Sell Verizon (VZ)

This iPhone thing just isn’t working out—for Verizon (VZ) that is.

The thought on Wall Street was that the company’s addition of Apple’s iPhone to its lineup of smart phones would drive Verizon’s smart phone market share higher and increase the all-important ARPU (average revenue per user) number.

But it just isn’t happening. At least not to the degree that Wall Street expected.

Maybe you could pass off the first quarter disappointment on these numbers as birthing pains for Verizon’s new offerings but the second quarter numbers came in much the same. I think we’ve got a trend here and it’s not one that investors in the stock should be happy with. The shares are up 6.71% for 2011 to date and 23.07% for one-year. Both of those numbers are ahead of the gains for the Standard & Poor’s 500 Index. Despite the 5.4% dividend on the stock, I’d take my gains here and look for a better total return play. (Verizon is a member of my Dividend Income portfolio http://jubakam.com/portfolios/ )

For the second quarter, reported on July 22, Verizon did add wireless subscribers to the tune of 1.23 million. Which would have resulted in really great news for the company’s revenue and profit lines except that the new and old users didn’t show much inclination to spend more on their monthly wireless bill by increasing their use of data services. ARPU grew by just 1.9% to $46.62 in the quarter and that was 6.5% below the Wall Street consensus on that measure. Verizon did increase its smart phone penetration among its customers by about 4 percentage points but the company’s smart phone sales as a percentage of sales (60%) continued to lag that of AT&T (70%).

I think this is an issue for a couple of reasons. Read more

Sell Energy Transfer Partners (ETP)

I think you can do better.

Yes, Energy Transfer Partners (ETP) pays a current yield of 8.2%. But with a master limited partnership like this what I want to see is the potential for solid increases in cash distributions over time. And on that front Energy Transfer Partners looks like a laggard.

I’m selling this master limited partnership out of Jubak’s Picks http://jubakpicks.com/the-jubak-picks/ as of today.

Standard & Poor’s, which gives this stock a buy rating, forecasts that cash distributions will climb just 1.7% in 2011. That trails S&P’s forecast of 7.1% growth in cash distributions for Magellan Midstream Partners (MMP), for example. In the realm of growth in real cash, and not in projected cash, Energy Transfer Partners showed no increase in distribution in the second quarter of 2011 versus a 7.2% increase from Magellan Midstream Partners and a 4.5% increase for ONEOK Partners (OKS). (Energy Transfer Partners is a member of my Jubak’s Picks portfolio; Magellan Midstream and ONEOK are members of my Dividend Income portfolio http://jubakpicks.com/jubak-dividend-income-portfolio/ )

This doesn’t look like a short-term problem either. Barclays forecasts that the distribution increase at Energy Transfer Partners will grow at a 3.1% compounded annual rate from 2010-2015 compared to 5.1% for its peers among master limited partnerships.

What’s the problem? Actually it seems to be problems plural. Read more

You can certainly find stocks with a higher dividend yield than the 3.4% that Abbott Laboratories (ABT) paid when I added it to my dividend income portfolio http://jubakam.com/portfolios/ on May 6. (It closed that day at $52.52) But I think you’ll be hard pressed to find a stock paying that much that has the same potential for very safe and steady growth. (See my post http://jubakpicks.com/2011/05/06/do-dividends-suddenly-seem-attractive-as-the-market-tumbles-where-ya-been-all-my-life-check-out-the-latest-update-to-my-dividend-income-portfolio/ for my latest update of that portfolio.)

Abbott Laboratories is among the most balanced of the big U.S. drug companies. Read more

Hard to understand how Telkom Indonesia (TLK) or more formally Telekomunikasi Indonesia managed to turn its first quarter into a disappointment but it did. The company, Indonesia’s biggest telecom business, broke through the 100 million subscribers ceiling in the quarter. And predicted that it would add 10 million to 12 million subscribers this year.

But big increases in operating and marketing costs negated all that good news. Read more

Sell Intel (INTC)

Lot’s of rumors and news floating through the market on Intel (INTC). I don’t think most of it has any real import for investors. It’s certainly irrelevant to anyone who bought shares of Intel for their high dividend way back last fall when I added it to my Dividend Income portfolio.

Then the shares traded at $18.87 and yielded a high (especially for a technology stock) 3.4%. Today, May 6, the stock trades at $23.52 and yields just 2.89%.

That’s a hefty 24.6% gain since September 17. But because of that gain the yield is no longer high enough to make the cut for my Dividend Income portfolio and I’m dropping it from that list with today’s revision of that portfolio (http://jubakam.com/2011/05/when-markets-get-bumpy-thoughts-turn-to-dividends-of-course-you-should-be-thinking-about-dividends-all-the-time-my-dividend-income-portfolio-is-a-good-place-to-start/ )

The recent buzz is a result of Intel’s announcement of a new 3D chip technology. Read more