Stocks found at least an interim bottom last week, gaining ground as the Federal Reserve expanded its quantitative easing program, and Congress worked toward passing a $2 trillion stimulus package, which President Trump signed into law on Friday.
Stocks are grappling with the uncertainty of how severe the economic damage will be from measures implemented to keep people from spreading the virus.
Although prices could still decline more, we now have lower prices that enhances the value of each of these stocks, and they are officially in the portfolio as recommended buys.
In light of overnight market events, please wait before buying the seven new stocks. For STLD, HUN, and MDT, clemency is withdrawn and they are being removed from the portfolio.
If the economy avoids recession, there is potential for a quick turnaround, like the bear market in 1987 that declined 33.5% to its low in just 101 days. The 2007-2009 bear market, which was accompanied by a recession, took the S&P 500 down 56.8% at its low on March 9, 2009.
We are adding Greif Class B (GEF-B) and Steel Dynamics (STLD) to the FDI Portfolio, and removing Cato Corp. (CATO) and Village Super Market (VLGEA).
Among top holdings of VIG and NOBL, we isolated dependable dividend payers that seem best equipped to weather a sustained downturn, favoring those with long payout histories, dividend payout ratios, and high rates of dividend growth.
LTC pays a monthly dividend at the rate of $0.19 per share, with the next ex-dividend date on March 22. Company director James Pieczynski purchased 1,000 shares last Friday at $45.05 per share.
With free cash flow per share over the past 12 months of $2.70 annual dividends of $0.65 are amply covered and have room to rise. The next ex-dividend date is March 12.
We will add several more this weekend and over coming days next week. It would be nice to get some signs of stabilization. I will send out hotlines for the new buys.
The drop in bond yields helped several of our real estate investment trusts like Monmouth Real Estate Investment (MNR +2.60%), American Campus Communities (ACC +1.11%), and Hersha Hospitality Trust (HT +0.85%).
The 16 stocks in last week’s Forbes Dividend Investor portfolio gained an average of 1.16% for the week. Our best weekly performer was the portfolio’s most recent addition: women’s clothing retailer Cato Corp. (CATO +6.93%).
The Forbes Dividend Investor portfolio gained an average of 1.91% for the week. Our best weekly performers were hotel REIT Hersha Hospitality Trust (HT +6.17%), Air Products and Chemicals (APD +4.70%), master limited partnership Phillips 66 Partners, L.P. (PSXP +4.52%), and RPT Realty (RPT +3.44%).
We are adding another stock to the Forbes Dividend Investor portfolio: Charlotte, N.C.-based Cato Corp. (CATO).
We are adding Dallas, Tex.-based Brinker International (EAT) to the Forbes Dividend Investor portfolio.
Among declining stocks, six of our holdings (TPR, HTBK, ETH, MERC, KSS, CMI) violated 10% trailing stops this week, and it is my risk management policy to sell stocks that have declined on a dividend-adjusted closing basis by more than 10% since the highest closing price since we’ve owned it
Utilities were strong as interest rates tumbled. American Electric Power (AEP +3.65%) was a bullish bright spot this week, and so was Air Products and Chemicals (APD +2.93), which beat earnings estimates with its quarterly report on Friday. No stocks violated 10% trailing stop loss levels.
The Forbes Dividend Investor model portfolio gained an average of 2.55% for the week, with the biggest advance coming from Mercer International (MERC +11.91%). Also posting above-average performance were Tapestry (TPR +5.32%), Newell Brands (NWL +5.30%), and American Electric Power (AEP +4.47%).
It’s a lot more than just a box, it’s packaging as a service.
Hersha Hospitality Trust (HT) is a REIT that owns 48 upscale hotels with 7,644 rooms. Revenue should grow 2% to $540.4 million, with funds from operation rising 7% to $2.15 per share, giving Hersha a 6.3 price/FFO multiple, 25.3% below the five-year average multiple. Insiders are bullish, too.
This week’s two worst performers are being removed this week from the FDI portfolio because they closed more than 10% below their highest closing price since we’ve held them: publishing and television station owner Meredith Corp. (MDP), and titanium dioxide maker Kronos Worldwide (KRO).
Last week’s new addition, Ethan Allen Interiors (ETH +1.94%) was the best performer, followed by Mercer International (MERC +1.75%), and Starwood Property Trust (STWD +1.31%). The biggest loser was Meredith Corp. (MDP -5.00%), which remained above a 10% trailing stop despite the steep decline.
The S&P 500 Index notched its fourth straight week of gains and is now up 12% since the first week of October. Value stocks caught a lift, which helped the undervalued dividend-payers in the FDI portfolio to exceed the market’s weekly return, with a big boost from owners of pipelines.
“Give the future, not presents.”
Our performance leader was newly-added forest products company Mercer International (MERC +3.97%), followed by Phillips 66 Partners, L.P. (PSXP +3.66%), Heritage Commerce Corp. (HTBK +3.00%), Kinder Morgan (KMI +2.28%), and Tapestry (TPR +1.61%).