Monthly Archives: June 2018

Technology

Double Your Money in Less Than Three Years with This Backdoor Play on AI

Michael A. RobinsonMICHAEL A. ROBINSON

Citigroup Inc. (NYSE: C) is looking to cut half of its 20,000 tech and operations staff and replace them with artificial intelligence, robotics, and other forms of automation.

Goldman Sachs International is looking to do something similar.

This is according to a series of interviews in the Financial Times.

A Gallup survey of 3,000 Americans released in March shows that 73% felt that AI would kill more jobs than it creates. That tracks with a 2016 survey by the Pew Research Center in which 65% said automation that includes AI would replace “much” of the work done now by humans.

People are scared – and I understand why.

But there’s a much bigger story here – and it’s a positive one for job seekers.

It’s a positive story for technology investors, too – so you know you’ll want to pay attention to this.

The truth is, AI-led automation is not a zero-sum proposition.

So, today let’s drill beneath these alarmist headlines.

Let’s discover how AI-driven automation is actually sparking a jobs boom.

And let’s dig up a hidden way to play this field with a stock that I think will double in lesss than 30 months.

Check it out…

An AI Odyssey

We recently celebrated the 50th anniversary one of the great, groundbreaking films of all time.

For millions of Americans, the debut of “2001: A Space Odyssey” on April 3, 1968, served as their intro into the world of artificial intelligence. And it came with quite a negative point of view.

Recall that the AI-powered HAL 9000 computer takes over the spaceship Discovery One, and even kills one astronaut.

To this day, many Americans remain leery of AI thanks to “2001.”

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However, Stanley Kubrick’s film had such a powerful impact on me that I’ve followed the world of AI – both its positive and negative effects – ever since.

In recent years, AI has become synonymous with automation and robotics because the three are now tightly intertwined as factories all over the world adopt these high-output platforms.

While the mainstream media is focused on automation’s job-killing prospects, I believe that AI will be a long-term boon to the economy.

And I’ve got several pieces of empirical data to back that stance up…

  • Last month, the Asian Development Bank said automation had created an extra 34 million jobs in the region. That’s because the tech lowered prices while improving quality for Asian goods.
  • In a 2017 study, Deloitte found that automation in the United Kingdom had destroyed 800,000 jobs in the past 15 years. But over that same period, it had created 3 million jobs – and they paid an average $13,500 more than the old ones.
  • The Centre for European Economic Research predicts that by 2021 industrial employment in its home market of Germany will rise by 1.8%. The study says that’s because the tech is making those factories more competitive.
  • And a June 2017 study sponsored by Salesforce.com Inc. (NYSE: CRM) puts the economic impact of AI at $1.1 trillion by 2021 – and that’s just for cloud-based revenue in the customer relationship management end of the cloud computing sector.

So, it’s exciting news to see global chip leader and Silicon Valley pioneer Intel Corp. (Nasdaq: INTC) focus so heavily on AI.

In September 2017, Intel unveiled an experimental “neuromorphic” chip called Loihi. As Intel says, this chip compares “machines with the human brain.” It can “read” its environment and become constantly smarter.

In fact, Loihi mimics many of the basic neural pathways in the human brain by packing 130,000 neurons and 139,000 synapses into 128 computer cores.

But as much as I find Intel’s new breakthrough highly exciting, there is an even better way for technology investors like you to play this emerging field.

Fact is, as important as AI chips are becoming, they are useless without one key device – computer memory.

And this firm delivers…

Crushing the “Memory” Market

As a quick recap, memory devices store dynamic data to make computers run faster and more smoothly.

This is what allows you to open multiple windows on your web browser while you work on a document, edit photos, and add graphics to a presentation – all while streaming music in the background.

By definition, AI requires complex memory chips because of the daunting amount of data these systems must crunch through to work at speeds that approach the human brain.

And Micron Technology Inc. (NYSE: MU) is the best memory firm operating in the world today. Even better, it has signed key partnerships with Intel over the course of its history.

Back in 2003, for example, Intel invested $450 million for a 5.3% stake in Micron to help the firm develop memory chips that would work well with Intel’s microprocessors.

Then, in 2005, the firms formed a $1.2 billion joint venture to develop NAND flash memory. That’s the kind of memory that now stores all the data in your smartphones and tablet computers.

If that’s all we tapped with our investment in Micron, it still would be huge. But Allied Market Research says NAND flash memory will be a $39 billion market by 2022.

And the story gets better…

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Micron is investing in the next generation of chip building and has begun selling a type of memory that will take smartphone and tablet computing to a whole new level.

And it should have a huge impact on gaming, Big Data, cloud computing, and virtual reality – not to mention AI.

Multidimensional Computing

Launched roughly a year ago in another joint effort with Intel, 3D XPoint is a new platform that looks at memory in a whole new way. This tech uses a microscopic mesh of wires that can be stacked on top of each other to provide computing in three dimensions.

The result is a single system that can handle both memory and storage – and performs both functions better than what’s out there today.

Grand View Research says the market for next-gen memory such as 3D XPoint will reach $3.4 billion by 2020 because of its scope throughout the world’s major tech systems.

In other words, Micron has a lot of long-term upside.

And it’s not doing badly in the short term, either. In its most recent fiscal quarter, Micron said it grew earnings per share by 246%.

With that strong earnings growth, we also get bargain pricing. Shares trade at $56 but are dirt cheap on a relative basis – roughly just five times next year’s earnings.

That’s a nearly 70% discount from the S&P 500’s forward earnings ratio.

In other words, you’re getting an amazing discount on a firm that cuts a wide swath through our tech-centric world.

I believe the stock could double in as little as 30 months.

I base that on the fact that over the past three years, Micron’s earnings have grown an average 31%. That means they should double in just 27 months – and pull the stock price up along the way.

Add it all up and you can see that it’s time to stop worrying about AI.

Instead, cash in on this red-hot trend.

With Micron, we have a stock that can do just that while piling up profits for tech investors over the next several years.

Get up to 14 dividend paychecks per month from safe, reliable stocks with The Monthly Dividend Paycheck Calendar, an easy-to-use system that shows you which dividend stocks to pick, when to buy them, when you get paid your dividends, and how much.  All you have to do is buy the stocks you like and tell them where to send your dividend payments. For more information Click Here.


Source: Money Morning 

Pot Stocks

Marijuana Stocks: Two to Consider, Two to Avoid

Marijuana Stocks: Two to Consider, Two to Avoid

Source: MarihuanayMedicina via Flickr

The marijuana legalization movement is picking up speed. There have been various wins here and there, such as in Colorado and Washington. Uruguay became the first nation in the Americas to permit recreational marijuana usage in 2014. It further legalized marijuana pharmacies in 2017.

However, until now, no major country had legalized consumption on a national level. Marijuana stocks were waiting for a bigger market to come online.

That’s happened now. Canada has opened up marijuana to public usage. Its Senate approved legislation earlier this week which removes the last obstacle to legalized pot. It’s expected that Canadians will be able to consume legal weed as early as October.

Not surprisingly, investors are rushing to get in on the ground floor of this vast new market. Here are some marijuana stocks that could deliver big gains, and others that come with significantly more risk.

Marijuana Stocks to Consider: Constellation Brands

You may know Constellation Brands (NYSE:STZ) as a leading beer and wine company. And that’s true. But Constellation has big plans for the marijuana space in the future. The opening move for that came with Constellation buying a 9.9% stake in Canopy Growth (NYSE:CGC) this past October.

This was an obvious and attractive way to get exposure to the marijuana equity space at an attractive price. Canopy stock was at around $10 back then and is now at around $34.

And there is a bigger strategic plan at work as well. Constellation wants to sell marijuana-infused products itself. The company has said that it’s too early to tell whether marijuana legislation will help, hurt or be neutral for alcohol companies. As a result, it is hedging its bets by selling pot-infused beverages of its own. As the company put it earlier this year:

“Our goal with this organization [Canopy] is to work collaboratively to both understand the cannabis business but also develop unique cannabis-based beverages that will be available around the world as legalities prove those to be an option.”

A Canopy spokesperson suggested that marijuana-infused products, such as beverages, won’t be legal in Canada until next year. However, she went on to add: “That said, we are already preparing for the opportunity to brand and market these products, once federal regulations permit.”

In the meantime, Constellation has its leading portfolio of beer and wines, including brands such as Corona. With STZ stock at 21x forward earnings, this is a reasonable way to get a shot at the marijuana market without taking massive downside risk.

Marijuana Stocks to Avoid: Canopy Growth

Let’s turn from Canopy’s 10% stock owner, Constellation Brands, to Canopy itself. Unfortunately for average investors, Constellation got in at a way better price than we could now.

Last fall, Constellation paid C$245 million (US$184 million) for 9.9% of Canopy Growth. CGC stock is now selling with a market cap of greater than $5.7 billion. That values Constellation’s share at $570 million, or triple their investment in under a year.

As stated above, that was a savvy move on Constellation’s part. But the price of CGC stock today bakes in some outlandish optimism. CGC stock now sells at more than 100x sales. The company sold only $55 million in product last year, but the market values that at more than $5.7 billion.

A 100x price/sales ratio is nearly unheard of in the history of publicly traded stocks. The general rule is to avoid stocks trading above 10x price/sales — maybe, just maybe you can get away with paying 20x for something growing at an incredible rate. But 100x sales is a bridge too far.

Sure, going forward, Canopy will be able to grow its revenues much more quickly. But a flood of competition will hit markets, lowering margins as well. And it’s not like Canopy was earning huge profits on its minimal revenue stream either. CGC stock is a story-driven mania at this point.

Once people double-check the math, they’ll see that Canopy won’t be able to create $5.7 billion in value anytime soon. A holding stake via a company like Constellation is a much safer way to invest, since it is a diversified business, and plans to roll out its own marijuana-infused products. And you don’t have to pay an arm and a leg for STZ stock like you do with Canopy.

Marijuana Stocks to Consider: Alcanna

Alcanna (OTCMKTS:LQSIF) is another marijuana stock worth considering today. Alcanna was formerly known as Liquor Stores N.A. Ltd. and ran, not surprisingly, liquor stores in Canada and the United States. It has realigned its business model in recent months, however. It’s divesting some of the U.S.-based liquor stores to become a more Canada-focused operation.

And, most importantly, Alcanna will now become a marijuana retailer. Alcanna currently operates about 175 liquor stores in Alberta, along with a smaller number in British Columbia. That gives it a nice position in the sales of already heavily regulated goods. That makes it a natural player for building out a marijuana retail business.

The company also earned a sizable endorsement. Aurora Cannabis (OTCMKTS:ACBFF) bought 25% of Alcanna earlier this year for a more than $100-million investment. That gives Alcanna plenty of capital to build out its retail business and a close partnership with one of Canada’s big emerging producers.

There is plenty of risk here. Alcanna had a mixed track record as a pure-play liquor store operator. Adding marijuana to the mix doesn’t guarantee success. But the valuation is reasonable, and Alcanna offers an interesting 4% dividend yield while waiting for the growth story to potentially play out.

Marijuana Stocks to Avoid: Neptune Technologies

Neptune Technologies (NASDAQ:NEPT) is a long-running story stock. Almost a decade ago, the company hyped up its krill oil, extracted from a type of small Arctic crustacean.

Neptune positioned krill oil as a superior alternative to fish oil, which companies such as Amarin(NASDAQ:AMRN) sell. Amarin obtained FDA approval for Vascepa, its fish oil-based pharmaceutical drug, for cardiovascular benefits.

Neptune, by contrast, never achieved similar success. While NEPT stock gyrated widely, krill oil never took off. A fatal factory explosion in 2012 set the company back farther. Last year, Neptune finally threw in the towel on krill oil, selling off its manufacturing business for $34 million. NEPT stock slumped to multiyear lows below $1/share following the news.

However, Neptune wasn’t done. It decided to pivot, not surprisingly, to marijuana. Instead of getting an extract from tiny marine life, the new plan is to extract oil from cannabis. It also has suggested that it may combine cannabis with omega-3 oils, though it’s unclear what potential synergies the two would have in combination.

And NEPT stock flew earlier this week following news that it will partner with Canopy Growth to make marijuana extracts in a multiyear deal. The press release provided little in the way of tangible details. Regardless, it was enough to shoot NEPT stock up to $4, giving it a $350-million market cap.

Could Neptune’s cannabis extracts become a big market? Sure. Is it worth a $350-million market cap for a company with a checkered past and no clear pathway to profitability in the future? Probably not.

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Source: Investor Place 

Dividends

How to Double Your Money Every 3 Years With Safe Dividend Stocks

If you want to clobber the stock market – and double your money every two or three years – then buying companies with accelerating dividends is an absolute must.

And I’ve got good news for you: there’s never been a better time to buy them.

That’s because dividend growth is on a sugar high: research firm IHS Markit recently predicted that global dividends would jump 10% this year—a new record.

What’s more, if you’re looking to grow your nest egg fast, you’re in luck, because accelerating dividends are the beating heart of my personal 3-step system for banking 12% annual returns for life.

I’ll tell you all about this safe, simple approach, and why that 12% number is vital, in just a moment. First, let’s talk about why I’m so focused on an accelerating payout.

Getting a fatter income stream is an obvious reason, but it’s just the start. Because as I wrote in December, a rising payout acts like a lever on a company’s share price, prying it higher and higher with every single dividend hike.

The pattern is plain as day in this chart of NextEra Energy (NEE), a supposedly “boring” utility that’s been quietly sending its shareholders bigger and bigger dividend checks over the past five years.

Look at how NEE’s stock has jumped with each and every dividend hike NextEra has delivered—and how its latest monster payout hikes have magnified those gains:

Bigger Dividend Hike, Fatter Share Price Pop

NextEra just delivered a 13% dividend hike earlier this year. But you and I can do even better.

We’ll start by looking at each part of my 3-step “accelerating dividend strategy,” designed to uncover the stocks that will deliver that 12% annual return we’re craving.

Why 12%? That’s because, as I show you in my in-depth investment report, “The Simple (and Safe) Way to Earn 12% Every Year From Stocks,” it’s enough to double your portfolio every 6 years and throw off a dividend stream that’s 3 times larger than the experts say you need in retirement.

That’s more than good enough for a risk-averse dividend fan like me. So let’s get going, starting with…

Step 1: Build Your Own High Yields

Plenty of dividend hounds simply run out and find the stock paying a high current dividend yield (6%, 7%, 8% and more) and call it a day.

But that can be a recipe for disaster.

Take telecom provider CenturyLink (CTL), which is getting a lot of headlines these days because of its ridiculous 12.3% yield. But that’s entirely because, as I told you back in November, the shares have been walloped (as you calculate dividend yield by dividing the annual payout into the current share price). Check out how the dividend yield has risen as the share price has dropped through the floor.

CTL: The “Dividend Trap” Is Set

This is a textbook example of why you’re often safer with a lower-yielding stock that grows the yield on your initial buy over time.

Let’s again consider NextEra for a moment, if you’d bought that stock five years ago, you’d be pocketing a nice 5.5% on your original buy today, thanks to the company’s accelerating payouts. That’s more than double NEE’s current yield of 2.8%.

Or better yet, you could go with a stock like Lam Research (LRCX), which dropped a fat 120% dividend hike on shareholders in March and has plenty of room for even bigger raises, thanks to another misunderstood measure (2, actually) I’ll show you now.

Step 2: Know Your Ratios

If you’ve been buying dividend stocks for a while, you probably know about the payout ratio. You calculate it by dividing the total amount of dividends paid out by the company’s last 12 months of net income.

If the result comes out to, say, 50% or less, you’ve got a safe dividend that’s likely to grow. As you get climb closer to 100%, the noose around the payout gets tighter.

Simple, right?

Problem is, earnings are an accounting creation and can be easily manipulated to overstate cash flow generation. But they can, at times, understate it, too.

Right now, for example, Lam has a net income–based payout ratio of 15.9%. That sounds great, but it doesn’t tell the whole story, because the company’s free cash flow payout ratio clocks in at a minuscule 12.3%!

Why the difference?

Because free cash flow (FCF) tells you how much cash a company is generating once it’s paid the cost of maintaining and growing its business. You calculate it by subtracting capital expenditures from cash flow from operating activities.

The bottom line is that FCF is a much better snapshot of how much cash a company is truly making. And while Lam gets a fantastic grade on both ratios, its higher net income–based payout ratio masks its even-higher dividend-growing power. And that’s why I expect more massive payout hikes out of this stock for years to come.

By the way, this is precisely the opposite of the almost certain payout cut our long-suffering CenturyLink investors can expect. That company’s FCF payout ratio is 128%—so it’s paying out way more in dividends than it generates in FCF.

Step 3: Buy Growth Instead of “Bond Proxies”

Lazy financial writers like to say that higher bond yields will hurt dividend stocks. This blanket statement may sound reasonable, but it’ll cost you money if you take it at face value.

Pundits have called sleepy dividend stocks like General Mills (GIS) “bond proxies” in recent times. GIS has paid 3% (more or less) over the last three years. That compared favorably with the 10-year Treasury note, which paid 2% (more or less) over that time period.

So, the story goes, investors had been buying stocks like GIS instead of safe bonds like Treasuries to scrape an extra 1% or so. But with Treasuries rallying to 3%, these same investors have “demanded” a higher yield from GIS. It now pays 4.6%, which means its stock price has dropped as the Treasury’s price has risen:

Bonds and Their Proxies: Like Oil and Water

This is a waste of time. It begs the question:

Who the heck was buying GIS for an extra stinking percent per year? Not contrarian income seekers.

Green Giant peas? Cheerios? Seriously? This company dominates food staples of yesterday. GIS is behind the curve on every current food trend. The numbers don’t lie – it’s been evident in the firm’s slowing dividend growth and falling revenue:

Beware the Slowing Dividend

What does GIS have to do with dividend growth tomorrow? Not much.

Remember, share prices tend to move higher with their payouts. So there’s a simple way to maximize our returns and hedge against higher interest rates: Buy the dividends that are growing the fastest.

Let’s take internet landlord CoreSite (COR). Its dividend has “lapped” GIS over the last three years. No matter how much trash the bond market talks, it will never catch this runaway yield:

Proxy? Please.

When Hidden Yields subscribers bought CoreSite on my recommendation in March 2016, it paid a $0.53 quarterly dividend. That was a 3.1% starting yield for us based on our purchase price.

In less than two years, the firm has nearly doubled its dividend. It now pays $0.98 per quarter, which means we’re earning more than 5.8% on our initial capital.

Plus as our income stream was rising, other investors were bidding up the price of our shares to keep pace with the increasing yields.

This combination of rising dividends and capital appreciation is what earned us 73% total returns in just 26 months – with no active trading beyond our initial purchase.

CoreSite Cooks the Bond Proxies

The 10-year’s yield is up about 1% since we bought CoreSite. Our stock gains haven’t been slowed by the bond bully because our dividend simply outran it.

And there are plenty of dividend growth stocks like CoreSite ready to run 70%, 80% and even 100%+ higher in the year or two ahead. Seven are particularly compelling buys today, to be specific!

7 More Buys to Double Your Nest Egg Fast

Of course, you can use the 3 steps I just showed you yourself, by using an online stock screener and poring over corporate earnings reports on your own.

But it can take hours to run an analysis like that on just a handful of stocks (and of course, you’ll also want to take a peek at dividend, earnings and FCF history, as well as valuation measures like price to book value and price to free cash flow).

Plenty of folks (myself included) love the challenge! But if you’d rather just cut to the chase and start pocketing your 12% annual return for life now, I’ve got you covered there, too.

Because my team and I have discovered 7 stocks set to deliver that steady 12% yearly return. All 7 boast an explosive mix of accelerating dividends, timely buybacks, strong current dividends and absurdly low valuations that just can’t last.

Here’s a glance at 3 of the 7 dividend-growth plays I’ll reveal when you click here:

  • The US company that’s cashing in on surging Chinese water demand. This is one of the most boring businesses you’ll find—making water heaters—but its dividend hikes are anything but: the payout has soared 167% in just 4 years! And there are far bigger payout hikes to come!
  • The 800% Dividend Grower. This unsung company has boosted its dividend eightfold since a new management team took over just 5 years ago! This stock is a complete no-brainer for anyone looking to get bigger and bigger dividend checks from here out.
  • And a “double threat” income-and-growth stock that rose more than 250% the last time it was anywhere near as cheap as it is now!

Please don't make this huge dividend mistake... If you are currently investing in dividend stocks – or even if you think you MIGHT invest in any dividend stocks over the next several months – then please take a few minutes to read this urgent new report. Not only could it prevent you from making a huge mistake related to income investing, it could also help you earn 12% a year from here on out! Click here to get the full story right away. 

Source: Contrarian Outlook 

Uncategorized

3 Trade War Stocks for a Knock-Down, Drag-Out Fight

Source: Shutterstock

In 2018, the stock market has been presented with two major risks:

  1. Inflation
  2. Trade

These risks have reared their ugly heads from time to time, and caused broader market volatility. Each time, though, the market has shrugged off the risk to ultimately head higher.

Right now, inflation concerns are subdued as the 10-Year Treasury yield has backed off 3%. But trade risks are at all-time highs as President Donald Trump continues to impose tariffs. Simultaneously, no one on the global political landscape appears willing to stand down, so tensions are escalating and the likelihood of a trade war breaking out is rising.

If things go on like this, trade talk will get ugly and the stock market will suffer.

But not all stock should be treated equally. Indeed, there are certain “trade war stocks” out there which should be largely immune to tariffs and trade talk. These stocks should head higher regardless of what happens on the trade front.

With that in mind, here’s a list of my three favorite trade war stocks to buy if all this trade talk takes a nasty turn.

Trade Wars Stocks to Buy: Facebook Inc (FB)

Source: Shutterstock

The FANG stocks are largely insulated from trade war risks for two major reasons: 1) they are giant internet companies that benefit consumers globally via services that won’t be affected in a trade war, and 2) they don’t have a presence in or reliance on China.

Of the FANG stocks, perhaps the one best positioned to succeed amid rising trade war fears is social media giant Facebook (NASDAQ:FB).

Facebook is a global digital ad giant that benefits everyone, everywhere, regardless of nationality. Facebook’s ad services won’t be adversely impacted by tariffs, nor will the volume of ad dollars that flow through the company’s ecosystem or the amount of people who access Facebook every month.

Instead, Facebook will keep doing business as usual. They will keep providing the best, most robust, and most effective digital advertising solutions in the world, and they will continue to roll out new growth initiatives like Messenger/WhatsApp monetization, Workplace, Marketplace and smart home products.

Last quarter, “business as usual” was represented by 50% revenue growth. Trade war risks won’t affect that growth rate. Instead, over the next several years, growth will remain in the 30%-plus range because of the company’s multiple growth catalysts.

Facebook stock trades at less than 30-times forward earnings. A 30 multiple for 30%-plus revenue growth is a bargain, especially considering that the big growth isn’t at-risk to prevailing trade war fears.

As such, Facebook stock is definitely one of the top trade war stocks to own here and now.

Trade War Stocks to Buy: Alphabet (GOOG)

Source: Shutterstock

The other top trade war stock from the FANG group is Alphabet Inc (NASDAQ:GOOG).

Much like Facebook, Google is a global digital advertising giant that benefits everyone, everywhere. The company’s advertising services will not be materially affected by trade war fears or tariffs. The amount of money being pumped into the Google ad machine also won’t be affected, nor will the number of people using Google search.

Instead, much like Facebook, Google will keep doing business as usual. All the trade war talk is just noise in the background.

The upside in Google stock comes from valuation and the company’s unparalleled data-set, which positions it to be a leader in tomorrow’s data-driven and an artificial intelligence-dominated world.

Google has forever been a 20%-plus revenue growth company thanks to its robust digital advertising platform. But that growth could be super-charged over the next several years as Google turns its unrivaled database on consumer searches and preferences into unrivaled AI and automated technologies.

Indeed, at the current moment, Google is the innovation leader in tomorrow’s big growth spaces like self-driving (Waymo) and AI (Google Duplex). Google’s leadership position in these markets will only grow over the next several years since data is what powers advancements in AI. Accordingly, Google’s growth could get a super-charged lift over the next 5-plus years.

But like Facebook stock, Google stock trades at under 30-times earnings. That multiple is just too cheap. Consequently, Google is not only one of the best trade war stocks to own now, but also a great long-term investment.

Trade War Stocks to Buy: Verizon (VZ)

Source: Shutterstock

Perhaps the best trade war stock to own amid rising trade-related fears is telecom giant Verizon Communications Inc. (NYSE:VZ).

At its core, Verizon provides telecommunications services exclusively in the United States. This business inherently has mitigated exposure to tariffs and trade. Consequently, regardless of what happens on the global trade stage, Verizon’s U.S.-based telecom business will be largely unaffected.

Moreover, Verizon is a big dividend payer with a yield of nearly 5%. As broader market fears escalate, investors tend to flock to dividend safe-havens with big and sustainable dividends. Verizon is exactly that.

And then there is the whole improving fundamentals part of Verizon stock.

For years, the wireless service industry was one defined by ruthless competition, price cuts, market saturation, and margin erosion. But those fundamentals are starting to change, mostly due to the forthcoming roll-out of 5G coverage. That will allow Verizon to differentiate itself from the pack, thereby allowing Verizon to lift prices and grow market share. Revenues, margins, and profits will trend higher as a result.

Overall, then, Verizon is one of the best trade war stocks to own right now given its lack of international exposure and huge dividend yield. Moreover, improving fundamentals in the wireless services industry pave the path for meaningful earnings growth and stock price appreciation over the next several years.

As of this writing, Luke Lango was long FB, GOOG and VZ.

Get up to 14 dividend paychecks per month from safe, reliable stocks with The Monthly Dividend Paycheck Calendar, an easy-to-use system that shows you which dividend stocks to pick, when to buy them, when you get paid your dividends, and how much.  All you have to do is buy the stocks you like and tell them where to send your dividend payments. For more information Click Here.


Source: Investor Place

Pot Stocks

This Pot Stock Has Uplisted and Is Poised for Massive Profit Potential

Michael A. RobinsonMICHAEL A. ROBINSON

As I’ve mentioned numerous times by now, Canada is right at the doorstep of becoming the first G7 nation where the use of recreational cannabis is legalized for the entire country.

I can’t emphasize enough how big this is.

In fact, the recreational marijuana market in Canada could be valued at anywhere between $5 billion and $10 billion per year.

The company that I’ll be talking about today is one that I first recommended to myNova-X Report readers way back in 2016.

The company has recently gone through some exciting developments and can take advantage of the massive potential of the marijuana market.

You see, on May 24, the company uplisted, and its shares are currently trading on the New York Stock Exchange, in addition to trading on the Toronto Stock Exchange.

Here’s why this move will maximize this stock’s profit potential.

You see, uplisting will benefit the stock’s price, liquidity, and potential appreciation.

First, by moving up to stronger and more recognizable exchanges, the stock will broaden its available shareholder base.

Second, the exchanges and market participants are more likely to offer greater liquidity and price discovery and be more active in supporting and trading the stock.

So let’s take a look at this Canadian pot stock and its potential for massive gains…

Canada’s Biggest Grower… Keeps On Growing

Canopy Growth Corp. (NYSE: CGC) is the biggest cannabis grower in Canada and has been expanding its capacity.

In fact, it’s poised to be one of the major global players in the industry as marijuana legalization spreads to more countries.

In addition to exposure in the blossoming Canadian market, Canopy already has agreements to export products to Germany, Australia, Spain, Denmark, Jamaica, Chile, and Brazil.

RELATED: Top five tiny Canadian pot stocks are set to skyrocket. Click here…

What’s more, one of Canopy’s investors is alcoholic giant Constellation Brands Inc. (NYSE: STZ), with a 9.9% stake in the company. That stake is worth a cool $191 million, and Constellation will have the option of purchasing additional stakes in the future.

It’s no coincidence that Constellation, which has a strong presence in California, made its move just months ahead of the state’s full legalization of marijuana.

Over the past year, Canopy has put more emphasis on its cannabis-oils products, as well, citing the higher profit margins of oils in its September quarter earnings report. Sales from oils increased 107% year over year, and the segment’s contribution to overall revenue rose from 14% to 18%.

The Brightfield Group estimates the global marijuana market will reach $31.4 billion by 2021. Should Canopy get 5% of the global cannabis market, it will grow sales by 250%.

Now, let’s take a look at what the stock currently looks like.

Two Exchanges, Plenty of Gains

Canopy is looking strong by closing above its initial New York Stock Exchange listing high once more. Though the cannabis sector isn’t yet fully on the same page, it can be comforted by the fact that Canopy, as its undisputed sector leader, continues to attract investors.

Shares of Canopy’s WEED on the Toronto Stock Exchange gapped up to $40 per share before retreating 15.76% over the next two-plus sessions as profit takers gained control.

Today is the second time Canopy Growth has breached $40 per share on a closing basis. On June 6, which was the day before Canada’s historic Bill C-45 vote was scheduled to take place, WEED finished at $40.68 per share after investors ran up prices in the sector in anticipation of a successful third reading vote.

Having accomplished that, the sector sold off around 8% over the next four days as a main underlying catalyst had been vanquished from the market.

Now that Canopy Growth has round tripped from sub-$34 and back – closing up $1.26 to $40.65 per share – investors have gotten past most of their recent post-legalization sell-off fears.

In fact, WEED closed just $0.03 shy of establishing a new post-NYSE closing high, meaning it can essentially set its sights on $41.40 and $44, which are the post-NYSE intraday high and all-time high, respectively.

Canopy’s seemingly uncontrollable appetite shouldn’t surprise anyone who is following the company. Last week, the company raised $500 million Canadian via convertible note offering, which was the largest ever in the cannabis space. The offering was upsized 25% from the previously $400 million Canadian aggregate principal amount announced just two days prior.

Endless Profit Opportunity for Just About Anyone

If you want to make a profit on the booming cannabis sector, then I suggest jumping onboard Canopy, where the opportunities and gains are seemingly endless.

But that’s just scratching the surface.

For instance, my paid-up Nova-X Report subscribers get total access to my Roadmap to Marijuana Millions model portfolio and stock research, which includes a full briefing on no less than five small caps, each trading for around $5, that are poised to explode when, as expected, Canada passes legalization. This is the kind of potential than can turn a tiny stake into $100,000 or more.

When Canada Takes Weed Fully Legal…

It’ll probably make our retrograde attorney general hopping mad, but there’s really nothing on Earth he can do to stop these small cannabis companies from hitting the stratosphere. Sessions could be furious, but folks who park a few hundred dollars into these “north of the border” firms could potentially turn a small stake into $100,000 – and fast.

Buffett just went all-in on THIS new asset. Will you?
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What is it?
It's not gold, crypto or any mainstream investment. But these mega-billionaires have bet the farm it's about to be the most valuable asset on Earth. Wall Street and the financial media have no clue what's about to happen...And if you act fast, you could earn as much as 2,524% before the year is up.
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Cryptocurrency

Buy This Blockchain Keeping Our Food Safe

So far in 2018, cryptocurrencies, such as bitcoin, have been nothing more than a way to lose a lot of money. But that doesn’t mean that the technology behind bitcoin – blockchain – should be the ‘baby’ that is thrown out with the ‘bath water’.

That is why I want to bring you a series of articles, of which this is the first, where I show you some of the leading firms that are making blockchain technologies a part of their everyday business operations, benefiting both the companies and consumers.

A 2017 survey from Juniper Research of 400 executives, managers and tech staff found that almost 60% of large corporations are considering using blockchain. Corporate spending on blockchain software is expected to reach $2.1 billion this year, up from $945 million in 2017, according to the research firm International Data Corp (IDC).

IDC added that distribution, retail and manufacturing are among the industries due to ramp up blockchain spending in 2018. This coincides with what I’ve noticed – that companies are looking to apply ledger technology to aid in the streamlining of their supply chains.

Using current technology, it is difficult to trace every item through every step of a supply chain that often very lengthy and complex, involving multiple parties and multiple jurisdictions. But distributed ledger technology changes the equation.

As to why, let me again give you a very brief explanation of what happens, courtesy of the Wall Street Journal:

  • “A blockchain ledger allows participants to add blocks of information after each party runs algorithms to evaluate a proposed transaction. If the parties agree that the transaction looks valid — identifying information matches the blockchain’s history and follows the rules created by the participants — then it will be approved, time-stamped and added to the chain. The data, encrypted and unchangeable, is always up-to-date on all participants’ systems.”

 Using Blockchain in the Food Supply Chain

One area that certainly needs technology that will trace an item through every step of the supply chain is food. There have been health scares related to food in almost every country on Earth.

So it is comforting to see that one of the largest food retailers in the U.S. – Walmart (NYSE: WMT) – is beginning to adopt blockchain technology in its food supply chain. Since 2016, Walmart has been working with IBM (NYSE: IBM) to develop software that uses blockchain to track products through its supply chain.

The company was among the early adopters of blockchain, with its operations in China. It deployed blockchain to ensure the place of origin and quality of pork in China, a country that has been plagued by food-safety scandals.

In December, Walmart teamed up with IBM and Tsinghua University in China to create a blockchain food safety alliance. The goal is to create a standards-based way of collecting data about the origin, safety and authenticity of food, using blockchain technology to track food items in real time through the supply chain.

Walmart believes blockchain can increase accountability and transparency among its multiple suppliers and middlemen. When something goes wrong, the point in the supply chain — and the participant that is at fault — can immediately be identified and verified. Blockchain also allows all the parties to see the extent of any damage to goods. For instance, if there was a case of tampering, it is likely that the specific warehouse where the tampering occurred could be pinpointed and any recall can be restricted to products that passed through there.

Walmart’s U.S. Food-Safety Blockchain

 The company has also begun to use blockchain technology here in the U.S. to trace food products through its supply chain. A blockchain will manage supply-chain data for about 30 products this year, after Walmart ran a major test of the technology in conjunction with IBM for several months in its mango supply chain between the U.S., Mexico and some South American countries.

After a mango is picked from a tree, it makes many stops before getting to your local Walmart. In fact, 16 farms, two packing houses, three brokers, two import warehouses and one processing facility were involved with the test. They all used a mobile app from Walmart to send details such as harvest dates, locations and images of their fruit to the retailer’s blockchain. The company says this process is simpler and more secure than the array of barcodes, scanners, paper forms, etc. that it used previously.

And Walmart found that using blockchain can reduce tracking times dramatically. . .it takes only about two seconds to trace a package of mangoes at any point from the farm to the store. Previously, it could take days or even weeks to work through the paper chain.

This could prove to be a life saver in the event of tainted food sickening people. With the speed and accuracy of Walmart’s blockchain, health officials could immediately be directed to the point of the contamination. And Walmart will save money since stores will only have to pull the mangoes off shelves from one location and not all mangoes.

I believe adoption of this technology can only help Walmart in its battle against others in the grocery business, including Amazon, and improve its profitability.

What Walmart is doing is only one example of blockchain being adapted for use by major corporations.

Buffett just went all-in on THIS new asset. Will you?
Buffett could see this new asset run 2,524% in 2018. And he's not the only one... Mark Cuban says "it's the most exciting thing I've ever seen." Mark Zuckerberg threw down $19 billion to get a piece... Bill Gates wagered $26 billion trying to control it...
What is it?
It's not gold, crypto or any mainstream investment. But these mega-billionaires have bet the farm it's about to be the most valuable asset on Earth. Wall Street and the financial media have no clue what's about to happen...And if you act fast, you could earn as much as 2,524% before the year is up.
Click here to find out what it is.
Uncategorized

5 Top Stock Trades for Wednesday Morning

On Monday morning, investors came out strong and bought the trade-war dip. On Tuesday, it took more convincing, but bulls reluctantly bid U.S. equities off their lows. I don’t know how much longer they can handle it though and if trade talks intensify, U.S. stocks look likely to head lower. That’s why on days like this, I like to look for strength, which you’ll see in our top stock trades below.

Top Stock Trades for Tomorrow No. 1: Netflix (NFLX)

Top Stock Trades for Tomorrow No. 1: Netflix (NFLX)

 

Talk about a juggernaut — Netflix, Inc. (NASDAQ:NFLX) has powered higher again on Tuesday, now up more than 3% and above $400. Thought you could get this on a pullback? Well think again, apparently.

Shares are now up a laughable 110% this year and more than 160% over the past 12 months. FANG is hanging tough amid the selling too, with Amazon.com, Inc. (NASDAQ:AMZN) racking up another all-time high on Tuesday as well.

So what do investors do with NFLX? For the love of God, please don’t short the thing. We’ve preached over and over not to short strength and this is a perfect example as to why, regardless of the valuation.

We were all over the breakout in late-May and props to those who are still riding it. $400 is a significant level, but with this high of an RSI (green circle) and after this big of a run, new buyers have to wait for a pullback or some consolidation first.

Top Stock Trades for Tomorrow No. 2: Chipotle (CMG)

Top Stock Trades for Tomorrow No. 2: Chipotle (CMG)

Want to know another strong stock lately? Chipotle Mexican Grill, Inc. (NYSE:CMG). This burrito monster has been on a tear, almost doubling from its 2018 lows.

Now though, CMG is coming into some pretty notable resistance between $475 and $500. The optimist in me is looking for shares to push through, but the realist in me says that may not happen quite so fast.

You may recall we warned investors not to short CMG after it ran from $325 to $425 in a week. But now we need to see how it handles resistance. If it pushes through, then great, as bulls can buy with a great risk/reward. Buying as CMG enters resistance though is a bad risk/reward.

Top Stock Trades for Tomorrow No. 3: Dropbox (DBX)

Top Stock Trades for Tomorrow No. 3: Dropbox (DBX)

Another monster? Dropbox Inc (NASDAQ:DBX), which went public in March at $21. After closing at $42 on Monday, the stock is officially a double.

But the story is a little more strange than that. While the stock was holding onto its gains following a successful IPO, shares were getting into a narrow, sideways range. It was the perfect name to watch for a breakout or a breakdown. However, no one expected it go from $31 to $43 in three days. We still don’t really have an explanation, (although there may be some reasoning).

While shares are down a bit Tuesday, the 40% gain in five days gives recent investors a lot of cushion to work with. I wouldn’t chase this name because it’s run too much. But those that think this name could outperform amid further market weakness (as we’ve seen the past few days) could buy DBX and use a stop-loss below Tuesday’s lows.

Top Stock Trades for Tomorrow No. 4: Celgene (CELG)

Top Stock Trades for Tomorrow No. 4: Celgene (CELG)

To say Celgene Corporation (NASDAQ:CELG) stock has been hammered this year almost feels like an understatement. With shares down more than 40% over the past eight months, it’s surprising to see this dud outperforming on any day, let alone Tuesday, up 2%.

$75 held as support and shares have been consolidating above this level for a month. That gives bulls a solid risk/reward should they go long near current levels.

Investors have two real tests though: If $75 is retested it has to hold or CELG could be in for more pain. Additionally, downtrend resistance is now near $83, but could be lower by the time it comes into play, which will be vital to bulls and bears.

If it holds, bears are still in control. A close above it and bulls have the ball.

Top Stock Trades for Tomorrow No. 5: MGM Resorts (MGM)

Top Stock Trades for Tomorrow No. 5: MGM Resorts (MGM)

It can’t all be about the winners today.

Should we call it $29? How about $30? For MGM Resorts International (NYSE:MGM), it’s not perfectly clear as to what the level is that shares must hold, but it’s pretty darn close.

Our line — parked at the politically correct $29.50 mark — shows this area was a critical pivot point for MGM as it went from resistance to support. Should it give way, it will likely become resistance again.

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Dividends

Buy These 3 High-Yield Stocks Thriving With Higher Fed Rates

Last week the Federal Reserve Board increased its Fed Funds Target rate for the second time this year, to 1.75%. The Fed Funds rate controls yields on the short end of the yield curve. Rate increases typically push fear-driven investors to sell the income stock categories like REITs and Utilities. Informed investors use these sell-offs as opportunities to buy dividend paying stocks for what will likely be market beating total returns.

I grabbed this important piece of data from a recent article from investment management company Neuberger Berman:

“Our research indicates that while, in the short term, REIT share prices have been influenced by the direction of interest rates, when measured over longer time periods, REIT total returns historically have not tended to be correlated to interest rates. In the current period, REITs’ underlying fundamentals and access to capital have not declined. Furthermore, many REITs have used low borrowing costs and the capital markets to strengthen their balance sheets… during periods when 10-year Treasury yields rose sharply, REIT total returns generally underperformed broader equity market returns in the short term, but generally outperformed after the initial period of weakness.”

I have seen other research that confirms in periods of rising interest rates REITs have, on average, outperformed the broader stock market. The reason is that rising rates indicate a strong economy and it is likely that commercial property values and rental rates are also increasing. If you are looking for individual REITs that specifically will do well in a rising rate environment, think about those commercial property sectors that have the shortest contract periods. With short term leases, these REITs will be able to more quickly increase the prices they charge to renters.

Hotels have the shortest lease periods – one night. Hotels operators change their rates daily based on demand and occupancy levels. Historically, hotel results mirror economic growth. A strong economy will lead to growing profits and share prices for the hotel REITs.

Chatham Lodging Trust (NYSE: CLDT) is a lodging/hotel REIT which owns 40 hotels in 15 states. The portfolio consists of premium branded upscale extended stay and select service hotels. The hotel REIT sector peaked in January 2015 and then went into a steep bear market which bottomed one year later. Over the last two and a half years, share prices have been volatile without a definite up or down trend.

Since its 2010 IPO, Chatham Lodging has steadily increased its dividend rate, with the last increase in March 2016. Chatham pays monthly dividends and is currently paying out just 62% of funds from operations (FFO) per share. This is a conservatively managed, attractive income yield stock that gives exposure to the lodging sector.

CLDT currently yields 6.4%.

Self-storage companies have rental rates that renew each year. There is a lot of turnover in a self-storage facility, which allows the operator to quickly adjust rates to changing economic conditions. Over the last 15 years, self-storage has been one of the best performing commercial property sectors.

Extra Space Storage (NYSE: EXR) is a large-cap, self-storage REIT with a best in class track record. The company owns 851 storage facilities. It has interests in another 216 through joint ventures and provides the management services for an additional 456 properties. The self-storage business provides strong same store revenue growth with low expenses and capital spending requirements.

Of the four major self-storage REITs, Extra Space is the historic leader for revenue, net operating income, and FFO growth. The company’s dividend has increased by 244% since 2012, including a 10.3% boost this year. This company is the class of the self-storage sector.

EXR currently yields 3.5%.

Rental rates paid for living quarters are usually reset annually. There are several economic factors that continue to push apartment and single family home rental rates higher. The REITs in this sector will be able to increase rental rates faster than the rate of increase in the Fed Funds rate.

Invitation Homes (NYSE: INVH) is one of the small number of REITs focused on owning single-family rental homes as opposed to apartment complexes. These REITs are the result of the institutional buying of distressed homes during the housing make crash of 2009-2011.Thousands of homes were bought at low prices, rehabilitated and turned into rental properties.

In the current economy the number of families that prefer renting to owning remains high. At the same time, millennials are forming families and want to get away from the apartment life into single family homes.

Invitation Homes owns 82,500 homes, with an average of 4,800 in each of the metropolitan areas where it has ownership. This large scale operation provides economy of ownership similar to apartments. The company forecasts to generate 5% to 6% same store net operating income growth. This is the highest growth rate among the different REIT sectors.

INVH is generating FFO of $1.15 per share against a current annual dividend of $0.44. When the company starts to grow the dividend the share price will take off.

Current yield is 2.0%.

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Source: Investors Alley 

Dividends

7 July Dividend Hikes to Buy for 12% Yearly Gains, Forever

Most people are chasing big dividend payers right now in this “3% world” we live in. Meanwhile, a small group of “hidden yield” stocks are quietly handing smart investors growing income streams PLUS annual returns of 12%, 17.3%, or more.

Let’s talk about how to find these stocks, and bank 12% returns or better every single year, by following a simple two-step formula.

See, everyone wants dividend stocks with good current yields. It’s easy to scan a newspaper or financial website and pick out the stocks that are paying 3%, 4%, 8% or whatever number you might consider “good.”

Yet that’s NOT the right way to pick dividend stocks.

You have to do more work to figure out if those yields are actually supported by the company’s cash flows, earnings power, long-term business prospects, etc. You have to sift through the same company’s history to determine how long it’s been paying those dividends. How consistently it’s been paying those dividends. And especially if it’s been regularly increasing its dividend payments.

The best time to buy a dividend grower is anytime. But we can tip the odds in our favor even further when we buy at moments like these – when the share price is due to “catch up” to the dividend.

Which brings me to step 1 of our 12% return formula…

Step 1: Buy Before Dividend Hikes

The “efficient market” is always slow to adjust to higher dividend levels. Folks who scan the papers are looking at trailing yields. They’re not considering next month’s payout increase, which is likely not yet priced into the stock quote.

Which means we should start our search for 12% by considering companies set to hike in the next month or two.

Here are nine firm’s poised to give their investors a payout raise in June.

Step 2: Review Next Month’s Dividend Hikes

Every dividend that eventually “accelerates” begins with a simple payout hike. We’ll talk about purchase timing in a moment. First, let’s review the seven stocks most likely to raise their dividends next month.

Discover Financial Services (DFS)
Dividend Yield: 1.8%

Financial stocks aren’t necessarily the most generous of dividend payers, with many of them shelling out in the 1%-2% area. Such is the case with credit card purveyor Discover Financial Services (DFS), which doesn’t even clear the 2% bar.

To its credit, DFS has pumped up its dividend significantly over the past few years, turning a 20-cent payout in 2014 into today’s 35-cent offering – a 75% increase.

To its detriment, the company has done so amid a roughly 15% contraction in earnings over roughly the same time.

Discover’s (DFS) Earnings Arsenal Is Waning

Still, the company did report a nice third quarter in April that included a 27% bump to the bottom line.

Expect Discover’s next dividend increase to come sometime in mid-July.

JM Smucker (SJM)
Dividend Yield: 2.9%

Jam master JM Smucker (SJM) is having itself a trying 2018, off double digits less than halfway through the year. That comes despite a beat on both the top and bottom lines back in February – the company’s $2.50 in earnings topped expectations by 37 cents, while revenues of $1.9 billion just slid above the $1.89 bill mark. Of particular interest was a gain in cash from operating activities, from $419.5 million to $469.0 million.

Perhaps investors aren’t pleased with guidance, which has net sales coming in between flat and down slightly for the year.

Investors will be hoping for a pick-me-up in the form of a dividend increase announced sometime in mid-July. SJM has lifted its dividend by almost 35% over the past five years, and still has ammunition enough to keep perking up the payout.

Kellogg (K)
Dividend Yield: 3.4%

Kellogg (K) might command a horde of popular brands including Frosted Flakes, Froot Loops, Rice Krispies, Pringles, Pop-Tarts, Eggo, Kashi, Morningstar Farms and more. But it doesn’t command much respect among Wall Streeters – nor has it for some time. The stock has essentially been dead money for the past five years, and it has posted a 5% loss this year versus a roughly flat market.

That’s despite a significant bump since its first-quarter report in early May. At the time, the company reported a 69% jump in earnings as well as top- and bottom-line beats, thanks in part to strength in its frozen-foods unit.

Kellogg leaves much to be desired, not just on a share-appreciation basis, but also in the dividend-growth arena. The company’s payout expansion has slowed to a crawl, ranging between about 2% and 4% annually for the past several years.

Kellogg’s (K) Dividend Growth Is Flattening Out

Education Realty Trust (EDR)
Dividend Yield: 4.1%

Education Realty Trust (EDR) is a niche real estate investment trust (REIT)  that specializes in collegiate housing, serving 79 communities across 25 states. Some of its most recent projects have been focused on Pennsylvania’s Lehigh University, as well as Mississippi State University.

This has been a roller-coaster stock for several years, including an up-and-down 2018 that has EDR sitting on fractional losses for the year-to-date. That hasn’t been helped much by a somewhat lackluster quarter for the period ended in March – the company’s funds from operation (FFO) declined 5% year-over-year on a 1.5% drop in same-community net operating income.

Also disappointing has been the dividend growth in this real estate name. The payout has improved by a modest 18% since 2014, with only penny-per-share hikes since 2015. Investors certainly will want to see better in mid-July, when the company typically announces its annual improvement.

National Retail Properties (NNN)
Dividend Yield: 4.6%

National Retail Properties (NNN) is a so-called “triple-net lease” REIT that boasts 2,800 properties across 48 states and 37 industries. It’s called a “triple-net” lease because when it leases properties, it puts the triple onus of taxes, insurance and maintenance on the tenant, too. So while the REIT charges less overall (because it’s not covering those expenses), it’s a far more predictable revenue model because there’s no guesswork as to what taxes will be in a given year, or what building issues will need to be addressed.

Like many retail REITs, National Retail Properties has been on the slide for a couple of years as the industry suffers the wrath of an ever-encroaching Amazon.com (AMZN) as well as other e-commerce headwinds. That said, the damage hasn’t been too bad simply because so many of NNN’s tenants aren’t direct competitors with Amazon. Consider that top tenants at the moment include companies such as 7-Eleven, Mister Car Wash and LA Fitness. As a result, funds from operation have actually been improving for years.

Dividend growth hasn’t exactly been explosive, however. The company’s payout has advanced by just 17% since 2014. And there’s no reason to expect anything different in mid-July, when the company is expected to deliver its 29th consecutive annual increase.

National Retail Properties (NNN) Is Making Money. Now It Needs to Give More Back.

Duke Energy (DUK)
Dividend Yield: 4.9%

What list of dividend growth stocks would be complete without a utility stock?

Duke Energy (DUK) is a Charlotte, North Carolina-based electric utility that serves roughly 7.6 million customers across 95,000 square miles of service area, and owns 49,500 megawatts of generating capacity.

This is one of the steadier dividends in the game, with Duke doling out a regular paycheck to investors for 92 consecutive years. And while it doesn’t sport a particularly long dividend growth history compared to the likes of Southern Company (SO), it still has more than a decade under its belt and has improved its payout by about 14% since 2014. The next payout hike should come sometime in the first couple weeks of July.

The yield also is getting help from a 10% year-to-date decline – more than twice as worse as the utility sector as a whole.

Enterprise Products Partners LP (EPD)
Distribution Yield: 5.9%

Energy master limited partnership (MLP) Enterprise Products Partners LP (EPD) has built an impressive income resume that includes 55 consecutive quarterly distribution increases. And that streak should extend to 56 consecutive quarters sometime in the first full week of July.

It’s likely to be a token increase, mind you, since it makes four such improvements in any given year. It also doesn’t add up a ton – the company’s distribution has inflated by just 22% since the start of 2014.

EPD is one of the largest energy partnerships in the world, boasting roughly 50,000 miles of natural gas, NGL, crude oil, refined products and petrochemical pipelines, not to mention storage facilities, processing plants and other assets.

It’s also no slouch, producing record net income, gross operating margin and adjusted EBITDA during its most recently reported quarter.

Step 3: Earn 12% Annual Returns For Life!

Robust dividend growth separates the winners from the losers.

And I’m not just talking about the stocks.

Low dividend growth goes hand-in-hand with slow and no growth – and even eventual decay. Hitch your wagon to the supposedly “safe” blue chips that most financial pundits shill for, and you’ll quickly be looking for part-time work a few years into your retirement.

Get up to 14 dividend paychecks per month from safe, reliable stocks with The Monthly Dividend Paycheck Calendar, an easy-to-use system that shows you which dividend stocks to pick, when to buy them, when you get paid your dividends, and how much.  All you have to do is buy the stocks you like and tell them where to send your dividend payments. For more information Click Here.
Energy

Two Stocks to Buy and One to Sell with Oil Prices Climbing Again

President Trump is at it again… on June 13, he again blamed OPEC for the rising price of oil. In a tweet he said, “Oil prices are too high, OPEC is at it again. Not good!”. This follows a similar tweet on April 20 when President Trump said “oil prices are artificially Very High” due to the supply curbs by OPEC and its allies.

Trump’s tweet comes ahead of a meeting next week of oil ministers from OPEC and Russia who are under pressure from the U.S. to raise output by at least one million barrels of oil a day, after more than a year of enacting production cuts.

So is OPEC to blame? Yes and no. There are other factors at play here such as a robust global economy that has driven up demand for oil. For example, if you look at just China and India, they have imported 962,000 barrels per day more in the first five months of 2018 than in the same period last year.

But the real problem is on the supply side, with President’s Trump’s imposition of new sanctions on Iran exacerbating an already bad situation. Let me explain…

Oil Supply Constraints

I found it interesting that well-known hedge fund manager Pierre Andurand responded to President Trump’s tweet saying an oil price spike is coming because the number of countries with excess production capacity are few. “OPEC has the lowest spare capacity ever right now. There is going to be a real issue. Prices will be above $150 in less than 2 years. Eventually higher prices will bring more supply. But right now [there is] too little supply coming over the next few years despite US supply growth,” he tweeted.

Andurand is someone to listen to in the oil market… he has returned to his investors a cumulative 560% since 2008. But is he just talking his ‘book’? Last year, he began accumulating positions betting on a return to $100 a barrel oil.

Related: Big Oil Bets Big on Big Data to Increase Revenues and Cut Costs

Unfortunately, for us consumers of oil Andurand is largely correct…

First, supply and demand right now in the oil market are roughly in balance at about 100 million barrels a day. BUT the so-called shock absorbers that would cushion any interruption in supply or spike in demand are at dangerously low levels.

Commercial stocks in the world’s major economies currently stand at 2.8 billion barrels, composed of crude (1.1 billion barrels), other liquids (300 million barrels) and refined products (1.4 billion barrels). The level of these inventories is already 27 million barrels below the five-year average, according to the International Energy Agency.

Then you must consider that the vast majority of inventories are held for operational reasons to ensure the uninterrupted flow of oil from wellhead to final customers. Global oil consumption has increased by more than 6 million barrels per day over the past five years, so other things being equal, the oil industry will want to hold more inventories for operational reasons. That leaves only a small percentage, generally less than 15%, actually available to act as a shock absorber.

For the last four decades, the oil industry’s second line of defense has been the existence of significant volumes of spare production capacity. But today, nearly all spare production capacity is held by Saudi Arabia, with smaller volumes held by Russia, Kuwait and the United Arab Emirates. The other oil producers have no spare capacity.

Add it up and OPEC’s spare capacity currently amounts to less than 2 million barrels per day, according to the U.S. Energy Information Administration. That is not good when you consider that in its latest oil market update, the International Energy Agency (IEA) said that it is possible that exports from Venezuela and Iran could decline by as much as 1.5 million barrels per day or about 30% of their current output by the end of 2019. Iran sanctions may take nearly a million barrels a day off the market and with the sorry state of Venezuela, oil production there may totally collapse.

To compensate for that lost output, Saudi Arabia and the others could boost production by somewhat over 1 million barrels per day, according to the IEA. But if that happens, OPEC spare capacity will be reduced to less than 1 million barrels per day – the lowest level since 2004!

And even though US production from its shale fields is on the rise, keep in mind that most U.S. refineries cannot handle that type of light sweet crude and run on the heavier crude such as from Saudi Arabia. And pipeline constraints mean much of that shale oil cannot reach the marketplace.

Oil Price Rise Investments

So how can you profit from this, or at least, make enough money to offset what will surely be rising gasoline prices?

Keep in mind that many oil producers are generating more free cash at current prices than they did at $100 per barrel before the market crashed four years ago. This is because of deep cost cuts during the downturn, with average operating expenses per barrel down by a third and development costs halved thanks to cost-cutting since 2014. That means most oil majors can now cover dividends and capital expenditure at prices around $50 per barrel, meaning that, at anything above that level, they are very profitable.

Of the larger oil companies, my favorite is Norway’s Equinor ASA (NYSE: EQNR), which recently changed its name from Statoil to emphasize its long-term move pivot away from oil and toward alternative energy.

But for now, the company is enjoying the benefits of higher oil prices it is earning (earnings per share were up 24% in 2017) from its rich North Sea oil holdings, including the massive Johan Sverdrup oil field. It’s stock up an impressive 26% year-to-date.

More Reading: Buy This Commodity Set to Become More Precious Than Oil

In its latest earnings report, the company lifted its adjusted net earnings to $1.47 billion, from $1.11 billion in the same period last year. Analysts had, on average, expected $1.61 billion. Cash flow from operations increased by 20% to $7.1 billion.

Here in the U.S. I like ConocoPhillips (NYSE: COP), which is also up 26% year-to-date. This should continue as the company expects compound annual growth rate (CAGR) of production through 2022 of 22%. Not surprising when you consider that the bulk of the acreage it holds in the Eagle Ford shake and Bakken shale are rich in oil. Another plus is that on February 1, ConocoPhillips entered into a deal with AnadarkoPetroleum to buy a 22% stake in the Western North Slope of Alaska. The company will also acquire the stake of Anadarko in the Alpine pipeline. Once the deal concludes, ConocoPhillips’ cash flow will rise from incremental production increases.

But for every winner, there is a loser. And the biggest loser, if oil prices continue to rise, is the airline industry. Overall, the International Air Transport Association says it expects net income of $33.8 billion for global airlines this year, down 12% from its December forecast.

Jet fuel represents a third of airlines’ expenses and industry executives predict costs will be passed on to consumers via higher fares. If I had to pick one loser among the airlines, it would be American Airlines (Nasdaq: AAL), which has added fuel costs to its other problems (overcapacity, etc.)

American lowered its profit outlook for 2018 due to an expected $2.3 billion rise in fuel costs this year. It unfortunately had listened to the short-term Wall Street focus… why waste money hedging – everyone ‘knows’ oil is headed lower, raise your profits by not hedging. Its stock is down 22% over the past three months.

Look for even more winners and losers if the oil price continues its ascent.

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