 12.95% |
| KKR & Co. | KKR | Called | 3/24/21 | $47.98 | 6/18/21 | $55 | 14.92% |
| Digital Realty Trust | DLR | Called | 1/27/21 | $149.17 | 7/16/21 | $155 | 5.50% |
| NextEra Energy, Inc. | NEE | Called | 2/24/21 | $73.76 | 9/17/21 | $80 | 10.00% |
| Brookfield Infras. Ptnrs. | BIP | Called | 1/13/21 | $50.63 | 10/15/21 | $55 | 11.65% |
| AGNC Investment Corp | AGNC | Sold | 1/13/21 | $15.52 | 1/19/22 | $15 | 5.92% |
| ONEOK, Inc. | OKE | Called | 5/26/21 | $52.51 | 2/18/22 | $60 | 19.62% |
| KKR & Co. | KKR | Sold | 8/25/21 | $64.52 | 2/23/22 | $58 | -9.73% |
| Valero Energy Inc. | VLO | Called | 11/17/21 | $73.45 | 2/25/22 | $83 | 15.53% |
| U.S Bancorp | USB | Sold | 3/24/21 | $53.47 | 4/13/22 | $51 | -1.59% |
| Enterprise Product Ptnrs | EPD | Called | 3/17/21 | $23.21 | 4/14/22 | $24 | 11.25% |
| FS KKR Capital Corp. | FSK | Called | 10/27/21 | $22.01 | 4/14/22 | $23 | 13.58% |
| Xcel Energy Inc. | XEL | Called | 10/12/21 | $63.00 | 5/20/22 | $70 | 12.66% |
| Innovative Industrial Props. | IIPR | Sold | 3/23/22 | $196.31 | 7/20/22 | $93 | -51.23% |
| One Liberty Properties | OLP | Sold | 7/28/21 | $30.37 | 8/24/22 | $25 | -12.94% |
| ONEOK, Inc. | OKE | Called | 5/25/22 | $65.14 | 1/20/23 | $65 | 2.66% |
| Xcel Energy, Inc. | XEL | Called | 10/26/22 | $62.57 | 1/20/23 | $65 | 4.67% |
| Realty Income Corp. | O | Called | 9/28/22 | $60.37 | 2/17/23 | $63 | 5.41% |
| Medical Properties Trust | MPW | Sold | 1/24/23 | $13.22 | 3/21/23 | $8 | -38.00% |
| Brookfield Infrastructure Cp. | BIPC | Called | 11/9/22 | $42.43 | 7/21/23 | $45 | 8.72% |
| Star Bulk Carriers Corp. | SBLK | Sold | 6/1/22 | $33.30 | 8/8/23 | $18 | -31.38% |
| Visa Inc. | V | Called | 12/22/21 | $217.16 | 8/18/23 | $235 | 9.16% |
| Global Ship Lease, Inc. | GSL | Sold | 2/23/22 | $24.96 | 8/29/23 | $19 | -13.82% |
| ONEOK, Inc. | OKE | Called | 3/28/23 | $60.98 | 9/15/23 | $65 | 9.72% |
| Hess Corporation | HES | Called | 6/6/23 | $132.25 | 10/20/23 | $155 | 17.87% |
| Tractor Supply Company | TSCO | Sold | 9/26/23 | $203.03 | 11/28/23 | $200 | -1.02% |
| Digital Realty Trust | DLR | Called | 7/18/23 | $117.31 | 1/19/24 | $135 | 17.16% |
| Intel Corporation | INTC | Called | 7/27/22 | $40.18 | 1/19/24 | $43 | 9.76% |
| AbbVie Inc. | ABBV | Called | 7/25/23 | $141.63 | 3/15/24 | $160 | 15.11% |
| Marathon Petroleum Corp. | MPC | Called | 10/24/23 | $149.45 | 3/28/24 | $165 | 12.06% |
| The Williams Companies, Inc. | WMB | Called | 8/24/22 | $35.58 | 5/17/24 | $35 | 7.14% |
| Main Street Capital Corp. | MAIN | Called | 3/26/24 | $46.40 | 9/20/24 | $49 | 10.91% |
| Brookfield Infrastructure Cp. | BIPC | Called | 2/27/24 | $32.64 | 9/20/24 | $35 | 11.00% |
| American Tower Corp. | AMT | Called | 1/23/24 | $202.26 | 9/20/24 | $210 | 5.43% |
| ONEOK, Inc. | OKE | Called | 8/27/24 | $79.59 | 10/18/24 | $88 | 11.18% |
| Alexandria Real Estate Eq. | ARE | Sold | 12/19/23 | $129.54 | 11/19/24 | $108 | -12.82% |
| FS KKR Capital Corp. | FSK | Called | 4/23/24 | $19.42 | 12/20/24 | $20 | 14.06% |
| Enterpise Product Ptnrs. | EPD | Called | 2/27/24 | $27.61 | 1/17/25 | $29 | 12.60% |
| Cheniere Energy Prtns. | CQP | Called | 1/22/25 | $53.04 | 3/21/25 | $60 | 14.67% |
| EXPIRED OPTIONS | |||||||
| Security | In/out money | Sell Date | Sell Price | Exp. Date | $ Return | Total % Return | |
| IIPR Jul 17 $95 call | out-of money | 6/3/20 | $3.00 | 7/17/20 | $3.00 | 3.40% | |
| MO Jul 31 $42 call | out-of-money | 6/17/20 | $1.60 | 7/31/20 | $1.60 | 4.03% | |
| ABBV Sep 18 $100 call | out-of-money | 7/15/20 | $4.60 | 9/18/20 | $4.60 | 5.05% | |
| IIPR Sep 18 $100 call | in-the-money | 7/22/20 | $5.00 | 9/18/20 | $5.00 | 5.69% | |
| QCOM Sep 18 $95 call | in-the-money | 6/24/20 | $4.30 | 9/18/20 | $4.30 | 4.82% | |
| USB Sep 18 $37.50 call | in-the-money | 7/22/20 | $2.00 | 9/18/20 | $2.00 | 5.52% | |
| BIP Oct 16 $45 call | in-the-money | 9/2/20 | $1.95 | 10/16/20 | $1.95 | 4.65% | |
| SBUX Oct 16 $87.50 call | in-the-money | 10/16/20 | $3.30 | 10/16/20 | $3.30 | 4.00% | |
| V Nov 20 $200 call | in-the-money | 9/22/20 | $10.00 | 11/20/20 | $10.00 | 4.99% | |
| ABBV Dec 31 $100 call | in-the-money | 11/18/20 | $3.30 | 12/31/20 | $3.30 | 3.62% | |
| EPD Jan 15 $20 call | in-the-money | 11/23/20 | $0.80 | 1/15/21 | $0.80 | 4.41% | |
| MO Jan 15 $40 call | in-the-money | 11/25/20 | $1.90 | 1/15/21 | $1.90 | 4.79% | |
| USB Jan 15 $45 call | in-the-money | 11/25/20 | $2.00 | 1/15/21 | $2.00 | 4.48% | |
| BGS Feb 19 $27.50 call | in-the-money | 12/11/20 | $2.40 | 2/19/21 | $2.40 | 8.96% | |
| VLO Mar 26 $60 call | in-the-money | 2/10/21 | $6.50 | 3/26/21 | $6.50 | 12.10% | |
| CVX Apr 1 $95.50 call | in-the-money | 2/19/21 | $4.30 | 4/1/21 | $4.30 | 5.02% | |
| AGNC Jun 18 $17 call | out-of-money | 4/13/21 | $0.50 | 6/18/21 | $0.50 | 3.21% | |
| KKR Jun 18 $55 call | in-the-money | 4/28/21 | $3.00 | 6/18/21 | $3.00 | 6.25% | |
| USB Jun 16 $57.50 call | out-of-money | 4/28/21 | $2.80 | 6/18/21 | $2.80 | 5.24% | |
| DLR Jul 16 $155 call | in-the-money | 6/16/21 | $8.00 | 7/16/21 | $8.00 | 5.36% | |
| AGNC Aug 20 $17 call | out-of-money | 6/23/21 | $0.50 | 8/20/21 | $0.50 | 3.00% | |
| OKE Aug 20 $57.50 call | out-of-money | 6/23/21 | $3.50 | 8/20/21 | $3.50 | 6.67% | |
| NEE Sep 17 $80 call | in-the-money | 8/11/21 | $3.50 | 9/17/21 | $3.50 | 4.75% | |
| BIP Oct 15 $55 call | in-the-money | 9/1/21 | $2.00 | 10/15/21 | $2.00 | 3.95% | |
| USB Nov 19 $60 call | out-of-money | 9/24/21 | $2.30 | 11/19/21 | $2.30 | 4.30% | |
| OKE Nov 26 $65 call | out-of-money | 10/20/21 | $2.25 | 11/26/21 | $2.25 | 4.28% | |
| KKR Dec 17 $75 call | out-of-money | 10/26/21 | $3.50 | 12/17/21 | $3.50 | 5.42% | |
| QCOM Jan 21 $185 Call | out-of-money | 11/30/21 | $9.65 | 1/21/22 | $9.65 | 7.17% | |
| OLP Feb 18 $35 Call | out-of-money | 11/19/21 | $1.50 | 2/18/22 | $1.50 | 4.94% | |
| OKE Feb 18 $60 Call | in-the-money | 1/5/22 | $2.75 | 2/18/22 | $2.75 | 5.24% | |
| USB Feb 25 $61 call | out-of-money | 1/13/22 | $2.50 | 2/25/22 | $2.50 | 4.68% | |
| VLO Feb 25 $83 call | in-the-money | 1/18/22 | $4.20 | 2/25/22 | $4.20 | 6.13% | |
| EPD Apr 14th $24 call | in-the-money | 3/2/22 | $1.25 | 4/14/22 | $1.25 | 5.69% | |
| FSK Apr 14th $22.50 call | in-the-money | 3/10/22 | $0.90 | 4/14/22 | $0.90 | 4.09% | |
| XEL May 20th $70 call | in-the-money | 3/30/22 | $3.00 | 5/20/22 | $3.00 | 4.76% | |
| SBLK July 15th $134 call | out-of-money | 6/1/22 | $1.60 | 7/15/22 | $1.60 | 4.80% | |
| OKE Oct 21st $65 call | out-of-money | 8/24/22 | $3.40 | 10/21/22 | $3.40 | 5.22% | |
| OKE Jan 20th $65 call | In-the-money | 11/25/22 | $3.70 | 1/20/23 | $3.70 | 5.68% | |
| XEL Jan 20th $65 call | in-the-money | 11/25/22 | $5.00 | 1/20/23 | $5.00 | 7.99% | |
| O Feb 17th $62.50 call | in-the-money | 12/28/22 | $3.00 | 2/17/23 | $3.00 | 4.97% | |
| QCOM Sep 16th $145 call | out-of-money | 7/20/22 | $11.75 | 9/16/22 | $11.75 | 8.73% | |
| V Mar 17th $220 call | out-of-money | 1/24/23 | $12.00 | 3/17/23 | $12.00 | 5.51% | |
| OKE May 19th $65 call | out-of-money | 4/11/23 | $2.70 | 5/19/23 | $2.70 | 4.43% | |
| V Jun 2 $230 call | out-of-money | 4/21/23 | $10.50 | 6/2/23 | $10.50 | 4.82% | |
| BIPC $45 July 21st call | in-the-money | 5/23/23 | $3.25 | 7/21/23 | $3.25 | 7.66% | |
| V $235 Aug 18th call | in-the-money | 7/11/23 | $9.00 | 8/18/23 | $9.00 | 4.13% | |
| GSL $20 Aug 18th call | out-of-money | 7/11/23 | $1.25 | 8/18/23 | $1.25 | 5.00% | |
| OKE $65 Sep 15 call | in-the-money | 9/15/23 | $3.20 | 7/25/23 | $3.20 | 4.92% | |
| INTC $35 Oct 20th call | out-of-money | 9/8/23 | $3.78 | 10/20/23 | $3.78 | 9.41% | |
| HES $155 Oct 20th call | in-the-money | 9/8/23 | $9.00 | 10/20/23 | $9.00 | 6.81% | |
| DLR $135 Jan 19th call | in-the-money | 11/22/23 | $6.00 | 1/19/24 | $6.00 | 5.11% | |
| INTC $42.50 Jan 19th call | in-the-money | 11/29/23 | $3.50 | 1/19/24 | $3.50 | 8.71% | |
| ABBV $160 Mar 15th call | in-the-money | 1/10/24 | $7.00 | 3/15/24 | $7.00 | 4.94% | |
| MPC $165 Mar 28th call | in-the-money | 2/14/23 | $10.00 | 3/28/24 | $10.00 | 6.69% | |
| QCOM $200 July 19th call | out-of-money | 6/5/24 | $12.00 | 7/19/24 | $12.00 | 8.91% | |
| MAIN $49.4 Sep 20th Call | in-the-money | 6/27/24 | $2.00 | 9/20/24 | $2.00 | 4.31% | |
| BIPC $35 Sep 20th Call | in-the-money | 7/16/24 | $3.00 | 9/20/24 | $3.00 | 9.19% | |
| AMT Sep 20 $210 call | in-the-money | 7/30/24 | $15.00 | 9/20/24 | $15.00 | 7.42% | |
| OKE Oct 18 $87.50 call | in-the-money | 8/27/24 | $3.50 | 10/18/24 | $3.50 | 4.40% | |
| FSK Dec 20 $20 call | in-the-money | 10/25/24 | $0.95 | 12/20/25 | $0.95 | 4.89% | |
| CEG Dec 29 $260 call | out-of-money | 9/25/24 | $24.00 | 12/20/24 | $24.00 | 12.24% | |
| EPD Jan 17 $29 call | in-the-money | 11/12/24 | $2.00 | 1/17/25 | $2.00 | 6.34% | |
| CEG Mar 21 $20 call | Buyback | 1/7/25 | $20.00 | 3/4/25 | $16.50 | 8.41% | |
| CQP Mar 21 $60 call | in-the-money | 1/22/25 | $3.00 | 3/21/25 | $3.00 | 5.66% | |
| QCOM Mar 21 $160 call | out-of-money | 1/7/25 | $10.00 | 3/32/2025 | $11.00 | 8.17% | |
AbbVie Inc. (ABBV)
Yield: 3.1%
This biopharmaceutical company stock has pulled back slightly off the high over the past two weeks. I don’t know if ABBV is poised for a pullback, which is normal after a surge to a new high like it just had, or if it will go higher. Things have improved as the company has moved beyond the Humira patent loss and already replaced the revenues. It’s been a great year as ABBV is up about 20% YTD in a down market. I like the prospects for the stock for the rest of this year. But the direction of the next 10% move is anybody’s guess. BUY
AbbVie Inc. (ABBV)
Next ex-div date: April 15, 2025
AGNC Investment Corp. (AGNC)
Yield: 14.2%
Sure, this mortgage REIT cooled off a bit amid the market correction. But it has still returned 13% YTD. It’s been one of the more stable stocks over the past month. After a rough couple of years with rising inflation and interest rates, this mortgage REIT is having a good year so far. Hopefully, it can keep going. The REIT reported solid earnings this quarter. AGNC has had a bad run over the last couple of years and it’s due for a significant turnaround. The trend has been good, but the recent rally has run out of gas. We’ll see if it can regain some upward momentum and make a run back past the recent high. BUY
AGNC Investment Corp. (AGNC)
Next ex-div date: March 31, 2025
Ally Financial Inc. (ALLY)
Yield: 3.3%
This online banker has been swinging around sort of aimlessly. But it really made a strong move off the recent bottom in the last week and a half. The stock has also managed about an 8% YTD return in a lousy market with declining confidence in the economy. If the economy deteriorates toward a recession or close to it, the stock will sell off. It deals primarily in auto loans, which are highly cyclical. However, if the economy hangs in there or economic news gets better, it could really take off. We’ll see if this current rally still has legs and then reevaluate. BUY
Ally Financial Inc. (ALLY)
Next ex-div date: April 30, 2025, est.
Broadcom Inc. (AVGO)
Yield: 1.2%
It’s been a tough year so far for technology stocks, especially those that had been riding AI demand to stratospheric highs. AVGO is down more than 20% from the high and over 15% YTD. The good news is that the stock may have bottomed out as it has trended higher since the stellar earnings report earlier this month. Broadcom soundly beat expectations with 25% revenue growth and 45% earnings growth and raised guidance for the current quarter. AI revenue grew 77% over last year’s quarter and reported that it has scored two more large AI chip customers. AVGO is being dragged lower by the sector. But it should come roaring back because it was higher for good reason: skyrocketing revenues. BUY
Broadcom Inc. (AVGO)
Next ex-div date: June 20, 2025, est.
Cheniere Energy Inc. (LNG)
Yield: 0.9%
Cheniere has been all over the place this year. It’s still up double digits YTD and it made a nice move higher over the last week, but it’s still about 10% below the high in January. Cheniere is the best liquid natural gas liquid (LNG) export company stock at a time of rising LNG demand worldwide. The company delivered a great fourth quarter, beating both revenue and earnings estimates. It also posted record LNG production and is in the process of expanding capacity. The stock will bounce around with the market in the near term. But the strong story is still very much intact with a friendlier regulatory environment and rising demand. BUY
Cheniere Energy, Inc. (LNG)
Next ex-div date: May 7, 2025, est.
Constellation Energy Corporation (CEG)
Yield: 0.7%
The news is better lately as CEG has been climbing slowly higher over the last two weeks and may have bottomed out after a huge selloff. CEG was climbing into the stratosphere earlier this year as AI and the electricity trade were on fire. But the DeepSeek news killed that trade for now. And the downside is getting as overdone as the upside was. The truth of the stock should be somewhere between the January high and the current low.
The fear is that AI will require less data than previously thought, data center plans will be stalled and the anticipated growth in electricity won’t occur. Nonsense, electricity demand is sure to grow even if at a lower rate than previously anticipated. And the fears are likely overblown. The two huge recent deals (the Microsoft (MSFT) deal and the Calpine acquisition) will deliver a high level of earnings growth in the years ahead and there may be more new deals coming. The market will regain its footing at some point, and CEG can come back fast. HOLD
Constellation Energy Corp. (CEG)
Next ex-div date: June 7, 2025, est.
NextEra Energy, Inc. (NEE)
Yield: 3.1%
The regulated and clean energy utility stock has done okay in a tough market. It was up for this month and YTD before pulling back over the past couple weeks. It seems like every time the market gets crushed, NEE has a great day. Investors are attracted to its defensive characteristics as a slower economy is feared and uncertainty about tariffs keeps any optimism at bay. But NEE has historically outperformed other defensive stocks significantly. It just got walloped by inflation and rising rates. But rates are falling, and NextEra is poised for even stronger growth ahead as electricity demand rises. BUY
NextEra Energy, Inc. (NEE)
Next ex-div date: May 31, 2025, est.
ONEOK, Inc. (OKE)
Yield: 4.1%
Energy has been solid, and this more volatile natural gas midstream company has come roaring back. It’s been a bit of a rollercoaster. OKE was rising fast but then got crushed as the natural gas trade unwound after the DeepSeek news. But the selling was hasty. ONEOK has reliable revenues and is in an ideal position for strong growth as natural gas production inevitably increases and electricity demand grows. Investors realized this and OKE spiked about 15% higher since early March. A continued rebound is highly likely, especially if the overall market stabilizes. BUY
ONEOK, Inc. (OKE)
Next ex-div date: May 3, 2025, est.
Qualcomm Corp. (QCOM)
Yield: 2.2%
The mobile device chip company delivered earnings with strong quarterly results and raised guidance for 2025. 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 demand. And guidance was raised for this year. But 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 a breakout is unlikely until that event is within sight. Meanwhile, QCOM has been knocked down with the rest of the tech sector. BUY
Qualcomm Incorporated (QCOM)
Next ex-div date: June 6, 2025, est.
Realty Income Corp. (O)
Yield: 5.8%
I guess we see what can finally get this legendary monthly income REIT moving. It’s the rest of the world going to Hell. The stock isn’t exactly killing it, but it is over 7% higher in a rough year so far for the overall market. Realty is a desirable defensive stock that attracts investor interest during times of market duress. The stock should also benefit as interest rates move lower. O had struggled during inflation and rising interest rates. But the benchmark 10-year Treasury rate has fallen significantly so far this year. It’s proving to be a nice holding in a dicey market. HOLD
Realty Income Corporation (O)
Next ex-div date: April 1, 2025
Toll Brothers, Inc. (TOL)
Yield: 0.8%
TOL is a cyclical company that doesn’t respond well to a slower economy. But that recent weakness is somewhat tempered by the falling mortgage rates, which makes housing more affordable. The slower growth narrative hit TOL when it was already down, and the stock hit a 52-week low. But TOL has been rising for the past couple of weeks. It could be that the economic worries don’t have lasting traction. Narratives change often in the market. The longer-term supply/demand dynamic is hugely favorable to this company, and it will rebound eventually. We will hold on to the stock for now in hopes of a rebound when the market stabilizes. HOLD
Toll Brothers, Inc. (TOL)
Next ex-div date: April 11, 2025
Existing Call Trades
QCOM March 21st $160 call at $11 – Expired
Call premium: $10.00
Dividends: $12.32
Total: $22.32 (total income of 16.6% in 46 months, and 48.8% with the previous calls)
The calls expired below the strike price and you retain the shares. That’s good. The position is turning into an income machine. On the surface, the position has been somewhat of a disappointment. The total return between appreciation and dividends is about 30% in just under four years. That’s not terrible but rather lame for a technology stock. However, there have been five calls sold against this position that have generated about 49% of the original purchase price in income. That makes this a successful position and a great income generator. Plus, we’re not done. There will be more calls down the road.
CQP March 21st $60 call at $3.00 – Expired and Called
Call premium: $3.00
Dividends: $2.43
Appreciation: $6.96 ($60.00 strike price minus $53.04 purchase price)
Total: $12.39 (total return of 23.4% in 8 months)
The shares were called. CQP had climbed to new highs amid the hot natural gas trade earlier this year. But unlike most other beneficiaries of that trade that have sold back down since the DeepSeek news in late January, CQP held tough and retained most of those lofty gains. I still believe natural gas and NGLs are a great place to be. We now have a position in Cheniere Energy (LNG) that should benefit. Meanwhile, we took a profit in a highly uncertain market and got a great total return and income in a short time.
Income 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 Income Advisor for an explanation of how dates are estimated.
The next Cabot Income Advisor issue will be published on April 29, 2025.
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