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

So what if you can’t muster the optimism to buy beaten up growth stocks today—and yet you’re not so pessimistic that you’re out in the backyard burying gold? Over the weekend I’ve been thinking about stocks that pay a dividend, but in some currency other than dollars. It strikes me as an attractive combination. Today I’m going to add a bit of that combination to my Jubak Dividend Income Portfolio http://jubakpicks.com/jubak-dividend-income-portfolio/

You have to have a degree of long-term optimism to buy growth stocks during the current global market sell off. And maybe you don’t right now what with the continuing euro debt crisis, the downgrade of U.S. debt to AA from AAA by Standard & Poor’s, and stock market reaction in Asia that on Monday morning had a whiff of panic. Quite possibly this doesn’t feel like a time to be buying any of the growth stocks I picked in my Friday, August 5, post on 10 growth stocks for a low/no-growth global economy http://jubakpicks.com/2011/08/05/10-picks-for-a-lowno-growth-global-economy-and-theyre-certainly-cheaper-than-they-were-a-week-ago/

Or maybe you can manage to muster a degree of long-term optimism, but the short-term looks very dark. And you’re not quite sure how long that short-term will last. A few days or a few weeks? Then sitting in cash feels like the right thing to do. Buy some gold? Gold closed in on $1700 an ounce Monday morning on buying in Asia. It’s probably still a good hedge—if the next stop is $2,000 that’s a 17% gain from here. But it’s expensive and carries its own risks of a correction and has the draw back of not paying any yield. Bonds? Certainly not U.S. Treasuries as everyone tries to figure out the ramifications of the U.S. downgrade.

Because I don’t know how long current market conditions might last, over the weekend I found myself thinking about safety certainly but safety that pays a little bit. And that’s led me to think about what I’m calling a safe-currency enhanced dividend play. Read more

Sometimes a high yield doesn’t justify the risk–here’s the logic behind my sell of Navios Maritime Partners back in May

Nothing wrong with the yield on Navios Maritime Partners (NMM) at 9.48% on a trailing-12-month dividend track record.

But how do you feel about the volatility of this master limited partnership as we head into the possibility of a slowing global economy? Dry bulk shippers are extremely sensitive to changes in global economic activity since day rates for their ships and the number of days those ships are under contract vary with how much iron ore and coal and the like need to go from hither to yon.

The partnership units, which trade at $17.93 today, June 14, fell to $13.96 in last year’s summer slump.

The low for the global economic crisis was $2.86 on November 20, 2008.

That’s too much risk for me, even with that dividend yield. 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