- There's still great deal of volatility in the REIT aristocrats.
- Prior recommendations are either unchanged for up modestly.
- I add Exxon and Universal Corp. to the buy list.
Top Performing Aristocrats
- Tanger Factory Outlets (SKT): +18.09%
- Meredith Corporations (MDP): +13.51%
- Franklin Resources (BEN): 13.25%
- Federal Realty Investment Trust (FRT): 13.23%
- Leggett and Platt (LEG): 12.95%
Bottom Performing Aristocrats
- Cincinnati Financial (CINF): -22.39%
- MGE Energy (MGEE) -6.63%
- Consolidated Edison (ED): -6.52%
- Becton Dickinson (BDX): -6.08%
- California Water (CWT): -5.55%
The REIT aristocrats (SKT)(FRT) remain very volatile, with investors torn between the sector's high yields and the now extremely challenging nature of their operating environment. Utilities lost ground last week. Electric utilities are seeing a drop in demand due to the shuttering of businesses. Water utilities are getting caught in the downdraft.
- Tanger Factory Outlets (SKT): 21.47%
- Meredith Corporation (MDP): 18.28%
- Helmerick and Payne (HP): 11.47%
- Exxon (XOM): 8.07%
- AT&T (T): 6.96%
- West Pharmaceuticals (WST): .335
- Ecolabs (ECL): .99%
- Tootsie Roll (TR): 1.01%
- Sherman Williams (SHW): 1.02%
- Brown Forman B shares (BF.B): 1.15%
Next, let's look at the watch list:The large drop in Edison is the stand-out event. As noted above, utility demand is down -- especially in the New York area. Kimberly Clark and Procter and Gamble are simply selling-off for technical reasons. Universal and Exxon are discussed below.
Here is how all three have performed since going on the list:
- Coke (KO): recommended on 4/13 at 46.5, currently at 45.6
- AT&T (T): recommended on 4/13 at 29.9, currently at 29.9
- Genuine Auto Parts (GPC) recommended on 4/21 a 70.56, currently at 75.19
Let's check in on other SA analysis of stocks on the watch or buy list.
- Keith Williams argues that Exxon's business is not as sound as you'd like to think.
- Kevin George argues for a slow recovery for Coke (KO)
- There were 10 stories on (T). All were positive. The central takeaway is that cash flow is sufficient to cover the dividend.
Today, instead of looking at a new company, I'm moving two stocks from the watch list to the buy list.
Let's start with Universal Corp. Its chart is signaling a "buy" opportunity:(UVV) is in a solid uptrend that started when the stock hit a low of 36.43 in late March. Since then, it's rallied about 25%. The shorter-term EMAs are all moving higher while prices have crossed over the 50-day EMA. Momentum is rising. At the end of last week, the stock sold-off to the uptrend.
Exxon has a similar chart, only with different numbers. The stock has been rallying since the end of March when it hit ann absolute low of 30.1. Since then, it's rallied 43%. The shorter-term EMAs are all moving higher; prices have made an initial move above the 50-day EMA on rising momentum.
Exxon just released its earnings, which were fair. However, it's keeping its dividend (emphasis added):
On Apr 29, ExxonMobil announced that it has maintained its quarterly dividend at 87 cents per share, likely to be paid on Jun 10, to shareholders of record as of May 13.
Since the coronavirus pandemic has shocked the energy market, many leading energy firms have opted to slash dividend as a measure of preserving cashflows. Energy giants Equinor ASA EQNR and Royal Dutch Shell plc RDS.A recently cut dividend by 67% and 66%, respectively.
Hence, the company’s decision to maintain dividends like BP plc BP is worth appreciating.
Some analysts will argue the company could still cut its payout. However, if they were going to do that, they would have announced it with their 1Q20 earnings report. Had they done so, it would have been in line with expectations while being folded into all of the other dividend-cut statements from other oil companies. Exxon's decision to announce it was keeping its dividend was, in fact, the key part of its announcement.
That's it for this week.
Disclaimer: this is not specific investment advice for anyone. I don't have a professional relationship with any reader. I reserve the right to be wrong (actually, the market likes to do that. Read people who disagree with me. In other words, buyer beware.
This article was written by
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