Stock Market News: 08-01-20

FOREX: The US $ fell vs. major currencies in July, in the wake of continuing government stimulus programs.
“The dollar index =USD was down 4.1% for July, its biggest monthly percentage fall since September 2010, with most of the drop coming in the last 10 days as new coronavirus cases surged across several U.S. states and some recent data pointed to an economic recovery losing steam.” (Reuters) Click here to read more…

Stock Market News: 04-18-20

Does your portfolio need more defense?

Click here to learn how Selling Options can give you more downside protection and more income.

Market Indexes:
3 out of the 4 major indexes gained again this week, on news of future reopening plans in some US states and in upcoming openings in some European nations. Some progress may have been made on potential vaccines and treatments, which also added to the indexes’ rise. The gains came in spite of gloomy economic data in retail sales, industrial production, housing, and leading economic indicators. The Russell small caps trailed, while the Tech-heavy NASDAQ led by a wide margin, and continues to be the most reilient index so far in 2020.
This Week’s Options Trades: Looking for high yield covered call hedging trades and high yield put-selling trades?
Options Yields are still high. Check out the 20% to 70% annualized yields in our Public Cash Secured Puts Table and our Public Covered Calls Table.
Click here to read more…

2020 Market Pullback Winners

Looking for dividend stocks which have outperformed during the 2020 pullback?
We found 3 stocks which have had positive returns since 2/20/20, when the market started falling.
Not surprisingly, 2 of the 3 are in the food industry, selling such long-lasting items as frozen veg and canned foods, but the 3rd one is a Tech REIT, which serves the biggest names on the internet.  While sheltering in place, greater internet usage and more frozen veg/canned food are definitely all on the table:

Con Agra Brands (CAG): Founded in 1919, CAG operates through Grocery & Snacks, Refrigerated & Frozen, International, Foodservice, and Pinnacle Foods segments. Some of its best-known brands are Birds Eye, Marie Callender’s, Banquet, Healthy Choice, Slim Jim, Reddi-wip, Vlasic, Angie’s BOOMCHICKAPOP, Duke’s, Earth Balance, Gardein, Frontera, Banquet,and Chef Boyardee.

Hormel Foods (HRL): Founded in 1891, HRL operates through 5 segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, and International & Other. It offers various perishable meat products, including fresh meats, frozen items, refrigerated meal solutions, sausages, hams, guacamoles, and bacons; and shelf-stable products, such as canned luncheon meats, peanut butters, chilies, shelf-stable microwaveable meals, hashes, stews, meat spreads, flour and corn tortillas, salsas, tortilla chips, and other products. The company also provides turkey products; nutritional food products and supplements; dessert and drink mixes; and industrial gelatin products.

CoreSite Realty Corp.(COR): COR delivers secure, reliable, high-performance data center and interconnection solutions to a growing customer ecosystem across eight key North American markets. More than 1,350 of the world’s leading enterprises, network operators, cloud providers, and supporting service providers choose CoreSite to connect, protect and optimize their performance-sensitive data, applications and computing workloads.

2020 Pullback Performance:
CAG is up 8.63%; COR is up 4.71%; and HRL has gained 4.41% since the start of the 2020 market pullback, vs. -17.41% for the S&P 500 and -16.17% for the DJIA.  All 3 have also outperformed the major indexes by a wide margin since the July 2019 and Sept. 2018 market highs:

However, we don’t want to give you the impression that it was all smooth sailing for this group. Quite the contrary, they all dipped during the 2020 crash – CAG dipped the most, while COR and HRL had the strongest rebounds:

DIVIDENDS:

COR has the highest dividend yield of the group, at 4.04%, and should go ex-dividend near the end of April. HRL has the lowest yield, 1.96%, but is a Dividend Aristocrat, having raised its dividends for at least 25 straight years. COR and HRL have the best 5-year dividend growth rates of the group.
CAG yields 2.62%, but you can improve upon that yield quite a bit, by selling options.

Selling Options For More Income:
Selling Covered Calls is an increasingly popular way to ramp up your short or near term income on a dividend stock. With all of the extreme volatility in 2020, you have the benefit of selling at the highest options yields in years.
As of the week ending 4/9/20 close, CAG’s mid-May $34.00 call strike had a bid of $.80, almost 4X its $.21 quarterly dividend. The nominal yield is 3.11% in ~5 weeks, or 33.49% annualized.
You can see more details for this and many other high yield trades, including one for COR, on our free Covered Calls Table.

Selling Cash Secured Puts below a stock’s price offers you the attraction of a lower breakeven entry point. In essence, you’re getting paid to wait.
CAG’s mid-May $32.00 put strike pays $1.45, nearly 6X the $.21 dividend. The nominal yield is 4.46% in just ~5 weeks, or 48.64% annualized.

You can see more details for this Put-selling trade and many other high yield trades on our Cash Secured Puts Table.

Price Targets:
Selling cash secured puts below a stock’s price can come in handy when the stock is close to or past its average price target. Such is the case with CAG, which only 2.8% below its average $33.40 price target. COR and HRL are both above their respective price targets.

Valuations:
CAG and HRL both have P/E’s on the high side, due to their better-than-market performance. COR is a REIT, and uses Funds From Operations, FFO, as its earnings metric.

Disclaimer: This article was written for informational purposes only, and is not intended as personal investment advice. Please practice due diligence before investing in any investment vehicle mentioned in this article.

High Options Yields From A Blue Chip Mouse

Did you grow up watching Uncle Walt every Sunday night on the “wonderful World Of Disney”? Or maybe you had your own Mouseketeer hat?
These days, the Mouse hasn’t been getting much respect from Mr. Market, who has been acting like a house cat, with respect to Walt Disney co., (DIS), shares.

The problem is cord-cutting, and how it affects ESPN, one of Disney’s premier cable cash machines. As millennials opt out of bundled cable packages, ESPN has seen sales declines, and the price/share has struggled in the past year.
Click here to read more…

Tech Dividend Stocks With High Options Yields

by Robert Hauver
Who are the winners so far in 2017? We looked at sectors from a variety of angles – trailing valuations, future earnings valuations, dividend yield, and performance, to see which sectors have outperformed, and which ones hold the most promise for the future.

Not surprisingly, Tech was a clear winner in Performance- it leads all other sectors so far in 2017:

Click here to read more…

2 Dividend Aristocrats With Room To Run

by Robert Hauver
Looking for dividend stocks with a long term record of dividend increases? The S&P Dividend Aristocrats index contains 50 such stocks, all of which have increased their dividends paid per share yearly for the past consecutive 25 years.
This group contains many household names across various industries – some of the largest companies on the planet. Here are the top 15 companies, sorted by market cap. Healthcare giant Johnson & Jonson, (JNJ), tops the list, followed by Exxon Mobil, (XOM), after which the market cap drops to the mid-$200B range, with Procter & Gamble, (PG), Walmart, (WMT), and AT&T, (T):

The sector breakdown shows Consumer Staples as the leading weighted sector in the index by far, with a 26% weighting, followed by Industrials, with 17.4%, and Healthcare, with 13.4%: Click here to read more…

2 Undervalued Healthcare High Dividend Stocks

by Robert Hauver
Looking for bargains in the high dividend stocks universe? You may want to check out Omega Healthcare Investors, (OHI), and Medical Properties Trust, (MPW), 2 Healthcare REIT’s which have lagged the market in 2017, due to the uncertainty surrounding potential healthcare legislation changes in the US.
There may be uncertainty, but let’s remember something – there are 10,000 Baby Boomers retiring every day in the US, which will keep ramping up demand for healthcare facilities for many years to come. In fact, we’ve seen some forecasts which call for Healthcare to eventually reach 20% of GDP in the US.
Click here to read more…

2 Specialty Foods Stocks For Income Investors

by Robert Hauver
Have you noticed how radically the offerings at your local markets have changed? Consumers are demanding more variety, and more healthful choices. Specialty foods, previously seen as exotic, such as artisanal cheeses, meats, smoked seafood, formerly hard-to-find exotic cooking ingredients or sauces, an increasingly wider array of beverages, and organic foods of all types now fill the grocery aisles.

The growth of the organic food industry has been accelerating over the past decade, and now represents over 4% of $760 billion annual food sales in the U.S.  Many specialty and organic items come from small, privately held firms, but there are ways than investors can access the specialty foods industry.

We examined the specialty food industry, with an eye to solid, publicly traded companies that income investors could benefit from, and we came up with these 2 dividend stocks:
Click here to read more…

How To Earn Dividends from Amazon

by Robert Hauver
We’ve all seen the headlines often- “Brick and Mortar Chain Store To Close More Stores”, over the past few years. as online retailers, notably Amazon, AMZN, keep gobbling up a bigger slice of the retail pie.
Unfortunately for income investors, AMZN isn’t in the realm of high dividend stocks – in fact, it’s not even in the universe of dividend paying stocks yet, as its management keeps reinvesting in the business. Given the stock’s trajectory, and the company’s revenue growth, the market has no problem with this at all.
So, what’s an income investor to do about this situation? How can we get an income-producing piece of this retail juggernaut?
We offer you 3 vehicles to do just that in this article: Click here to read more…

Defensive Utility Dividend Stocks Beating The Market In 2017

by Robert Hauver
Is the post-election rally over? Maybe it’s just slowing down, with some investors taking profits, and others adopting a “wait and see” posture, as we head toward next week’s Fed meeting, where it seems more than likely that they’ll raise rates again. There’s also the uncertainty of future policy execution in DC, coupled with the upcoming French and Dutch elections. Suddenly, there’s more for investors to worry about…
In light of this altered landscape, we examined the defensive Utility sector, also well known as having many dividend stocks. It’s represented here by the popular ETF, XLU, which serves as a proxy for the sector on many financial websites.
Even though the S&P has had an impressive gain of 5.69% over the past 3 months, the Utilities ETF has outperformed, rising 8.28%:

Here are XLU’s top 10 holdings – Florida-based Next Era Energy, NEE, is the fund’s largest holding, at 9.45%:

(Source: YahooFinance)
Valuations: This table ranks them by lowest P/E ratio, where electric utility PPL Corp., PPL, leads the pack by a wide margin. It’s interesting to note that PPL is also among the leaders for dividend yield – (see the Dividends table further on in this article for more info).

Performance: The first 4 stocks in this table have outperformed the group average and the S&P 500’s performance year to date in 2017, and also over the past trading month.

As the market has gotten a bit choppier, some Utilities have had more appeal, in spite of the impending advent of rising rates. Edison International, EIX, NEE, and Sempra Energy, SRE, are the 3 top performers in this group so far in 2017, and over the past month.

Dividends: However, those 3 leaders are among the lowest, when ranking by dividend yield. Of course, their yields declined, as their price/share advanced strongly over the past year, from 15% to over 20%.
Note: PPL’s next ex-dividend date is tomorrow, 3/8/17, so we should see it adjust downward for the $.395 quarterly dividend. PPL, NEE, SRE, and EIX have the lowest dividend payout ratios in this group, which speaks to the strength of their earnings, and their conservative cash allocation.

You can track the current prices and dividend yields for several of these stocks in the Utilities section of our High Dividend Stocks By Sectors Tables.

Options: We’ve listed this June call trade for NEE in our free Covered Call Table, which has more details about this and over 25 other call-selling trades. NEE has one $.983 quarterly dividend due during the term of this trade. The June $135.00 call strike has a bid of $2.00, about 2x the amount of the next dividend.

You can also track a June NEE put option trade, in our Cash Secured Puts Table, where we track over 25 other income-producing, put-selling trades.

Price Targets: As income and value investors, we’re always faced with the same conundrum – which do you favor more – dividend stocks with an attractive dividend yield, vs. finding undervalued stocks.
As this table illustrates, these stocks are all either close to or above their consensus price targets right now – analysts upward price revisions haven’t kept up with the price advances of this group. This makes sense, given that higher rates will create higher operating expenses for these capital equipment-heavy companies.

Financials: The relative debt loads for these companies shows that the 4 performance leaders, EIX, NEE, SRE, and PCG, all have Debt/Equity loads which are lower than the average for this group. Even if rates aren’t going to rise to much higher levels, the market is rewarding lower debt loads in this sector.

Disclosure: Author held no shares of any of the stocks mentioned in this article at the time of publishing.
Disclaimer: This article is written for informational purposes only, and isn’t intended as personal investment advice.
Copyright 2017 RH Group Inc. All Rights Reserved