07-14-2016, 12:14 AM
Jeepers, asw, no one's replied yet. I'm of the opinion that, of those you mentioned, and pretty much the whole market is at the least very fully valued. I'm not too excited to put money to work here except for the few smaller positions I'm DRIPping to help them catch up. But, if we were to have a decent pullback, here are my thoughts:
Energy - PSX is basically a refining company. With the drop in oil, their feedstock got cheaper. I suspect if oil "normalizes" much more, they would be facing some headwinds at least for a while. OXY is more integrated and would be my choice if I were to add another energy company. COP, to me, is a stub major that took a beating when oil prices dropped. I think it will take a while for them to clean up the balance sheet once oil gets above it's current pricing. Have you thought about HP or NOV? Eventually someone's going need their expertise once supply/demand swings the other way.
Utes - I agree, they're pretty overvalued to me too. I even turned the DRIPs off even though they're the smaller holdings in my portfolios. Thought I saw a break starting the last couple days but it would take a bigger drop for me to be comfortable. Of those you mentioned, I like D, DUK & WEC. Maybe I haven't paid enough attention but the water companies have been habitually lower yielders even in more "normal times". If interest rate were more realistic, I'd also look at LNT or XEL. I still like ES but no one seems to. Despite the lousy regulatory environment, they've still grown the dividend at a decent rate for a ute. They are in the middle of expanding their natural gas supplies to alleviate the shortages in New England and bringing in more cheap Canadian hydro power to replace their higher cost legacy plants the regulators want to shut down. There's quite a concentration of wealth in their service area.
Telecoms - Don't know how you feel about being subject to currency fluctuations but BCE or TU have had good returns in their native currency. T still has a decent yield here and is the only US-based telecom I would add a little to here.
Healthcare - Depends on what you're looking for. I prefer companies that make things which is why I'd prefer AMGN. UNH is a pretty good insurance company if you get it at a decent price. My only concern would be the uncertainty of the ACA and all the changes/repeal proposals being bandied around during this political season. At the right price, I wouldn't be too concerned though. MDT, great company but perennially a low yielder. If you're looking for capital gains, I'd dig a little deeper. Other low yielders to consider are ABC and BDX.
Energy - PSX is basically a refining company. With the drop in oil, their feedstock got cheaper. I suspect if oil "normalizes" much more, they would be facing some headwinds at least for a while. OXY is more integrated and would be my choice if I were to add another energy company. COP, to me, is a stub major that took a beating when oil prices dropped. I think it will take a while for them to clean up the balance sheet once oil gets above it's current pricing. Have you thought about HP or NOV? Eventually someone's going need their expertise once supply/demand swings the other way.
Utes - I agree, they're pretty overvalued to me too. I even turned the DRIPs off even though they're the smaller holdings in my portfolios. Thought I saw a break starting the last couple days but it would take a bigger drop for me to be comfortable. Of those you mentioned, I like D, DUK & WEC. Maybe I haven't paid enough attention but the water companies have been habitually lower yielders even in more "normal times". If interest rate were more realistic, I'd also look at LNT or XEL. I still like ES but no one seems to. Despite the lousy regulatory environment, they've still grown the dividend at a decent rate for a ute. They are in the middle of expanding their natural gas supplies to alleviate the shortages in New England and bringing in more cheap Canadian hydro power to replace their higher cost legacy plants the regulators want to shut down. There's quite a concentration of wealth in their service area.
Telecoms - Don't know how you feel about being subject to currency fluctuations but BCE or TU have had good returns in their native currency. T still has a decent yield here and is the only US-based telecom I would add a little to here.
Healthcare - Depends on what you're looking for. I prefer companies that make things which is why I'd prefer AMGN. UNH is a pretty good insurance company if you get it at a decent price. My only concern would be the uncertainty of the ACA and all the changes/repeal proposals being bandied around during this political season. At the right price, I wouldn't be too concerned though. MDT, great company but perennially a low yielder. If you're looking for capital gains, I'd dig a little deeper. Other low yielders to consider are ABC and BDX.
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“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan
“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan