it will work getting through this - investorplace...bond market. this will also significantly aid...

(continued)

It Will WorkThe US economy is taking massive

hits. Companies are shuttering, result-ing in massive layoffs. Consumer spending is going to slow dramatically. And business spending is already slowing. But the past several years has seen the rapid development of remote commerce and business.

More workers have been moving out of offices and have started to work at home or in other facilities. And automation has made the assembly, processing and packing of goods more autonomous.

Retail also has been going through the massive movement to remote commerce, which is ramping up in a huge way now and should continue its expansion. Logistics and delivery companies, including the US Postal Service, are responding and ramping up with massive new hires. And the companies providing the goods, from food and household goods to other needed items, are firing on all cylinders with new hires and expanding operations.

The US government also has plans to help underway. The Federal Reserve, with the backing of the US Treasury, is doing all it can to help. And through special purpose vehicles, it is buying corporate bonds, com-mercial mortgages, corporate loans, bond ETFs and other securities and placements. And this is on top of the massive open market operations pro-viding credit and liquidity to everyone from Wall Street to main street.

The Administration is working with Congress to pump trillions of dollars into the economy. Businesses will get grants and funding. Federally backed loans to businesses, students and homeowners will get assistance. And households will be getting cash to help carry them through this. And we don’t have to pay some of our taxes for a while.

This is an incredibly unprecedented crisis like no other. But I’m confident that these plans will work.

April 2020

Vol. 31, No. 4

Getting Through ThisDear Friend,

The past few weeks have been trying. But the coronavirus isn’t bringing the end of days. In fact, as of this writing, Johns Hopkins University is reporting that 98,025 folks have recovered from the virus.

Nonetheless, the US economy is taking severe hits. Unemployment is spiking. Estimates for jobless claims and unemployment numbers are now in the millions. And each of those individuals means a big drop or stop in spending in a market that was leveraged to consumer spending.

However, the movement for online and remote retail that was already firmly on the rise is spiking. Amazon (AMZN), Walmart (WMT) and others are ramping up. Logistics and delivery companies from United Parcel Service (UPS) and the US Postal Service are on the move. And hiring and pay hikes are coming at a huge daily pace for these companies, amounting to hundreds of thousands of new and higher-paying jobs.

The Federal Reserve is flooding the economy with cash and credit, including unlim-ited quantitative easing (QE) buying of Treasuries, agencies and mortgages as well as a series of special purpose vehicles with backing by the US Treasury that will buy corpo-rate bonds and commercial mortgages as well as provide main street business loans.

This makes the Fed, with the backing of the US Treasury, an unlimited lender and financier for the US economy and markets. And trillions of dollars for stimulus are also in the works. Washington is working to provide further direct payments and credit facilities for businesses and households.

The economy will get through this. The stock, bond and other markets will get through this. But for your portfolio to get through this, you need to know the status of each of your holdings. This means how each company is set to service its debts and stay in business. In this issue, I go through each and every company we own and present how I see them doing just that.

Growth StrategiesWeeks In, Weeks to Go

COVID-19 came into the world in December in Hubei Province in central China in its capital city of Wuhan. Since then, the impacts of the virus have started to pass in China. Hubei residents are out and about. And factories and other businesses around the nation are back online for supply chains as well as local commerce. Infrastructure and transportation are also coming back.

This is good news for both China and the US. It shows that, while dire, the impact of the virus has an endpoint or at least a point of some sort of normalcy for the economy. However, the number of cases is now ramping up significantly as tests are rapidly coming to market and are being deployed around the US and beyond.

As of this writing, the US has 32,717 confirmed cases, with 178 recovered and 409 dead, according to the most recent data from Johns Hopkins University. And globally, the world has 329,935 cases, 97,847 recovered and 14,360 dead. In the graph showing cases on page 2, this shows up in the soaring number of those diagnosed, along with the now strong climb in recoveries and the flatter number of tracked deaths.

This along with the demographic data of cases shows that the vast number of the US working population is not seeing a serious impact on their health. And I assert that this shows that modifying the shelter in place orders to those who are older and health

2 Profitable Investing | April 2020 | profitableinvesting.investorplace.com

Neil George’s Profitable Investing® (ISSN 2577-9311) is published monthly by InvestorPlace Media, LLC, 1125 N Charles St, Baltimore, MD, 21201. Please write or call if you have any questions. Phone: 800/211-8566. Email: [email protected]. Web site: profitableinvesting.investorplace.com

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challenged would have positive impacts on the US economy. That has been the experience in China—that as the virus begins to pass, the economy should be able to come back sooner rather than later.

The PlansThe US government has quickly

developed plans to address the current economic and market crises. The Administration has rolled out some initial executive and agency (including US Treasury) orders to ease burdens on households and businesses, such as delayed tax filings, quarterly tax pay-ments and Small Business Administration (SBA) loans and lending relief.

And the Federal Reserve has been very, very busy. The Fed has commenced unlimited QE, which means that it is buying trillions of dollars of Treasuries, agency bonds and mortgage securities, including mortgage-backed securities (MBSs).

This brings a huge amount of liquidity to the core of the US credit market and also allows the US Treasury to bring new issues to fund economic development without causing shocks to the markets.

In addition, working under the Dodd-Frank Act of 2010, it is establishing a series of special purpose vehicles that are approved with separate credit guarantees from the US Treasury. Under current US law, including the Federal Reserve Act and the Emergency Powers Act (there is a discussion to amend and ease this in Congress as I write), the Fed cannot take credit risk that comes from non-government guaranteed security purchases. The Treasury guarantees solve for this.

The special purpose vehicles are being rolled out quickly. They start with the Commercial Paper Funding Facility (CPFF). This allows the Fed to buy and sell commercial paper, which is a type of very short-term funding, typically overnight but up to one year, that companies like financials use for treasury operations and cash management.

One of my old bank trading desks par-ticipated in this market, as institutional clients would issue paper and others, including money market funds, would buy it. Banks take some of the risks throughout the market-making process and have to allocate capital to it. The Fed is now freeing up this critical market for the economy, making for needed liquidity for companies and funds.

Then, the acronyms keep coming for other facilities that will buy just about everything. The Fed will buy US corporate bonds way down the credit-rating ladder to provide stability and stimulus. It will buy asset-backed securities (ABSs), which are pooled loans and receivables from corporate loans, credit card debt, car and other leases and many other sources of US credit. In turn, this will provide a massive boost to credit in the US. And it will also buy bond funds, including ETFs, in corporate bond investments. This will significantly aid corporate bond funds and ETFs.

It will buy municipal securities, including municipal bonds, which will provide credit access to state and local authorities to address local challenges as well as provide stability to the muni bond market. This will also significantly aid municipal bonds and bond funds.

It will buy commercial mortgage-backed securities (CMBS), which had

become a very challenged market, impacting the vital real estate market as well as real estate investment trusts (REITs).

The Fed will further buy and/or fund commercial loans, which should include collateralized loan obligations (CLOs), providing a wall of credit and support for the vast market of business and corporate loans. In turn, this will support the business development companies (BDCs), which participate in these markets.

And it will be setting up a so-called “main street” lending facility for making and/or buying smaller to middle market business loans. This will go well beyond the SBA lending market and will go far to support the core of US businesses.

All of this will make the Fed not just a go-to financier, but the bank for the US for some time. And in doing so, the assets of the Fed will continue to climb significantly.

This totally reverses the rolldown in assets in 2019, which started to climb again last September. And while the graph on page 3 shows a spike over the last two weeks closer to $5 trillion, this number will be climbing even more significantly in the coming weeks. This will be a significant boost to the credit markets and to the rest of the financial market as well as the underlying economy.

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Profitable Investing | April 2020 | profitableinvesting.investorplace.com 3

Then we come to Congress. A virus stimulus package should provide a series of fiscal assistance measures to businesses and households. The Administration and the Treasury Secretary negotiated a series of grants and loans for small and large businesses meant to keep them afloat through the crisis and, more importantly, to keep their workforce on the payroll.

Keeping them on the payroll keeps them on healthcare insurance and keeps paychecks coming for households. And as the virus passes, it will allow businesses to resume more quickly to allow the economy to recover.

Then there will be a series of checks or direct deposits for households to keep Americans from getting further in jeopardy. In addition, there are many other provisions to assist state and local authorities to support both ongoing spending as well as additional emergency measures. And there are provisions to

assist healthcare facilities, agencies and companies to further deal with the virus and other ongoing challenges.

All of this will be a big shot in the arm for the economy, amounting to trillions of dollars. And with layoffs now projected to add millions to weekly jobless claims, this should go far and will likely be expanded.

However, there are a lot of unknowns. Some, including St. Louis Federal Reserve Bank President Jim Bullard, are saying that unemployment could hit 30% in the short term and that gross domestic product (GDP) could drop by 50%. But both the massive and aggressive Fed actions as well as fiscal actions should blunt some of this and aid the reversal as the virus and its impacts pass.

The US Federal deficit will expand, and it’s likely that the deficit as a percentage of GDP will head to levels seen in late 2009. The deficit and related Fed funding will increase the

government’s footprint on the economy, which is already quite large. But like we learned after the 2007-2008 financial crisis, the big actions by the Fed, the Administration and Congress are not only needed but should result in a return of the economy and economic growth.

One of the immediate barometers for the success of the Fed and the financial markets is the US dollar. The dollar had been generally rising from the start of the year as financial markets around the globe scrambled for cash and the primary currency of the world. Then, as the US began to experience the financial market mess impacts of the virus in February into March, the dollar slipped. But over the past few weeks and especially the past few days the dollar is soaring again to levels not seen in several years, as measured by the Bloomberg US Dollar Index, which tracks the dollar against the major trade and financial currencies of the globe.

If the Fed actions and the government’s spending was deemed imprudent, then the dollar would begin to show trouble. And while the government can’t spend indefinitely and the Fed can’t buy everything, both have immense capabilities that have yet to be put to work if needed.

The Markets: BondsThe US bond markets are going

through many changes. To start, let’s look at the US Treasury yield curve. The yield curve shows individual average yields for each maturity year. As you can see in the chart on page 4, the changes from year-end to now are very dramatic. Short-term yields have gone from around 1.50% to near zero. The two-year maturities have dropped to around 0.25%, with 10-year maturities down to around 0.70% and the long-end 30-year is now down to around 1.30%.

This forms the base case for top tier credit of the US bond market, as Treasuries are the benchmark for the US market. And as such, with the addition of the Fed actions, corporate bond yields, mortgage rates and bond yields, consumer and business loan rates and municipal bond yields should follow lower.

As of March 20, before the Fed actions and virus relief legislation, the overall US bond market, as measured by the Bloomberg Barclays US Aggregate

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Index, was dropping the second week of March, as even US Treasuries were being sold to raise cash. And corporate bonds and municipal bonds were also aggressively sold to raise cash as well as to exit non-US Treasury bonds on short-term concerns about the market and credit conditions.

Adding to the sales have been fund liquidations and redemptions, including open-end, closed-end and ETF funds. This has resulted in bigger discounts to net asset values (NAV) for closed-end and ETF funds.

All of this has been painful, as bond and bond fund prices have dropped. And while not as severe overall compared to the drop in the stock market, bonds should be providing more downside protection and even offsetting gains in normal economic and market times. But bonds, bond like preferreds and bond funds and ETFs are continuing to earn ample interest income, which fuels the payout of interest and dividend income.

This income is what is providing an offset to the general stock market woes and will pay you to continue to own bonds, preferreds and funds. And with the surge in Fed buying across bond markets along with low to lower inflation, bonds are a good area of the market to continue to buy and own with some bargains right now, as the market has significantly discounted them along with funds and ETFs in recent weeks.

One of the reminders of bargain buys in corporate and municipal bonds comes from 2008. In early September 2008, both US corporate and muni bonds were experiencing selloffs. Credit markets were seeing challenges for corporations to meet their debt obligations, and municipal issuers were being questioned as to their abilities given the housing market and financial crises as well as rising unemployment. But both markets began to stabilize, aided again from Fed actions and fiscal stimulus, and 2009 was one of the best years for corporate and municipal bonds in then recent history.

The Markets: StocksStocks have gone through the worst

parts of the bible over the last few weeks, with the S&P 500 Index dropping from 3,386.15 on Feb. 19 to 2,235.25 as of this writing. This has the index losing over

30% on a year-to-date basis and makes this selloff one of the worst in history.

The selloff has resulted in every sector of the index being down year to date, with the exception of food retail companies, and even the most defensive and dependable sectors, including US utilities, losing ground.

The key trouble is that the US economy has been nearly put on full stop, with many industries and businesses either significantly reducing operations or shutting down nearly completely. This also means that the big risk for any stock, let alone the market, is the unknown of when the US economy will get through this. Moreover, with layoffs, consumers are not only cut off from many retail stores but also paychecks.

But the virus will pass, as discussed earlier. And with the majority of the US workforce and population in the lower-

risk demographic groups, getting back to work will happen. That said, there are no credible means to come up with forecasts on sales and earnings to value most stocks right now, so the result is that the S&P will be trading on guesses.

With that in mind, I have been looking at the stock market and individual stocks based on “status.” This means I am looking at the underlying assets, including cash and other items, as well as the broader measure of underlying net values in book value.

By looking at the general assets less the liabilities of companies, we can get closer to the intrinsic value of the companies. And dividing that against the number of common shares gets us to the price to book valuation for each share as well as the weighted value for the S&P 500.

Right now, the price to book (P/B) ratio of the S&P is sitting at 2.47 times. This is way lower than the recent high

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this year of 3.73 times, meaning that after the selloff, stocks in the index have dropped in their valuation per share by 33.8%, even more than the index price drop on a year-to-date basis. And it is now below the five-year lows for this measurement.

When measuring the book value and the P/B ratios, we rely on company disclosures and of course the uncertainty about the potential liquidation process and a theoretical net value of the assets. And while during this time of extreme economic duress, assets will be valued on a varied basis, it is a good tool to work on the status of the market and individual companies.

For the past five years to date, the underlying weighted book value for the S&P 500 members has been climbing by a compound annual growth rate (CAGR) of 4.6%. So, there’s value in the underly-ing stocks. And as we get through this, sales and earnings will follow. But the debts of a company are more important in order to get to its status.

I always look at the balance sheets of companies before I recommend them. As I mention from time to time, if I wouldn’t lend a company money as a former banker and bond guy, then I don’t have any business recommending its stock. So, over the past few weeks, I’ve been going through each of our stock holdings and their debts. I also look at dividend capabilities and whether a company should or needs to make a near term adjustment.

My goal is to come up with judgements as to the sustainability of each company to be able to get through

the current mess to the other side. This will allow our portfolios to be able to continue to own good stocks of companies that should make it.

Then, I go through the post-crisis estimations of how each company should emerge. And while revenue and earnings estimates are very hard to model, I’ve been looking at the underlying business models to make sure that each company is going to be relevant and successful as we move through to some sort of normalcy. This also means what I see for their customer bases and their suppliers in addition to keeping or ramping their workforce back up. The overall goal is not just to tell you that a stock is cheap, but that I see that its prospects of surviving for now and getting its business and profits back up are good.

Following this section of the issue, I’ll go through all of the model portfolios and the holdings to answer these questions. There are more than quite a few that should indeed get through the current challenges and eventually generate more sales and profits along with dividends along the way.

The Markets: PetroleumAs if the US economy and stock

market didn’t have enough to deal with during this virus crisis, it also has to deal with the fallout in the petroleum market from a sudden drop in demand from economic shutdowns and a hissy-fit between Saudi Arabia and Russia inside the Organization of the Petroleum Exporting Countries plus others (OPEC+).

Crude oil prices for global Brent and US West Texas Intermediate (WTI) have plunged to $27 and $23 a barrel, respectively. Saudi Arabia wanted to make further production cuts to stabilize prices, and Russia didn’t want to go along. The Saudis then ramped up production even of their depleting and post-peak fields and dumped oil from its reserves into the markets.

This is causing mayhem and carnage in the US for shale oil producers, including the core Permian Basin. There will be a lot of fallout, as exploration and production companies are facing major cash and credit crunches. And there will be bankruptcies. Right now, companies are evaluating their wells in terms of revenue and operating costs. And when they can, there is a move to change wells to operate at what is called maintenance levels. This is the lowest level of production without shutting off a well and incurring the additional costs of capping a well, including cleanup.

Cash burn rates are very important for the companies and their creditors. But in the end, outside of the virus impacts to demand, the fields and equipment will still be there, either in the hands of the existing companies or in the hands of new companies after liquidation and reorganization. I see that US production will be curtailed and that it will result in a supply/demand imbalance post the virus crisis, which will return crude oil to higher levels. And natural gas is still a basic necessity for utilities and the petro-chemical industries and will find support.

One of the interesting parts of the oil market is that while spot prices are down now nearly below ground, future delivery prices are still higher in the futures markets and modeled future fair values. This points to the fact that oil isn’t going away for the economy of the US or that of the globe. There are still major consumers that are buying crude oil, and the market is providing values for crude past both the Saudi dumping and the virus crisis.

Refined products have dropped significantly in demand, as car travel is way down from the move to increase remote working, and airline fuel just isn’t as needed while planes are grounded by airlines. So, refiners get cheap feedstock but fewer customers and demand.

The pipelines still have demand for

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their pipes but at what I project is at a lower capacity for crude and refined products, while natural gas should be more stable. But revenue growth is not going to happen for a while until well after the virus crisis.

And then there’s the counterparty risk. With crude oil producers under extreme duress and failures to follow, contracts with pipelines will be impacted. The bigger and more battle-hardened pipes will make it through as they have before, but there will be similar failures here as well. Again, I’ll cover the individual pipelines in the following sections of this issue.

Total Return Portfolio

This issue is all about the status of the companies behind the stocks in our model portfolios and how they will be able to get through the current mess and continue to run their businesses and pay their dividends. So, I am presenting each of the stock holdings of the Total Return Portfolio in this section and how I see them working out.

Growth & Income PlaysAllianceBernstein (AB) is an

asset-management company set up as a passthrough partnership, which provides tax advantaged revenue and dividends. It has limited debts, making for a great deal of flexibility during the crisis. However, as an asset manager, it gets paid on the amount of assets under management (AUM). And with the US stock and bond markets down heavily as well as global markets seeing even greater selloffs, the AUM when reported will show a decline.

Adding to the decline in AUM is the outflow of investment from clients, as all fund management companies are dealing with outflows. The company should get through and beyond. But with AUM down, revenue will be down, and dividend distributions will be lower for later this year. AB is a buy under a revised price of $19.00 (T).

Compass Diversified Holdings (CODI) is an investment holding company that owns a collection of consumer and industrial companies. It had a pile of cash leading into the mess, having taken profits on some

of its holdings last year, little debt and an ample credit line, which is untouched. This company will get through. And going forward with so much dry powder, it will be able to make acquisitions again at bargain prices. The shares are now at a 5% discount to book and a 50% discount to trailing sales (which will see a decline this quarter and next). CODI is a buy under a revised price of $14.00 (T).

Covanta Holdings Corporation (CVA) is the leading energy-from-waste (EFW) company in the US, providing clean energy from trash and unrecyclable materials. The company has a good dependable base of US municipal contracts to accept trash and provide electricity. This means visible and sustainable cashflows. The growth in the US has been slowed, despite the strong rise by localities to dispose of waste beyond crowded landfills. But its partnership with Macquarie, an Australian global infrastructure investment company, has brought operating deals in the UK, Ireland and China, which should provide for a rise in cashflows into the next two years.

Its dividend is too high, even as it is set to pay the next one on April 3 at 25 cents. It should reduce it to shore up cash as well as pay down its credit line with Bank of America that is running at half of the limit and is set for review in 2023. But Macquarie has further capability to assist the company and could take an equity stake. CVA is a buy under a revised price of $10.00 (TF).

FMC Corporation (FMC) is a leading agricultural protection company with herbicides and pesticides used

worldwide, including in Europe and China where foreign firms and products tend to face additional barriers. It has a low level of leverage, with debts at only 35% of assets. It has manageable loans maturing in 2021 and 2023, along with one of its smaller bond issues in 2023. And it has a bank line of credit, largely untouched through 2024. It will make it through, and its products will remain in demand going forward. FMC is a buy under a revised price of $75.00 (TF).

Franco-Nevada Corporation (FNV) is a gold royalty company with additional interests in other precious metals as well as a minor interest in oil and gas production. The company has an enormous amount of cash on hand, and debts are almost non-existent at 1.6% of assets. It has a minor loan maturing in 2021 and a large credit line with Canadian Imperial Bank of Commerce through 2024 that has a very small draw on it. Credit is not an issue.

The risk with Franco-Nevada lies with its counterparties. It owns streams of royalties from mining companies and other companies that have sold royalty interests to the company. The virus problem so far has not significantly impacted the flow of minerals and royalties. The minor oil and gas interests are compromised, and I have worked through a projection on the impact to revenues this quarter and in subsequent quarters, which is more than offset from the rise in revenue from its gold and other precious metals income. FNV is a buy under a revised price of $109.00 (T).

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TOTAL RETURN PORTFOLIOStocks (56%)Indexed Equities (18%) Symbol T/TF

Entry Date

Fwd. Yield

Buy Under Comments

Vanguard Healthcare ETF VHT TF 3/16/16 1.18% $160.75 US healthcare spending along with government aid is going to drive better returns

Vanguard High Dividend ETF VYM TF 6/21/16 3.35% $73.25 Core S&P 500 performance with dividend focused allocation

Vanguard Info Tech ETF VGT TF 8/20/18 1.64% $215.25 Technology is now seen as a more defensive sector in current market

Vanguard Real Estate ETF VNQ TF 10/28/19 4.18% $72.25 REITs are bargains after all asset sales in stock market

Vanguard Utilities ETF VPU TF 9/24/18 3.19% $119.00 US utilities are one of the safest parts of challenging stock market

Growth & Income Plays (24%)Alliance Bernstein AB T 11/19/18 20.11% $19.00 AUM will drop near term with market drops & redemptions, but still a survivor

Compass Diversified Holdings CODI T 5/21/18 11.21% $14.00 Lots of cash means lots of dry powder to now be able to buy new assets on the cheap

Covanta Holdings CVA TF 3/26/19 11.49% $10.00 With backing from Macquarie, the company is further developing clean energy from waste (EFW)

FMC Corporation FMC TF 4/25/19 2.56% $75.00 With food demand soaring, this company provides needed crop protection and farm-yield enhancement

Franco-Nevada Corporation FNV T 6/26/19 0.90% $109.00 The way to buy and own gold with a dividend

Hercules Capital HTGC T 6/25/18 18.29% $9.60 Credit condition is good and it invests in the dependable technology segment

Hormel HRL TF 4/17/17 2.07% $47.50 Clean and safe meat and other food products remain in high demand

Microsoft MSFT TF 11/30/12 1.38% $153.00 The company proves during lockdowns and remote work that it is a backbone of the economy

Nestle NSRGY T 12/17/08 2.30% $100.00 Food products and consumer goods should remain in strong demand including for pets and livestock

NextEra Energy NEE TF 9/8/08 2.71% $220.00 Utilities offer more defense in current strife and this continues to be a proven company

Procter & Gamble PG TF 12/17/08 2.89% $110.00 Consumer products demand surge & Charmin brand leading the way

United Technologies UTX TF 8/6/14 3.39% SELL Merger with Raytheon brings major credit concerns on top of losses in aviation unit

Viper Energy VNOM TF 7/23/18 28.80% HOLD Credit conditions appear good with lots of cash & limited debt in an unsettled market

Zoetis Incorporated ZTS TF 5/28/19 0.77% $110.00 The way to protect humans is for healthier livestock protection including vaccines

Real Estate Investment Trusts (8%)American Campus Communities ACC T 7/12/18 7.69% SELL Dependable & predictable student housing instantaneously stopped with lockdowns

Digital Realty Trust DLR T 2/9/18 3.84% $114.00 Remote working proves power of cloud computing that needs data centers

Hannon Armstrong Sustainable Infra HASI T 12/31/19 6.52% $24.50 ESG opportunity in renewable energy financial with government guarantees structured as a REIT

Life Storage LSI T 12/26/18 5.50% $79.50 In this economic mess, self-storage tends to thrive

Medical Properties Trust MPW T 2/26/19 7.59% $15.00 Medical properties are in very strong demand

W.P. Carey Inc. WPC T 1/3/14 7.89% $55.00 Heavy multiple insider buys of this well-run REIT

Toll Takers (6%)Enterprise Products Partners EPD T 2/22/05 12.81% $15.25 This pipe company has made it through all the worst of the market before and will now

Kinder Morgan Inc. KMI TF 11/28/14 7.76% $14.50 Heavily capitalized, long-standing company

Pembina Pipeline PBA T 8/14/12 8.98% HOLD Canadian government views company as part of vital economic development

Fixed Income (44%)Cash (11%)Synchrony Bank high-yield savings account 7/31/15 1.50% Market 1.50% yield—call 866/226-5638 to order & watch your FDIC insurance limits

Multisector Bonds (15%)BlackRock Credit Allocation Trust BTZ TF 7/26/19 10.16% $11.30 Good investment grade corporate bonds at bargain prices with yield

DoubleLine Total Return Bond Fund DLTNX TF 7/22/14 3.00% $10.40 Treasuries & mortgage bonds without leverage, Fed working on liquidity in markets

Vang Interm-Term Corp Bond ETF VCIT TF 10/28/19 3.03% $86.80 Corporate bonds are bargains and have Federal Reserve support

Preferred Shares (7%)Atlas Corp. 7.875% Series H ATCO.PH TF 1/22/19 11.75% HOLD CUSIP# 81254U304—Change in overall ownership but same operations; Hold for now

Teekay LNG Partners 9.00% Series A TGP.PA TF 1/22/19 12.16% $20.00 ISIN# MHY8564M1131

NuStar Energy 8.50% Series A NS.PA TF 1/22/19 21.12% HOLD CUSIP# 67058H201—I'm evaluating market conditions for this specific security; Hold for now

iShares US Preferred Stock ETF PFF TF 3/9/17 6.80% $32.75 Preferred stocks should be bought at current values right now

Flaherty & Crumrine Preferred Opp. Fund PFO TF 7/23/18 9.11% $10.00 Preferred stocks are bargains now & fund offers good yield as well

Minibonds (3%)JMP Group 7.25% 11/15/27 JMPNL TF 1/22/19 10.99% $18.00 CUSIP# 466273109

Cowen Inc. 7.75% 06/15/33 COWNL TF 1/22/19 10.64% $18.25 CUSIP# 223622804

US Cellular 6.95% 05/15/60 UZA TF 1/22/19 7.95% $23.50 CUSIP# 911684405

Municipal Bonds (4%)BlackRock Taxable Muni Bond BBN TF 2/26/20 6.00% $24.94 Taxable municipal bonds offer good credit with price upside & works for IRAs

BlackRock Municipal Income BLE T 4/23/18 8.49%* $13.60 Well-managed fund with tax-free yield at good pricing

Nuveen AMT-Free Credit NVG T 4/23/18 8.65%* $14.30 Munis are bargains & monthly tax-free & AMT-free dividend

Nuveen Municipal Credit NZF T 4/23/18 8.55%* $14.40 Munis should be bought now & tax-free monthly dividend checks

Treasury Bonds (4%)Two-year Treasury Bond T 12/24/18 0.32% HOLD Hold if you own at a higher yield, but do not buy more

At least 10% below buy-below price as of the publication of this issue T: Buy in taxable account for best results TF: Buy in tax-advantaged account (IRA, etc.) for best results*Taxable-equivalent yield Bold indicates revised price


Hercules Capital (HTGC) is an alt-financial company providing financing with equity participation to technology companies in various stages of development. Technology is one of the better forward-looking segments through the virus mess, as the sector is providing solutions for more remote commerce, management as well as life science products and services. Many of its highly diversified portfolio companies should continue to advance and then some.

Debts are higher at 52.9% of assets, and it has a revolving credit line for working capital that will mature on May 5. It also then has a bond and smaller loan maturing in 2022, with another line of credit that is visibly open and set to mature that same year. It has placed two preferreds with maturities in 2025 and 2033. However, it placed additional shares last year to build up its equity capital for further investment rather than debt, with the ability to expand it if needed. Insiders have ample positions in the shares. HTGC is a buy under a revised price of $9.60 (T).

Hormel Foods (HRL) provides consumers with meat and packaged foods, which has been a good market, particularly with the fallout in meat supplies from the other virus crisis—the African Swine Fever. The company has lots of cash and very little debt, with debts to assets running at 3.1%. It will have a bond maturing next year as well as an untapped credit line. I see packaged and safe meat products as a good market through the virus and even after the virus challenges. HRL remains a buy under $47.50 (TF).

Microsoft (MSFT) is proving that it was perhaps one of the best prepared to capitalize on the virus mess with its Azure cloud computing business as well as subscription-based software and ser-vices. Remote working is not just a virus thing. It will be expanding and driving more business to the company. It has a pile of cash on hand, and debts are limited at 30.2% of assets. Its corporate bonds are laddered throughout the next several years going even out to 2050. It will continue to find buyers for its bonds, and it is not in jeopardy to say the least. MSFT is a buy under a revised price of $153.00 (TF).

Nestlé (NSRGY) is a Swiss-based global food company. It is being affected by the virus, as plants in India

are now suspended, with lockdowns in place by authorities. And other plants around the world are being impacted. The company has been a cash machine, so its treasury operations have kept cash working rather than piled up. But its debts are low at 29% of assets.

It has a laddered series of bonds throughout the next several years. Pricing of bonds remains strong, showing ample credit ability for rollovers or for additional capital to weather further supply disruptions. I see the company getting through the mess, and with its successes before the virus on cost controls and product management—along with strong demand for food and consumer products—NSRGY is a buy under a revised price of $100.00 (T).

NextEra Energy (NEE) is power utility with a strong base of regulated business in Florida along with one of the world’s largest collections of wind and solar power generation in its unregulated businesses. Debt to capital is at 50.7%, and it has a long laddering of bonds running through 2050. It also has two lines of credit out to 2020 and 2025, which are visibly untouched. And it has three preferreds with maturities in 2022, 2023 and 2050+.

Moody’s has a rating on its bonds at Aa2 and S&P at A+. These are above the BBB threshold of investment grade, but in the recent sell-everything markets, the bonds have been sold off. Power demand should be down with businesses shut down around its markets and, while somewhat offset by a perceived increase in household power demand, I am expecting a drop in revenue for this quarter stretching into next. The company is one of the better ones in the utility space with its balance of regulated and unregulated units. And its wind and solar units will continue to benefit from state and local requirements for clean power. NEE is a bargain buy under a revised price of $220.00 (TF).

Procter & Gamble (PG) has perhaps the single most valuable product right now in its Charmin toilet paper. But beyond that, the consumer products company has finally done the jobs that it needed to, including controlling costs and better managing its products and brands. Revenues were turning up, and margins were improving. But though it has numerous manufacturing

facilities around the US and multiples more outside the US, it is at risk for shutdowns just as many of its products, including cleaning agents, soaps and toilet paper, are firmly in demand.

As it generates lots of cash, cash on hand has not been a priority. But debts are low at only 26.1% of assets. And the debts are primarily in a long-running ladder of bonds going out several years. A stronger credit with ratings running at Aa3/AA-, it is finding buyers for its bonds, including a new series being issued now. PG is a buy under a revised price of $110.00 (TF).

United Technologies (UTX) is a company undergoing massive changes right at the very wrong time with the virus fallout. The merger with Raytheon (RTN), complete with all of the debt, is having trouble, and rating agencies are not fully going along. And the dispositions of Otis and Carrier will come with some offloading of debt, but it is still left with lots to cover. Add in the challenges for its civilian aircraft parts and motors, which are moving into duress with customers like Boeing (BA) shuttering for a period and airlines pausing on plane deliveries, and this is not good for UTX. The military business is dependable, and the merger with Raytheon will concentrate more focused revenue for the company. Had the merger not been underway, the company would be in much better shape, particularly on a credit basis given the current virus fallout. And while the Fed will likely end up with some of the company’s bonds, this isn’t good for now. I am recommending selling it until the dust settles. And I will be reviewing the spin-offs of Otis and Carrier, as I see value in both of these companies. Sell UTX.

Viper Energy (VNOM), the landlord of the Permian Basin, was placed on Hold in the March 10 Journal. It has piles of cash and alternatives amounting to 5.4 times its current liabilities. And its debts are meager at only 21.1% of assets. It has a bond maturing out in 2027 and a smaller loan maturing in 2022, along with a sizable credit line with Wells Fargo (WFC) late that year.

The risk to VNOM is that its tenants continue to slow production, which means less revenue for dividend payouts, but more so if the tenants abandon the wells without cleanup and capping


them leaving potential liabilities for the company. The primary tenants are longer-standing companies, and VNOM has the backing of Diamondback Energy (FANG). The shares are now valued at book value, which will more likely be written down with lower oil prices. For now, I am keeping a keen eye on it. Hold VNOM (TF).

Zoetis (ZTS) is a leader in livestock and pet health and vaccines. It is a solution company for viruses. It has lots of cash and managed debt, with a smaller maturity to deal with in November. ZTS is a bargain buy under a revised price of $110.00 (TF).

Real Estate Investment TrustsWhile defensive, REITs have been sold

like nearly everything else. The key is the sustainability of the properties and the tenants as well as managing debts. Here are the ones to buy and sell right now.

American Campus Communities (ACC) is on the front line of shutdowns in universities around the nation. This will have negative impacts this year and next. Sell ACC.

MFA Financial (MFA) is the mortgage investment company that has weathered the worst of the mortgage markets even in 2007-2008. But its peers now have margin call problems, driving down prices. I recommended selling it in the March 24 Alert due to this risk. Sell MFA.

Digital Realty Trust (DLR) is getting a further boost from the virus, with remote working showcasing the need of cloud computing and data centers. DLR is a buy under a revised price of $114.00 (T).

Hannon Armstrong Sustainable Infrastructure Capital (HASI) provides government-secured finance for green energy projects. It will continue to do better. HASI is a buy under a revised price of $24.50 (T).

Life Storage (LSI) will see further demand for its self-storage, with countless households disrupted by shutdowns and lockdowns. LSI is a buy under a revised price of $79.50 (T).

Medical Properties Trust (MPW) has properties hotly in demand, and its tenants are getting lots of additional government-funded assistance. MPW is a buy under a revised price of $15.00 (T).

W.P. Carey (WPC) is a well-managed net lease company with heavy

management buying of stock right now. It is currently priced just above book, making it a bargain buy. WPC is a buy under a revised price of $55.00 (T).

Toll TakersIn the March issue, I went through

the risks and opportunities in the petroleum markets and, in particular, continued to address the advantages of pipelines along with their challenges and risks. Our three pipelines have weathered other major challenges, including plunging oil and gas prices in 2008-2009 and 2014-2016, and I see them doing so again now. They have proven to have control over counterparty risks from producers, refiners and commercial customers.

Enterprise Products Partners (EPD) has controlled debts and managed cash flows. EPD is a buy under a revised price of $15.25 (T).

Kinder Morgan (KMI) is a long-standing company through lots of thick and thin. KMI is a buy under a revised price of $14.50 (TF).

Pembina Pipeline (PBA) is the Canadian oil and gas pipeline company. It has support from the regional and national government, which sees the company as a vital asset for the economy. But environ-mental protests aren’t helping on top of the other industry woes. I am placing it on Hold for now. Hold PBA (T).

The Model Mutual Fund Portfolios

Our fund portfolios reflect the massive selling of both stocks and bonds in the markets that has come from the lockdowns and shutdowns in the US economy in response to the virus mess. The drive to cash from all corners of the markets has led investors large and small to sell everything in a painful way over the past weeks.

Now, it comes down to getting through the mess over the coming weeks and months. There are many good companies that are embedded inside each of the funds in the portfolios that will do just that. And in turn, they will emerge on the other side of this and will sell more goods and services, and profitability will be the result.

On the fixed income side, there are good corporations with managed credit

and debts that will continue to service their bonds and preferreds. And the market is already going through like I’ve been doing in evaluating their credit and are buying bonds that are great values right now.

Municipalities are taking hits to tax revenues due to lockdowns and shutdowns, and they are spending additional resources to deal with the local mess resulting from the measures. These two factors are weighing on the perceptions of municipal bonds. Like US Treasuries, they have been sold to raise cash. And throughout the history of municipal bonds, they have the best credit results of any other bond segment next to Treasuries.

While tough to look at right now, with the Fed’s massive actions and the legislation by the Administration and Congress, the economy will respond, and the markets are showing signs that investors are looking through the mess and beyond. This will get better.

The Incredible Dividend Machine

The Incredible Dividend Machine continues to provide monthly dividend payments throughout the year, even during this highly challenged time. And while stock prices are down for every-thing, the regular dividend distributions pay you to be patient and provide the ability to get through the crisis.

But the key to staying patient is to know that the companies behind the stocks and the dividends are going to be sustainable. The virus mess is causing some new challenges for all companies from the lockdowns and shutdowns and exacerbating existing challenges for those having troubles before the virus.

Cycle ABCE Inc. (BCE) should continue to

be a dependable dividend-payer. The major communications company of Canada is one of the essential services and is being perceived as a good risk. It placed an additional C$1 billion bond just last week and found that the issue was oversubscribed with buyers. Yielding 6.3%, BCE is a buy under a revised price of $38.00 (T).

EPR Properties (EPR) is a REIT that owns all the wrong assets for the


current situation, as lockdowns and shutdowns are restricting recreational and entertainment facilities and schools are closing. The company will get past the mess, but not without sustained challenges, as restrictions on their tenants will weigh on it for some time. Sell EPR.

To replace it, I am bringing up Corporate Office Properties (OFC) from the Niche Investments. OFC does have office properties leased to a collection of tenants that are feeling the pain of the lockdowns, but it also has an expanding collection of data center properties in key locations, including in and around the mid-Atlantic technology centers of Northern Virginia, where Amazon is the primary or sole tenant. Yielding 5.2%, OFC is a buy under a revised price of $20.00 (T).

Merck (MRK) is in the drug business and, while not directly involved in the virus businesses, it may well be tapped for vaccine manufacturing. But in the meantime, I see revenues continuing, and it has ample cash and limited debts. Yielding 3.5%, MRK is a buy under a revised price of $75.50 (TF).

Mondelez International (MDLZ) is seeing surging demand for its food products during the virus mess, and that may well continue as we move through

and past this. It is hiring and paying to keep employees at work. It does face some risk of further lockdowns, but it has very low debt and good cash coming in even during the crisis. Yielding 2.5%, MDLZ is a buy under a revised price of $50.50 (TF).

PPL Corporation (PPL) is in the regulated and unregulated power utility business. Revenue from its unregulated businesses should drop a bit with reduced power demand. But the regulated side should provide a good base for the company. Debts are a bit elevated, but the company has laddered out its bonds over many years. And it has credit lines with significant visible capabilities. Yielding 7.3%, PPL is a buy under a revised price of $25.00 (TF).

South Jersey Industries (SJI) provides power to southern New Jersey, including its biggest center of customers in Atlantic City. With the lockdowns, that city is not consuming as much power, which is putting stress on the company. It has been working with this, as the region had challenges before the virus mess. That said, for now, I am placing it on Hold. Hold SJI (TF).

TPG Specialty Lending (TSLX) is an alt-financial that provides business loans and acquires loans for its portfolio.

This is a tough market right now, but TPG has a good track record of managing financial risk. The Fed is very eager to support business loans and is set to buy a lot of them to support the market. Meanwhile, the company has controlled debt and access to a reported additional credit if needed. TSLX is a buy under a revised price of $13.00 (TF).

Cycle BAlerian MLP ETF

(AMLP) remains on Hold as it does have some synthetic good assets, but as noted in the March issue (and in my discussion about pipelines and Enterprise Products Partners in this issue) there are near term challenges from the OPEC+ mess on top of the virus mess. Hold AMLP (TF).

AT&T (T) took on a lot of debt in its acquisition of Time Warner and is one of the largest non-financial bond and debt issuers in the US. I am keeping it as a Buy for now, but it really needs to keep the phones on and folks streaming more while they are on lockdown. Buy T under a revised price of $29.00 (TF).

Colgate-Palmolive (CL) is in the consumer goods business, including needed soaps and cleaning products, which remain strongly in demand. Debts are elevated at 56.4% of assets, but its bonds are well laddered out, and it has two major credit lines that are visibly not tapped. Yielding 2.9%, CL is a buy under a revised price of $64.50 (TF).

Magellan Midstream Partners (MMP) provides transportation, storage and distribution of refined petroleum. This means gasoline, diesel as well as jet and marine fuels and other products. With the lockdown, demand for refined products is suffering. But it will rebound. It has traditionally had lots of regular cash flows, so it has kept less on hand. Debts are higher at 57.8% of assets, as it is a capital-intensive company that is essential for the US economy. Its bonds are largely placed in longer maturities for some stability, and it has two major credit lines with full visible availability from Wells Fargo. But given the market conditions, I am putting it on Hold for now. Hold MMP (T).

ONEOK Inc. (OKE) is a natural gas focused pipeline corporation that has been very focused on its primary petrochemi-cal customers. With the economy hitting nearly full-stop, I am concerned about the near term for the company. Its debts are higher relative to assets, but its loans and bonds are spread out over time. And it has access to an ample credit line from Citibank. But I am placing it on Hold for now. Hold OKE (TF).

Realty Income (O) has what has been a very defensive portfolio of properties leased to all of the retail storefronts of companies that are beyond the broad retail apocalypse, such as FedEx, Dollar General & Family Dollar and LA Fitness. But with the lockdowns, this is going to be a problem to be resolved. Debts are at a manageable level, and it has visibly untapped major credit lines with Wells Fargo. That said, given the uncertainty of the lockdowns, I am placing it on Hold. Hold O (T).

The Incredible Dividend MachineCycle A (January, April, July, October) T/TF Buy UnderBCE Inc. (BCE, 6.3%) T $38.00 EPR Properties (EPR, 15.8%)* T SELLCorporate Office Properties (OFC, 5.2%) T $20.00 Merck (MRK, 3.5%) TF $75.50 Mondelez International (MDLZ, 2.5%) TF $50.50 PPL Corp. (PPL, 7.3%) TF $25.00 South Jersey Industries (SJI, 4.9%) TF HOLDTPG Specialty Lending (TSLX, 11.7%)** TF $13.00

Cycle B (February, May, August, November)Alerian MLP ETF (AMLP, 21.5%) TF HOLDAT&T (T, 7.1%) TF $29.00 Colgate-Palmolive (CL, 2.9%) TF $64.50 Magellan Midstream Partners (MMP, 12.5%) T HOLDONEOK Inc. (OKE, 15.2%) TF HOLDRealty Income Corp. (O, 4.8%)* T HOLDVerizon (VZ, 4.8%) TF $52.00

Cycle C (March, June, September, December)BlackRock (BLK, 3.4%) TF $420.00 Dominion Energy (D, 5.5%) TF $70.00 Duke Energy (DUK, 5.0%) TF $75.00 Easterly Gov’t Properties (DEA, 4.4%) T $23.50 Main Street Capital (MAIN, 13.2%)** T $20.00 Public Svc. Enterprise Group (PEG, 4.6%) TF $41.50 Ventas (VTR, 10.8%) T SELLEversource Energy (ES, 3.2%) TF $74.25 *Monthly dividend payer, **Annual Yield


Verizon (VZ) has less debt stress than AT&T in terms of size. And given more remote work, the company should continue to see ample revenue. Yielding 4.8%, VZ is a buy under under a revised price of $52.00 (TF).

Cycle CBlackRock (BLK) will see a drop in

traditional AUM, which will result in a drop in fee income in the near term. But it picked up a major new customer in the Federal Reserve, which has contracted it to run some of its bond-buying special purpose vehicles. This is a good bargain buy, as it is valued at a mere 1.71 times

book. Yielding 3.4%, BLK is a buy under a revised price of $420.00 (TF).

Dominion (D) continues to run its regulated and unregulated businesses, which should continue to deliver cash for its debt service and its dividends. Yielding 5.5%, D is a buy under a revised price of $70.00 (TF).

Duke Energy (DUK) should continue to operate its utility businesses. Debts are well spread out over many years, and it has two credit lines with the Bank of Nova Scotia and Wells Fargo. Yielding 5.0%, DUK is a buy under a revised price of $75.00 (TF).

Easterly Government Properties (DEA) should be resilient with its heavy concentration of properties leased by the US government. DEA is a buy under a revised price of $23.50 (T).

Main Street Capital (MAIN) is another alt-financial focused on middle-market business lending. This is now a troubled market with liquidity challenges beyond the company. But specifically, it has a lower debt-to-assets level and has access to a major credit line that could be used, if necessary, for near term liquidity. MAIN is a buy under a revised price of $20.00 (T).

Public Service Enterprise (PEG) is a straight-forward utility with debts that are running at average levels to assets. Yielding 4.6%, PEG is a buy under a revised price of $41.50 (TF).

Ventas (VTR) was challenged before the virus mess, as cost troubles and pricing ability for its senior facilities were beginning to further pressure margins. Now that the virus mess is here and seniors are the most at risk, there is too much limiting improvements for now. Sell VTR.

To replace it, I am bringing up Eversource Energy (ES) from the Niche

Investments. This is the local power and gas company operating in New England markets. Yielding 3.2%, ES is a buy under a revised price of $74.25 (TF).

Niche InvestmentsThe farm team of stocks in the Niche

Investments is being tapped to fill two open positions in the Incredible Dividend Machine, with Corporate Office Properties (OFC) moving into Cycle A and Eversource Energy (ES) moving into Cycle C.

Meanwhile, there are plenty of oppor-tunities in the rest of the collection.

Alliant Energy (LNT) is a good utility company providing power, gas and water to local markets in Illinois, Iowa, Minnesota and in its home state of Wisconsin. The debt structure is average, and it has a good credit line if needed. LNT is a buy under a revised price of $46.00 (TF).

B. Riley Financial (RILY) is a very compelling company with heavy cash-generating business units that also comes with leverage with higher debt levels. CEO Bryant Riley owns 18.4% of the shares and bought another block this month alone. It should do well with its divisions that focus on store closings and company liquidations. RILY is a buy under a revised price of $17.00 (TF).

Ericsson (ERIC) is a strategic company for its local market as well as for much of the globe for its communications equipment, including for 5G services. ERIC is a buy under a revised price of $8.50 (T).

Gray Television (GTN) is missing out on political spending in light of the virus mess during the election season. But despite some leverage for acquisitions, it looks to be able to service it, and cost controls and revenue gains from new

The Fund PortfolioStocks (56%)Vanguard High Dividend Yield ETF (VYM)Vanguard Real Estate (VNQ)Vanguard Utilities ETF (VPU) Vanguard Information Technology ETF (VGT)Vanguard Health Care ETF (VHT)Fixed Income (44%)Intermed.-Trm Corporate ETF (VCIT)iShares Preferred and Income Securities ETF (PFF)SPDR Nuveen Bloomberg Barclays Municipal Bond ETF (TFI)Cash (11%)

Niche InvestmentsName (Ticker, Yield) T/TF Buy UnderAlliant Energy (LNT, 3.4%) TF $46.00B. Riley Financial (RILY, 10.8%)** TF $17.00Ericsson (ERIC, 1.0%) T $8.50Gray Televison (GTN, 0.00%) TF $12.00KAR Auction Services (KAR, 6.3%) TF $12.00Ritchie Brothers Auctioneers (RBA, 2.5%) T $34.00Samsung Electronics (SSNLF, 2.9%) T $41.00Waste Management (WM, 2.4%) TF $95.50Xcel Energy (XEL, 3.0%) TF $56.00**Annual Yield

The Fidelity and Vanguard Portfolios

Fidelity (800/544-8888)Stocks (56%)Fidelity High Dividend ETF (FDVV)Fidelity MSCI Real Estate ETF (FREL)Fidelity US Utilities ETF (FUTY)Fidelity Health Care ETF (FHLC)Select Software & IT Svcs (FSCSX)

Fixed Income (44%)High Income (SPHIX)Principal Preferred Securities (PRFCX)Intermediate Municipal Income (FLTMX)Cash (11%)

Vanguard (800/662-2739)Stocks (56%)High Dividend Yield ETF (VYM)Real Estate ETF (VNQ)Utilities ETF (VPU)Information Technology ETF (VGT)Vanguard Health Care ETF (VHT)

Fixed Income (44%)Intermed.-Trm Corporate ETF (VCIT)iShares Pref. and Income Secs. ETF (PFF)Tax-Exempt Bond ETF (VTEB)Cash (11%)

stations should help cash flow and debt service. And it has piles of cash on hand right now. GTN is a buy under a revised price of $12.00 (TF).

KAR Auction Services (KAR) is a leading wholesale vehicle auction company, including for salvaged vehicles. This should be a defensive company and stock, and it has lower debt and cash on hand. It’s now valued at a 20% discount to book and has a 6.3% yield. KAR is a buy under a revised price of $12.00 (TF).

Richie Brothers Auctioneers (RBA) knows troubled times, as that is how it was founded decades ago liquidating inventories during credit crises. It will be getting a whole lot more business right now. It has low debt and lots of cash. RBA is a buy under a revised price of $34.00 (T).

Samsung Electronics (SSNLF) is the world leader in components and final electronic goods. Use the current market environment as an opportunity to pick up some shares. SSNLF is a buy under a revised price of $41.00 (T).

Waste Management (WM) keeps picking up the trash and what is allowed to be recycled. It is a bit of a bargain at current levels. WM is a buy under a revised price of $95.50 (TF).

Xcel Energy (XEL) has a collection of regulated power and natural gas businesses in varied states around the nation. And it is taking the lead from NextEra Energy (NEE) in taking advantage of the market to develop wind power farms. Debts are a little more than average for a utility, but it is well distributed and has an ample credit line in place to defend it. XEL is a buy under a revised price of $56.00 (TF).

Final ThoughtAfter Assessing Status, Going Forward

So much has been thrown at the economy and markets over the past few weeks with so much resulting carnage. Throughout this issue, I’ve examined the underlying fundamentals and underpinnings of what is going on in the stock, bond and other markets. In turn, I’ve focused on the status of the companies behind all of the stocks in the portfolios.

While not all of them are through the impacts of the lockdowns, most show that they have the capabilities to service their debts as well as the ability to emerge on the other side of this mess with their business models working or changing and adapting along with their employees, suppliers and customers.

After that, we need to focus on what is going to work best going forward. I am going through companies that have the edge on capitalizing on their individual and segment strengths through the current and upcoming months and those that will gain investor and market attention for their intrinsic and performance values.

I am beginning to see bits of data and guidance from more and more companies, which I’m using on the plans to go forward. And I’ll be presenting my work on an ongoing basis through my Journals and market updates as we move towards the May issue.

For now, I’ve fully updated the prices throughout each of our model portfolios, so please review what I’m recommending we sell and look at what you should continue to buy and own. I continue to recommend that you maintain the defensive allocations of 56% stocks and 44% fixed income, which includes the very valuable 11% cash allocation.

We’re getting status. Now let’s go forward. And if you have questions, concerns or comments, please reach out to me and my team at [email protected] or call us at 800-211-8566.

Thank you very much for reading and subscribing.

All My Best

Neil George

NEIL GEORGE began his financial services career in 1987 with Merrill Lynch International Bank in Vienna, Austria and subsequently held senior positions at what are now US Bank and globally-

based Investec PLC. Neil’s long career has included stints as a bond trader and the manager of a fixed-income fund worth over $1 billion. An income hunter at heart, he’s also the former editor of several successful investment advisories dedicated to finding Wall Street’s best yields. Neil earned an MBA in international finance from Webster University in Europe and a bachelor’s degree in economics from King’s College. His market commentary and insights have been featured in the Wall Street Journal, Barron’s, Bloomberg, CNN and NBC.

Actions to Take This Month

1. In the Total Return Portfolio:• Sell UTX• Sell ACC• Sell MFA (per March 24 Alert)• Focus on remote economy

companies with MSFT & DLR as well as gold with FNV

• Check the portfolio on p. 7 for updated buy prices

2. In the Incredible Dividend Machine:• Sell EPR• Sell VTR• Buy OFC• Buy ES• Focus on BLK with Fed contract

to oversee bond buying & DEA with its dependable US government tenants


3. In the Niche Investments:• OFC moved up to Incredible

Dividend Machine• ES moved up to Incredible

Dividend Machine• Focus on RILY with CEO buying

& deal making to buy assets on the cheap


4. Overall, stick with the defensive allocation of 56% stocks, 44% fixed income (with 11% in cash). Synchrony Bank high-yield savings account 1.50% is very compelling for cash. In addition, Fed bond buying highly favors US corporate bond funds & municipal bond funds in the Total Return and Fund Portfolios.

SUMMARY

it will work getting through this - investorplace...bond market. this will also significantly aid...

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