Buy Total (TOT)
I’m sure this one is going to be popular. (Yeah, right.)
Today, May 28, I’m adding Total (TOT) to the Jubak Dividend Income portfolio.
That’s right a European (gasp) oil (shudder) stock.
Total’s shares have dropped from $65 at the beginning of 2010 to $45 now. That’s driven the yield up to 6.5%, considerably above the yields for U.S.-based oil companies such as Chevron (CVX) at 3.8%.
Buy Banco Santander (STD)
I don’t know when the euro debt crisis will be over or when European stocks, particularly European bank stocks, will stop sinking like stones. Certainly investors aren’t out of the woods yet: Fitch Ratings downgraded Spain to AA today (finally), for example.
But I do know that with a yield of 9.5% today, May 28, Banco Santander (STD) is paying me quite handsomely to wait.
Whenever you see a yield this high, you know that the market thinks there’s a lot of risk in a stock. The Spanish economy is a mess and the government’s efforts at cutting its budget deficit haven’t convinced anyone that the country is serious about fixing its problems.
Update Energy Transfer Partners (ETP)
I’m filing this update from the beach. I’m on vacation the week of March 29 April 2. Unless the sun stops shining here in the Bahamas (or the kids decide to hire themselves out on a fishing boat), I don’t anticipate filing more than once a day for this week. JubakPicks.com will go back to its normal schedule on Monday April 5.
Update Energy Transfer Partners (ETP)
Energy Transfer Partners (ETP) has hit my $47 target price just about on schedule. But I don’t see any reason to sell these master limited partnership units out of Jubak’s Picks quite yet. As I wrote in July 2009, “The longer the Federal Reserve promises to keep interest rates low, the more valuable Energy Transfer Partners (ETP) is and the longer I want to hold it.” The Fed’s target for shorter interest rates is still at 0% to 0.25% and the promise is still to keep rates at that level “for an extended period.” Long-term interest rates have begun to push upward in anticipation of an eventual change in Fed policy, or inflation, or the depreciation of the dollar, or whatever, but the 7.84% yield on these units is still comfortably ahead of that increase. (For more on Federal Reserve policy see my post http://jubakpicks.com/2010/03/16/fed-holds-interest-rates-near-0-but-continues-to-reduce-role-in-the-markets/ )
Buy American Electric Power (AEP)
With this post I’m buying American Electric Power (AEP) for my Dividend Income Portfolio. I think a modestly better economy in 2010 will increase company sales, profits, and cash flow enough to increase the dividend in 2010. (The yield is now 4.7%.) That will give income investors some protection against rising interest rates in 2010. The company certainly has room to raise the dividend since the current payout ratio is only around 60%. That’s low for a utility. (The payout ratio is the percentage of a company’s profits that are paid out to shareholders in dividends.)
In 2010 I’m looking for a big pick up in the company’s sales of electricity to industrial customers in its core Mid-West service area on a pickup in U.S. manufacturing that is, tentatively I’d admit, now under way, and in the company’s sale of out of system power to other utilities.
