The market ended the week with mixed results, with Financial stocks slowly recovering and Communication Services ending with -3.05%. The S&P500 and Dow Jones Indices also performed flatly, with S&P500 ending at -0.10% and -0.23%. Investors are still waiting for clear signals with next week’s potential interest rate hike and mixed earnings results.
| Index | Last | YTD | 1 Week |
| S&P 500 | 4133.52 | 7.66 | -0.10 |
| S&P 500 Energy | 653.30 | -2.83 | -2.54 |
| S&P 500 Materials | 508.05 | 3.78 | -0.31 |
| S&P 500 Industrials | 851.44 | 2.41 | 0.75 |
| S&P 500 Consumer Discretionary | 1150.47 | 14.42 | 0.53 |
| S&P 500 Consumer Staples | 798.68 | 2.51 | 1.68 |
| S&P 500 Health Care | 1564.68 | -1.32 | -0.24 |
| S&P 500 Financials | 552.37 | -3.05 | 0.98 |
| S&P 500 Information Tech | 2587.05 | 19.10 | -0.46 |
| S&P 500 Communication Services | 191.16 | 19.95 | -3.05 |
| S&P 500 Utilities | 353.78 | -1.31 | 1.09 |
| S&P 500 Real Estate | 233.24 | 0.37 | 1.59 |
| S&P Dividend Aristocrats | 768.19 | 2.67 | 1.13 |
| Dow Jones Industrial Average | 33808.96 | 2.00 | -0.23 |
Market Moving News
Deposit flight affecting US regional banks even with higher interest income – Regional US lenders reported deposit outflows due to customers being spooked by the banking crisis and moving big institutions.
Alphabet is taking another leap into the frontline of AI by combining Deepmind and GoogleBrain – Alphabet is merging Google Brain and DeepMind to further compete in the artificial intelligence race and will be headed by Jeff Dean as its chief scientist.
United Airlines warns softening of the economy – United Airlines CEO Scott Kirby says that while the company “feels good” about its full-year profit outlook, the company still sees a potential mild recession or soft landing of the economy as a “base case” and the company is ready in case of such scenario.
Week Ahead
Funds shift to bonds according to analysts – analysts and portfolio managers see the market moving into bonds due to a shrinking Equity Risk Premium (extra return an investor can expect for holdings stocks over bonds), and it is at its lowest level since the Great Financial Crisis.
Earnings Season Continues – This week, companies like AT&T, American Express, and Blackstone Inc. are expected to release their earnings with lower expectations due to the current environment. Companies like Union Pacific Corp and CSX Corp are expected to profit due to their price hikes and volume.
Ten Dividend Companies to Watch
With analysts and market professionals seeing the US economy potentially slowing down along with mixed earnings results, investors are often advised to be defensive. One strategy investors would hear during these uncertain times is investing in dividend companies, with the slow growth, dividends provide a margin of safety through turbulent times.
We will only be looking at companies with a low payout ratio (ratio of the total amount of dividends paid out to shareholders relative to the net income of the company) of at least a 10% growth in dividend payments(annualized percentage rate of growth that a particular stock’s dividend), and a dividend yield (ratio between the current dividend of the company and the company’s current share price) of at least 1.5%.
To fund their dividend payments, we would need the companies to have good cash flow growth (ensures that companies have more money coming into the business) of at least 10%. To top it off, I’d want to make use of Barchart’s opinion rating and direction (Barchart’s Opinion ratings are based on an aggregate of multiple technical indicators to easily identify the direction and recommendation for stock) to ensure that companies I get will those that are not in a down-trend or are just flat.
Ecopetrol S.A. ADR (EC)
Dividend Yield: 13.15%
Ecopetrol S.A. is an oil company operating in Colombia, Peru, Brazil, and the United States Gulf Coast. The Company operates in the following segments: include Exploration and Production, Transportation and Logistics, Refining, Petrochemicals, and Biofuels. The company operations include exploration, development, and production activities in Colombia and abroad as well as transportation of crude oil, motor fuels, fuel oil, and other refined products, including diesel and biofuels.
EC shows that it currently trades within a $3 range while trading above our 50 SMA (red line) and 100 SMA (green line). Both lines’ slope shows us how prices are creeping up to the price and may give investors a chance to buy into EC once prices retest SMA.
Natural Resource Partners LP (NRP)
Dividend Yield: 5.62%
Natural Resource Partners L.P. is a company that owns, manages, and leases a diversified portfolio of mineral properties in the United States. The company also has interests in coal and other resources. Its business owns, manages, and leases a diversified portfolio of mineral properties in the United States, including interests in coal and other natural resources. Its operations focus on its mineral rights across the US and soda ash production business.
NRP shows that it’s currently trading in a tight range between our 2 SMA’s which tells us that we might see a break above or below the SMA’s. The good thing is that bullish investors may be in control as SMA’s are sloping upward, and we are seeing a rise in volume and a cross of the RSI above the 50-line mark. Investors who wish to buy into NRP may wait for prices to cross above all SMA’s or buy into NRP in small increments while it’s still consolidating with a stop just below the 100 SMA (green line).
M.D.C. Holdings Inc. (MDC)
Dividend Yield: 5.06%
M.D.C. Holdings, Inc. is a company focused on homebuilding and financial services. The company’s operations cover mortgage operations and homebuilding operations via subsidiary companies that purchase finished lots or develop lots necessary for the construction and sale of single-family detached homes, land acquisition and development, home construction, sales and marketing, and customer service.
MDC shows that prices are in a healthy trend and are poised to break out and test their resistance in the $40.00 area and proceed with its second attempt for a breakout. RSI isn’t showing any signs of exhaustion and can potentially lead to a follow-through. Investors willing to buy into MDC can wait for the breakout and retest attempt for a low-risk entry.
Sun Life Financial (SLF)
Dividend Yield:4.38%
Sun Life Financial Inc. is a Canada-based financial services company that provides insurance, wealth, and asset management services. The company operation segments are in Canada, the United States (U.S.), Asset Management, Asia, and Corporate. These segments cover a range of services from protection, health, group insurance, asset management, and wealth solutions to its clients domestically and internationally.
SLF just retested its SMA’s (red and green line)and successfully closed above it last Friday. Depending on how investors react to this on the next trading day will determine if a resumption of its current trajectory is in play.
Canadian Natural Resources Limited (CNQ)
Dividend Yield: 4.41%
Canadian Natural Resources Limited is a firm that operates as an independent crude oil and natural gas exploration, development, and production company. The company’s operations are focused in North America, in Western Canada; the United Kingdom portion of the North Sea; and Cote d’Ivoire and South Africa in Offshore Africa for their exploration and production operations, which are further broken down into three geographic segments: North America, North Sea, and Offshore Africa. The company also has Oil Sands Mining and Upgrading operations that produce synthetic crude oil through bitumen mining and upgrading operations at Horizon Oil Sands.
CNQ shows how prices have been trading in a range between $ 44.00-$ 62.51 since last year and just retested it last April 14. With SMA’s (green and red line) showing prices are trading flatly, investors can wait for CNQ to establish proper support on the SMA, wait for it to test the $ 44.00 – $48.00 area, or skip CNQ as a whole. It’s always best practice to wait for the market to come to you rather than chase it.
Marin Products Corp (MPX)
Dividend Yield: 4.17%
The Company designs, manufactures and distributes branded outboard sport deck boats, Chaparral luxury sterndrive and outboard pleasure boats, and Robalo outboard sportfishing boats. The Company markets and distributes its product lines through its independent dealer network.
MPX is trading in a tight range and establishing support on top of its 50-day SMA (red line). With no clear indication of a test of resistance, investors can wait for clearer signals before buying into MPX.
Edison International (EIX)
Dividend Yield:4.04%
Edison International is the holding company of Southern California Edison Company (SCE) and Edison Energy Group, Inc (Edison Energy Group). The Company generates and distributes electric power and provides energy services and technologies, including renewable energy through its subsidiaries.
EIX is currently trying to break out from its $72.93 resistance. SMA’s and RSI are now not showing any signs of exhaustion. Investors willing to buy into EIX can wait for a confirmation of the breakout to ensure a lower-risk entry.
Escalade Inc. (ESCA)
Dividend Yield: 4.09%
Escalade, Incorporated (Escalade) designs, manufactures and sells sporting goods, fitness, and indoor/outdoor recreation equipment for different sports and recreational activities. The company holds other brands like Bear Archery; STIGA, a table tennis brand; Accudart; RAVE Sports; Victory Tailgate; Onix, a Pickleball brand; Goalrilla; Lifeline fitness products; Woodplay and American Heritage Billiards.
ESCA is currently starting to have a healthy correction from its continuous run since December last year. RSI recently printed a divergence which led to prices currently correcting. Investors willing to buy into ESCA can wait for prices to test its SMA’s (red and green line) or when it establishes support for a lower-risk entry.
LCI Industries (LCII)
Dividend Yield:3.67%
LCI Industries is a company engaged in supplying, domestically and internationally a range of engineered components. The company is focused on original equipment manufacturers and the aftermarket segments. Their products include steel chassis and related components; axles and suspension solutions; slide-out mechanisms and solutions; thermoformed bath, kitchen, and other products; vinyl, aluminum, and frameless windows and others.
LCII is currently on its way up to test its previous resistance in the $120.00 area after establishing strong support at the $100.00 area. Currently, RSI is in bullish territory and shows no sign of exhaustion. Investors willing to buy into LCII can wait for prices to retest its SMA (red and green line) or choose to wait for the breakout and retest on the $120.00 area.
NiSource Inc. (NI)
Dividend Yield: 3.49%
NiSource Inc. is an energy holding company that operates through two segments: Gas Distribution Operations that provide natural gas to residential, commercial, and industrial customers and the Electric Operations segment that generates, transmits, and distributes electricity through its 486,000 customers in 20 counties in the northern part of Indiana as well as wholesale electric and transmission transactions.
NI is currently attempting to break out in a tight range between $26.00-$29.00 area. SMA’s (red and green line) is starting to slope up and RSI is also in the bullish territory, signaling a higher chance for a breakout on the upside. Investors willing to buy into NI should wait for the breakout and retest or a test on test on the SMA’s.
Final Thoughts
With the markets still waiting for clear signals from the Fed and earnings season results, investors should always wait for the market to provide opportunities rather than chase the market. Being on the sidelines is still a position in an uncertain market as risk can come slowly, then all at once.
