“A billion here, a billion there. Pretty soon you’re talking about real money.” I was reminded of this line when evaluating fourth-quarter results in the energy sector. That’s because the big multinational producers are generating profits that aren’t just huge by corporate standards — they dwarf the GDP of some small countries.  Exxon Mobil (NYSE: XOM) hauled in $6.4 billion in adjusted net income in the fourth quarter. BP (NYSE: BP) shattered expectations with a profit of $3.5 billion. Royal Dutch Shell (NYSE: RDS-A) banked earnings of $5.7 billion. That’s $15.6 billion from just three companies — in a single… Read More

“A billion here, a billion there. Pretty soon you’re talking about real money.” I was reminded of this line when evaluating fourth-quarter results in the energy sector. That’s because the big multinational producers are generating profits that aren’t just huge by corporate standards — they dwarf the GDP of some small countries.  Exxon Mobil (NYSE: XOM) hauled in $6.4 billion in adjusted net income in the fourth quarter. BP (NYSE: BP) shattered expectations with a profit of $3.5 billion. Royal Dutch Shell (NYSE: RDS-A) banked earnings of $5.7 billion. That’s $15.6 billion from just three companies — in a single quarter. For the year, the combined earnings of the five super-majors — this trio plus Chevron (NYSE: CVX) and Total (NYSE: TOT) — reached an incredible $80 billion. Indeed, we are talking about real money. —Recommended Link— Create a 10%+ Income Stream for Life We’re sitting on a collection of the safest, most generous monthly payers available. And while $11,200 in dividend checks is a welcome addition to anyone’s income, investors also love racking up capital gains as high as 446%. Start generating a 10%+ income stream for life today from these consistent companies.. Even more impressive than the… Read More

Last week, news outlets reported the release of minutes from the Federal Reserve’s meeting in January. We all know that when the Fed meets, it’s usually big news. Since the financial crisis, the central bank has been ever-so-gradually raising interest rates, from zero, to where they now sit, in a range of 2.25% to 2.5%. But ever since equities markets fell sharply to end 2018, the Fed has been sending mixed signals. I won’t bore you with the details, but the short version is that Fed Chair Jerome Powell seemed committed to gradual increases… until things… Read More

Last week, news outlets reported the release of minutes from the Federal Reserve’s meeting in January. We all know that when the Fed meets, it’s usually big news. Since the financial crisis, the central bank has been ever-so-gradually raising interest rates, from zero, to where they now sit, in a range of 2.25% to 2.5%. But ever since equities markets fell sharply to end 2018, the Fed has been sending mixed signals. I won’t bore you with the details, but the short version is that Fed Chair Jerome Powell seemed committed to gradual increases… until things got a little ugly. So the question became whether the Fed would continue raising rates gradually or take an even softer stance going forward. So here’s what we learned from the official notes from the meeting… #-ad_banner-#As it stands, the central bank still holds about $3.8 trillion in Treasury bonds on its balance sheet. The “balance sheet reduction” program, where the Fed was holding U.S. government bonds to maturity without making any new repurchases, will likely conclude at the end of the year. (Remember QE, or quantitative easing? Well, this was quantitative “tightening,” if you will.) Still with me? Good,… Read More

My young boys ask a lot of questions. I know this isn’t unique. Almost all young children ask questions. And after a while, almost all those questions become extremely repetitive and, in all honesty, annoying. But I’m sure I’m not the only parent who has faced a long stream of “why” questions, which is currently among the favorite questions of my little guys. I patiently answer their questions as many times as they ask because I have found myself in their situation at times. We all have. After all, “Why?” could be among the most important question we ask as… Read More

My young boys ask a lot of questions. I know this isn’t unique. Almost all young children ask questions. And after a while, almost all those questions become extremely repetitive and, in all honesty, annoying. But I’m sure I’m not the only parent who has faced a long stream of “why” questions, which is currently among the favorite questions of my little guys. I patiently answer their questions as many times as they ask because I have found myself in their situation at times. We all have. After all, “Why?” could be among the most important question we ask as investors. —Recommended Link— Your Chance To Learn From The Best Do you want to make up to $4,000 each week in the stock market in only about 10 minutes per week? Stock expert Jim Fink is holding a new LIVE, free training where he’ll reveal his 3 secrets behind his #1 investing strategy for 2019. Join him February 27th at 1:00 P.M. Eastern to learn how to make easy money each week selling stock insurance to nervous-Nelly investors. Spots are limited — Click here to register for free. This week, I want… Read More

S&P 500 companies have now posted healthy double-digit earnings growth for five straight quarters — maintaining a 20%-plus pace for a few of those. While the first quarter of 2019 could fall on either side of zero, full-year 2019 profits are expected to climb another 5% over last year’s record levels. In short, it’s been a good environment for dividend growth. That’s exactly what we like to see over at my premium newsletter, High-Yield Investing.  As my premium subscribers know, I keep tabs on companies that are likely to announce dividend hikes in the coming month and share my findings… Read More

S&P 500 companies have now posted healthy double-digit earnings growth for five straight quarters — maintaining a 20%-plus pace for a few of those. While the first quarter of 2019 could fall on either side of zero, full-year 2019 profits are expected to climb another 5% over last year’s record levels. In short, it’s been a good environment for dividend growth. That’s exactly what we like to see over at my premium newsletter, High-Yield Investing.  As my premium subscribers know, I keep tabs on companies that are likely to announce dividend hikes in the coming month and share my findings in regular issues. And while the companies mentioned may not end up being official portfolio recommendations right away, it’s always a good exercise that could eventually lead to another long-term winner. Here are four more prospects likely to reward investors with increased payouts starting next month. #-ad_banner-#1. Air Products and Chemicals (NYSE: APD) — APD is a leading global supplier of industrial gases. The company provides oxygen, nitrogen, and carbon dioxide, as well as rarer gases such as neon and xenon. These products are marketed to many fields including aerospace, food/beverage, metals fabrication, and healthcare. With stronger sales volumes and… Read More

As a child, I wanted to be a weatherman. I knew more than any ten-year-old should about barometric pressure and relative humidity and spent countless hours in the winter staring at the radar praying for snow (understand, it’s a rarity in my home state of Louisiana).  Back then, one of our local network meteorologists never predicted any of the white stuff, even when his colleagues assured kids that several inches were coming and schools would be closed the next day. I hated that guy. But my ski gloves and sled never got much use — he was right 99% of… Read More

As a child, I wanted to be a weatherman. I knew more than any ten-year-old should about barometric pressure and relative humidity and spent countless hours in the winter staring at the radar praying for snow (understand, it’s a rarity in my home state of Louisiana).  Back then, one of our local network meteorologists never predicted any of the white stuff, even when his colleagues assured kids that several inches were coming and schools would be closed the next day. I hated that guy. But my ski gloves and sled never got much use — he was right 99% of the time.  Of course, you can’t really blame the weatherman for the forecast. They are simply the messengers. Please keep that in mind when I tell you the stock market forecast appears rather stormy right now.  I’d much prefer to say that conditions look lovely — but honestly, you might want to keep an umbrella handy the next few weeks.  Here’s what’s got me worried.  This chart shows the change in S&P first-quarter earnings estimates over the past 18 weeks. Back in September, analysts were anticipating a decent 6.7% increase. By December 31, that projection had been cut in half… Read More

Occasionally, I give Wall Street analysts a tough time. They tend to have a herd mentality, are myopically focused on the short-term, and are reluctant to downgrade stocks until trouble goes from bad to worse and the damage has already been done. That’s a bit like yanking a tiring pitcher after he’s surrendered a big home run. #-ad_banner-#But I never question the intelligence of these professionals, or their knowledge of the industries they cover. Spending all day, every day, analyzing one specific group (whether its airlines, utilities or biotechnology) affords a deep understanding of those businesses and their operating environments. Read More

Occasionally, I give Wall Street analysts a tough time. They tend to have a herd mentality, are myopically focused on the short-term, and are reluctant to downgrade stocks until trouble goes from bad to worse and the damage has already been done. That’s a bit like yanking a tiring pitcher after he’s surrendered a big home run. #-ad_banner-#But I never question the intelligence of these professionals, or their knowledge of the industries they cover. Spending all day, every day, analyzing one specific group (whether its airlines, utilities or biotechnology) affords a deep understanding of those businesses and their operating environments. I might not always agree with their conclusions, but if an analyst says a retailer’s debt maturities look problematic or a manufacturer might benefit from favorable foreign currency translation, I value their insight and opinion. They know who is gaining market share, where regulatory changes are headed and when disruptive new products will be released. They also know how stock prices behave. So, I find their target prices informative.  Take wireless tower owner Crown Castle (NYSE: CCI), a former holding in my premium newsletter, High-Yield Investing. In late December, with shares trading near the $100 mark, analysts had a consensus… Read More

Not many asset classes finished 2018 on a high note. But the December pullback was particularly harsh for high-yield bonds. In fact, the group suffered its worst monthly performance in eight years.  Like most in this category, the SPDR High Yield Bond (NYSE: JNK) fund ended 2018 in negative territory with a loss of 3.3%. Despite being riskier than their investment-grade counterparts, annual declines are rare for high-yield bonds.  #-ad_banner-#In fact, it has only happened a handful of times over the past 20 years.  And they don’t stay down for long. According to State Street, high-yield bonds have rebounded 29%… Read More

Not many asset classes finished 2018 on a high note. But the December pullback was particularly harsh for high-yield bonds. In fact, the group suffered its worst monthly performance in eight years.  Like most in this category, the SPDR High Yield Bond (NYSE: JNK) fund ended 2018 in negative territory with a loss of 3.3%. Despite being riskier than their investment-grade counterparts, annual declines are rare for high-yield bonds.  #-ad_banner-#In fact, it has only happened a handful of times over the past 20 years.  And they don’t stay down for long. According to State Street, high-yield bonds have rebounded 29% on average in the calendar year following an annual decline. While I wouldn’t bank on that large of a gain, I do believe this same pattern will hold in 2019.  As you may know, this group isn’t particularly rate-sensitive. Like equities, it responds more to broad economic changes, which in turn influence the ability of corporate borrowers to repay their IOUs. Right now, most are meeting principal and interest payments in a timely manner.  According to Moody’s, default rates on speculative-grade U.S. debt are projected to fall from 3.0% currently (already well below historical norms) to just 2.0% by September. Read More

Have you heard? The U.S. Postal Service (USPS) just raised the price of a Forever stamp to $0.55 from $0.50. This is the sharpest percentage increase (10%) since 1991 — and the biggest hike on record in nominal terms. As a young financial advisor in the late 1990s, I would always stress the impact of inflation when meeting with prospective clients, modeling it into any retirement funding projections. And the best way to drive home the point was to show how stamp prices had increased steadily over the years. In fact, they are directly tethered to inflation rates. Back… Read More

Have you heard? The U.S. Postal Service (USPS) just raised the price of a Forever stamp to $0.55 from $0.50. This is the sharpest percentage increase (10%) since 1991 — and the biggest hike on record in nominal terms. As a young financial advisor in the late 1990s, I would always stress the impact of inflation when meeting with prospective clients, modeling it into any retirement funding projections. And the best way to drive home the point was to show how stamp prices had increased steadily over the years. In fact, they are directly tethered to inflation rates. Back then, stamps had doubled in price from $0.15 to $0.32 over the prior two decades. Twenty years later, and they’ve continued to march all the way to $0.55. How long do you think it will be before they hit $0.60, or $1.00?  An acquaintance of mine had the foresight back in 2007 to “invest” $1,000 in Forever Stamps, purchasing 2,439 at a fixed price of $0.41 each. It really wasn’t that different from speculating in commodities by using futures contracts. She didn’t do too bad. The value of those 2,439 stamps has now risen to $1,341, an increase of 34.1%. Read More

It may be frigid across much of the country, but corporate earnings growth remains quite steamy. As of February 1, 230 members of the S&P 500 (46%) had posted fourth-quarter results. That means we’re about halfway through the reporting season. And thus far, nearly three-out-of-four companies beat expectations. The torrid 20%-plus growth rate we’ve seen the past several quarters is finally beginning to moderate (that pace is unsustainable for long). Still, if you blend the actual results with the latest estimates from the other 270 companies that are due to report soon, S&P earnings are on track to increase 12.4%. Read More

It may be frigid across much of the country, but corporate earnings growth remains quite steamy. As of February 1, 230 members of the S&P 500 (46%) had posted fourth-quarter results. That means we’re about halfway through the reporting season. And thus far, nearly three-out-of-four companies beat expectations. The torrid 20%-plus growth rate we’ve seen the past several quarters is finally beginning to moderate (that pace is unsustainable for long). Still, if you blend the actual results with the latest estimates from the other 270 companies that are due to report soon, S&P earnings are on track to increase 12.4%. That would mark the fifth consecutive quarter of healthy double-digit profit growth. A week earlier, the same methodology pointed toward a growth rate of 10.9%. That means we’ve had some big upside surprises in recent days — mostly in the energy sector. On average, the energy sector is beating consensus earnings expectations by 23%, versus 3.5% for the S&P 500. In fact, this group is single-handedly propping up growth rates for the entire market. As you can see from the chart below, it has been a disappointing quarter for utilities, whose earnings have slipped 5.2% from a year ago. Tech… Read More

Kinder Morgan (NYSE: KMI) is back. Publicly, the energy pipeline master limited partnership (MLP) issued guidance calling for distributable cash flow (DCF) of $4.6 billion in 2018 or $2.05 per share. Quietly, it has been telling stockholders that the numbers were tracking ahead of expectations.  Well, the official count is now in. The company indeed beat the mark, generating $4.73 billion in DCF or $2.12 per share. That’s within two cents of the record high of $2.14 set in 2015. So for all intents and purposes, it has made a full recovery. Yet back then, KMI shares commanded a price… Read More

Kinder Morgan (NYSE: KMI) is back. Publicly, the energy pipeline master limited partnership (MLP) issued guidance calling for distributable cash flow (DCF) of $4.6 billion in 2018 or $2.05 per share. Quietly, it has been telling stockholders that the numbers were tracking ahead of expectations.  Well, the official count is now in. The company indeed beat the mark, generating $4.73 billion in DCF or $2.12 per share. That’s within two cents of the record high of $2.14 set in 2015. So for all intents and purposes, it has made a full recovery. Yet back then, KMI shares commanded a price north of $40. Today, they are still well below $20. That’s difficult to reconcile. Clearly, many investors haven’t forgiven Kinder Morgan for its forced dividend cut in late 2015 as the bottom fell out of the oil market and many midstream partnerships suffered a liquidity crunch. But those days are long gone — distributions were hiked 60% last year, and management is aiming for a 25% encore both this year and next. If you prefer to look at standard earnings rather than cash flow, Kinder Morgan reported net income of $1.481 billion ($0.66 per share) in 2018, versus $27 million… Read More