The Rally Forges On
This market rally keeps forging on no matter what. Technology cooled off but, no problem, other sectors are picking up the slack.
Interest rates have likely peaked. The chances of a Fed rate cut before the end of the year have increased. And the economy is still solid. Sectors rotate, headlines come and go, but as long as the main ingredients of future lower rates and a still-decent economy prevail, the market should be good.
That said, even if the rest of the year is strong, the market is bound to have a crummy month again at some point. It will only take one bad headline, or one sour Fed comment, or an ugly outside event. Things are great now. But don’t get too comfortable.
The midstream energy companies and Business Development Companies in the portfolio have come alive again and are moving toward new highs. There should be some call writing opportunities in the near future in several of these securities. Stay tuned and watch for “Trade Alerts” in your email.
It’s a good time to sell covered calls with the market making more new highs and in danger of teetering. The recently targeted calls for Brookfield Infrastructure Corporation (BIPC) and NextEra Energy (NEE) didn’t reach the target price and never went off. Those call trades have been removed. But we still have existing calls on Qualcomm (QCOM) and Main Street Capital (MAIN).
Past Month Activity
June 11th
NextEra Energy, Inc. (NEE) – Rating change “BUY” to “HOLD”
Sell NEE SEP 20th $77.50 calls at $4.40 or better
Realty Income Corp (O) – Rating change “BUY” to “HOLD”
June 25th
Sell NEE SEP 20th $77.50 calls at $4.40 – Removed
NextEra Energy, Inc. (NEE) - Rating change “BUY” to “HOLD”
June 27th
SOLD MAIN September 20th $49.40 calls at $2.00 or better
July 2nd
Sell BIPC Sep 20th $35 calls at $3.00 or better – Removed
Portfolio Recap
Alexandria Real Estate Equities, Inc. (ARE)
Yield: 4.5%
This is a great niche REIT that owns and operates innovation campuses where life science and technology companies lease space for research and development. ARE had been an excellent performer until inflation and rising interest rates. It’s had a rough couple of years but has shown upside potential during times when it looks like interest rates will fall. This is a solid REIT that reported strong earnings and raised the dividend again this quarter. ARE will likely bounce around somewhat at the mercy of the interest rate narrative and not significantly surge higher until rates muster a sustained move downward. BUY
American Tower Corporation (AMT)
Yield: 3.3%
AMT had a good month in May and pulled back a little in June. But the price remains right near the early June high. As with ARE, better interest rate news should be good for this cell tower REIT. It too has been bouncing around with interest rates. But AMT is still far from the 52-week high. American Tower rallied strongly after the REIT beat estimates on both revenue and earnings with 9.8% adjusted funds from operations per share growth over last year’s quarter. The REIT also raised guidance for 2024. It’s a solid REIT with stronger growth than most of its peers, but interest rates will be the biggest determinant of performance in the near term. BUY
Brookfield Infrastructure Corp. (BIPC)
Yield: 4.8%
This is a great company that had stellar performance for years before interest rates rose to decade highs, making it more expensive to borrow and expand. The stock just can’t seem to get any real traction. It held up great until last summer. It rose off the October market low but is still at the same price it was last December. The operational performance has been sound. Brookfield reported strong earnings and the company rallied strongly off the early April dip. The company also raised the quarterly dividend by 6%. I expect BIPC to continue to be bouncy until rates make a sustained mover lower. BUY
Enterprise Product Partners L.P. (EPD)
Yield: 7.1%
This midstream energy partnership moves like a turtle. But the trend is clear. It has been trending higher, albeit in a slow and sometimes bouncy fashion, for nearly four years. It’s up for the year and although EPD is still below the April high, it has come back to within pennies recently. As the technology rally fades and investors look to alternatives, the high yield and inflation protection make midstream energy companies an excellent choice. Earnings again showed Enterprise is solid operationally and that huge distribution yield is safe. I expect EPD to continue to pay the massive distribution and trend higher at a snail’s pace. (This security generates a K1 form at tax time). BUY
FS KKR Capital Corporation (FSK)
Yield: 13.9%
The massive-yielding BDC pulled back last month after the quarterly payout went ex-dividend. When a yield is this high and this important to the stock, the ex-date has a noticeable impact. But after the BDC absorbed the ex-dividend, it has been crawling back toward the high and is now within pennies. So far, FSK is delivering as advertised. It’s continued to pay the massive dividend, and the price has appreciated since it was added to the portfolio. BUY
Main Street Capital Corporation (MAIN)
Yield: 5.5%
Some of the best income stocks are rallying again and picking up the slack from the technology sector. This Business Development Company pulled back somewhat after making a high in early May, but it moved higher again in June and just made a new 52-week high. It’s still in an uptrend that began last fall and has been steady for weeks. MAIN paid the regular monthly dividend of $0.72 per share in the second quarter, marking a 6.7% increase year-over-year, as well as a $0.30 supplemental dividend. The current yield is reflected above as 5.5% because I only include the regularly scheduled dividend. Including the supplemental dividends, the yield is 7.9%. BUY
NextEra Energy, Inc. (NEE)
Yield: 2.9%
After a huge run higher from March until the end of May, NEE is having a comeuppance in June. After a 40% run higher the stock pulled back 11% in June. The story hasn’t changed. It’s just that the rally had to run out of gas at some point. The quite long-in-the-tooth rally is the main reason NEE was downgraded to a HOLD last month. But NextEra posted solid earnings in the recent quarter, which also added to the stock’s revitalization. NEE had been a superstar performer before inflation and rising interest rates. I expect solid performance going forward over the longer term. HOLD
ONEOK, Inc. (OKE)
Yield: 4.8%
This amazing midstream energy company has returned to within pennies of the all-time high after a brief period of weakness. Earnings are rock solid with inflation protection and recession resilience. The high yield should be at a premium in a likely more sideways market going forward. It is a more volatile stock than the other midstream companies that have been in the portfolio. That has been a good thing in a strong energy market. The higher volatility also provides for high call premiums, which have already benefited the OKE portfolio positions during earlier holding periods. BUY
Qualcomm Corp. (QCOM)
Yield 1.6%
After a big dip in June following a huge surge in the spring, QCOM appears to have bottomed and is crawling back. QCOM soared 39% from May 1 to June 18th. But it fell 15% after that. Not to worry, it’s still up 48% YTD. The recent stock performance reflects profit-taking in the AI space after a big surge from the last round of earnings reports. But QCOM should continue to deliver as several analysts see a major smartphone upgrade cycle for AI next year. Qualcomm is at the leading edge of chips that enable AI for smartphones and should benefit mightily. The good news about the recent weakness is that it might not be called away on our options expiration date later this month. BUY
Realty Income Corp. (O)
Yield: 5.9%
Realty has historically been a legendary income stock that has raised the monthly payout every year since 1969. It had also been one of the best REITs to own. But that has not been the case for a while. Sure, it’s been a tough market for REITs these past couple of years, and fortunes change. But O has continually underperformed its peers and the REIT index in good times and bad for a long time now. The stock is downgraded to HOLD but it will still be held in the portfolio because of the high monthly income it offers. The stock will be held in the portfolio, for now. HOLD
Existing Call Trades
Sell QCOM July 19th $200 calls at $12.00 or better
Wow. QCOM appeared to be running away. The calls were targeted at the high, but the stock had another rally left in it. It pulled back to below the strike price last week but has moved again in the last several trading days. This would be a good stock to keep. We’ll see what happens in the next couple of weeks.
Sell MAIN September 20th $49.40 calls at $2.00 or better
This is a great income stock with an effective yield of about 7.9% that pays monthly. But the market is teetering near the high and might not stay there. These calls enhance an already stellar income.
Current Recommendations
| Open Recommendations | Ticker Symbol | Entry Date | Entry Price | Recent Price | Buy at or Under Price | Yield | Total Return |
| Alexandria Real Estate Eq. | ARE | 12/19/23 | $129.54 | $119.00 | $140.00 | 4.27% | -6.31% |
| American Tower Corp. | AMT | 1/23/24 | $202.26 | $195.74 | $220.00 | 3.31% | -2.35% |
| Brookfield Infrstr. Cp. | BIPC | 2/27/24 | $32.64 | $34.45 | $40.00 | 4.70% | 5.24% |
| Enterprise Product Ptnrs. | EPD | 2/27/24 | $27.61 | $28.50 | $30.00 | 7.23% | 5.08% |
| FS KKR Capital Corp. | FSK | 4/23/24 | $19.42 | $20.50 | $20.50 | 13.66% | 5.82% |
| Main Street Capital Corp. | MAIN | 3/26/24 | $46.40 | $49.00 | $50.00 | 8.45% | 6.64% |
| NextEra Energy, Inc. | NEE | 4/25/23 | $77.50 | $79.50 | $65.00 | 2.57% | 6.02% |
| ONEOK, Inc. | OKE | 5/29/24 | $79.59 | $81.00 | $84.00 | 4.89% | 1.77% |
| Qualcomm Inc. | QCOM | 5/5/21 | $134.65 | $204.05 | $165.00 | 1.67% | 62.54% |
| Realty Income Corp. | O | 6/27/23 | $60.19 | $52.80 | $62.00 | 5.81% | -7.15% |
| Call Trades | |||||||
| Open Recommendations | Ticker Symbol | Intial Action | Entry Date | Entry Price | Recent Price | Sell To Price or better | Total Return |
| QCOM July 19 $200 call | QCOM240719C00200000 | Sell | 6/5/24 | $12.00 | $8.55 | $12.00 | 8.91% |
| MAIN Sep 20 $49.40 call | MAIN240920C00049400 | Sell | 6/27/24 | $2.00 | $2.86 | $2.00 | 4.31% |
| as of close on 06/28/2024 | |||||||
| 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 | 15.08% |
| Qualcomm | QCOM | Called | 6/24/20 | $89.14 | 9/18/20 | $95 | 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% |
| 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 $170 Apr 26th call | out-of-money | 3/12/24 | $10.00 | 4/26/24 | $10.00 | 7.42% | |
| WMB $35 May 17th call | in-the-money | 3/12/24 | $2.00 | 5/17/24 | $2.00 | 5.62% | |
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