Watching the markets with an eye to the main chance, Raymond James strategist Tavis McCourt sees both risk and opportunity in current market conditions. The opportunity, in his opinion, stems from the obvious factors: the Democrats won both Georgia Senate seats in the recent runoff vote, giving the incoming Biden Administration majority support in both Houses of Congress – and increasing the odds of meaningful fiscal support getting signed into law in the near term. More importantly, the coronavirus vaccination program is proceeding, and reports are showing that Pfizer’s vaccine, one of two approved in the US, is effective against the new strain of the virus. A successful vaccination program will speed up the economic recovery, allowing states to loosen lockdown regulations – and get people back to work. The risks are also coming from the political and public health realms. The House Democrats have passed articles of impeachment against President Trump, despite the imminent natural closure of his term of office, and that passage reduces the chances of political reconciliation in a heavily polarized environment. And while the COVID strain is matched by current vaccines, there is still a risk that a new strain will develop that is not covered by existing vaccinations – which could restart the cycle of lockdowns and economic decline. Another risk McCourt sees, beyond those two, would be a sharp rise in inflation. He doesn’t discount that, but sees it as unlikely to happen soon. “…product/service inflation is only really a possibility AFTER re-openings, so the market feels a bit bullet proof in the very near term, and thus the continued rally, with Dems winning the GA races just adding fuel to the stimulus fire,” McCourt noted. Some of McCourt’s colleagues among the Raymond James analyst cadre are keeping these risks in mind, and putting their imprimatur on strong dividend stocks. We’ve looked into Raymond James’ recent calls, and using the TipRanks database, we’ve chosen two stocks with high-yield dividends. These Buy-rated tickers bring a dividend yield of 7%, a strong attraction for investors interested in using the current good times to set up a defensive firewall should the risks materialize. Enterprise Products Partners (EPD) We’ll start in the energy sector, a business segment long known for both high cash flows and high dividends. Enterprise Products Partners is a midstream company, part of the network that moves hydrocarbon products from the wellheads to the storage farms, refineries, and distribution points. Enterprise controls over 50,000 miles worth of pipelines, shipping terminals on Texas’ Gulf coast, and storage facilities for 160 million barrels oil and 14 billion cubic feet of natural gas. The company was hurt by low prices and low demand in 1H20, but partially recovered in the second half. Revenues turned around, growing 27% sequentially to reach $6.9 billion in Q3. That number was down year-over-year, slipping 5.4%, but came in more than 6% above the Q3 forecast. Q3 earnings, at 48 cents per share, were just under the forecast, but were up 4% year-over-year and 2% sequentially. EPD has recently declared its 4Q20 dividend distribution, at 45 cents per common share. This is up from the previous payment of 44 cents, and marks the first increase in two years. At $1.80 annualized, the payment yields 7.9%. Among the bulls is Raymond James’ Justin Jenkins, who rates EPD a Strong Buy. The analyst gives the stock a $26 price target, which implies a 15% upside from current levels. (To watch Jenkins’ track record, click here) Backing his bullish stance, Jenkins noted, “In our view, EPD’s unique combination of integration, balance sheet strength, and ROIC track record remains best in class. We see EPD as arguably best positioned to withstand the volatile landscape… With EPD’s footprint, demand gains, project growth, and contracted ramps should more than offset supply headwinds and lower y/y marketing results…” It’s not often that the analysts all agree on a stock, so when it does happen, take note. EPD’s Strong Buy consensus rating is based on a unanimous 9 Buys. The stock’s $24.63 average price target suggests an upside of 9% from the current share price of $22.65. (See EPD stock analysis on TipRanks) AT&T, Inc. (T) AT&T is one of the market’s instantly recognizable stock. The company is a member in long standing of the S&P 500, and it has reputation as one of the stock market’s best dividend payers. AT&T is a true large-cap industry giant, with a market cap of $208 billion and the largest network of mobile and landline phone services in the US. Its acquisition of TimeWarner (now WarnerMedia), in a process running between 2016 and 2018, has given the company a large stake in the mobile content streaming business. AT&T saw revenues and earnings decline in 2020, under pressure from the corona pandemic – but the decline was modest, as that same pandemic also put a premium on telecom and networking systems, which tended to support AT&T’s business. Revenues in 3Q20 were $42.3 billion, 5% below the year-ago quarter. On positive notes, free cash flow rose yoy from $11.4 billion to $12.1 billion, and the company reported a net gain of 5.5 million new subscribers. The subscriber growth was driven by the new 5G network rollout – and by premium content services. The company held up its reputation as a dividend champ, and has made its most recent dividend declaration for payment in February 2021. The payment, at 52 per common share, is the fifth in a row at current level and annualizes to $2.08, giving a yield of 7.2%. For comparison, the average dividend among tech sector peer companies is only 0.9%. AT&T has kept its dividend strong for the past 12 years. Raymond James analyst Frank Louthan sees AT&T as a classic defensive value stock, and describes T’s current state as one with the bad news ‘baked in.’ “[We] believe there is more that can go right during the next 12 months than can get worse for AT&T. Throw in the fact that shares are heavily shorted, and we believe this is a recipe for upside. Large cap value names are hard to come by, and we think investors who can wait a few months for a mean reversion while locking in a 7% yield should be rewarded for buying AT&T at current levels,” Louthan opined. In line with these comments, Louthan rates T an Outperform (i.e. Buy), and his $32 price target implies room for 10% growth from current levels. (To watch Louthan’s track record, click here) What does the rest of the Street think? Looking at the consensus breakdown, opinions from other analysts are more spread out. 7 Buy ratings, 6 Holds and 2 Sells add up to a Moderate Buy consensus. In addition, the $31.54 average price target indicates ~9% upside potential. (See AT&T stock analysis on TipRanks) To find good ideas for dividend stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights. Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
