JotCast | 5/30/23 Capitalist Times Live Chat

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5/30/23 Capitalist Times Live Chat

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Hans

7:14

Elliott Is UNG a good buy at this low price, I think it is at it's 52 week low.

Elliott Gue

7:14

Thanks for the question, I answered it just above.

PeteH

7:14

Hi Roger, Thanks for holding those live chat. What is your assessment of EIX dividend safety and outlook.

Roger Conrad

7:14

Hi Pete. I think it's very safe and likely to be increased again next year at a similar rate to this year, which was 5.4%. Wildfire season is always a risk. But every year, the company further reduces its risk of being a part of wildfires by undergrounding wires, installing covered conductor wire and boosting surveillance capability. I like the stock as a buy up to 75.

Kathy

7:19

ARE and HASI - what are your feelings on adding to each given the decline they have had this year?

Roger Conrad

7:19

Hi Kathy, thanks for joining us today. I review Q1 earnings and guidance updates at length in the May REIT Sheet update that will post tomorrow morning. The short answer is their results and guidance were solid and the drop in share prices doesn't appear to be related to any business developments. Alexandria REIT (NYSE: ARE) is probably taking on some water being technically an office REIT, despite the fact its life science specialty is still running very strong with occupancy steady in contrast to other office REITs. Hannon Armstrong (NYSE: HASI) is being hit along with other financial REITs, despite having a unique niche that's also proven resilient in recessions. And both stocks are getting hit by the selloff in dividends stocks as well as any stocks not directly caught up in the AI stampede. Bottom line, I view the reasons for the selloff as ephemeral and still see recovery likely. So I'm staying with them at this point,

Fred W

7:21

Hi Roger,
For the longer term, considering both potential price appreciation and dividend payouts,
which of the following stocks would you prefer and in what order?

ET, EPD, KMI,CHK,CQP,EOG or PXD?

Thanks

Roger Conrad

7:21

Hi Fred. These are really apples and oranges. But in midstream, Enterprise, Cheniere and Kinder Morgan are safest while Energy Transfer has a higher yield and more upside. Pioneer and EOG are safest on the producer side, with Chesapeake more aggressive. All are solid buys at current levels.

RobertP

7:24

Roger/Elliott, thank you for hosting your live chats with all your subscribers. Have a question about a LNG carrier, Flex LNG. Seems they have carved out a niche on new efficient vessels and a commitment to reducing global emissions.

Roger Conrad

7:24

Hi Robert. It's probably one we should pick up coverage of thanks. it's been a while since we recommended any tankers--and that's been the right move as we continue to see dividend cuts, roll-up mergers at low prices and so on. There's just more supply out there than demand, as old ships have been kept in service while new ones have built. Ultimately that changes. But Flex LNG has a yield of nearly 10%, which has been the same since late 2021. That makes us a little wary, especially when there are much safer midstreams yielding as much or even more.

Victor

7:26

Hello Guys and thank you for this service. I'm not sure if this was asked, but XOM was changed to a hold on the model portfolio. Could you expand on why this is the case?

Roger Conrad

7:26

Hi Victor. The highest recommended entry point has been 85 for some time, which is a level roughly $20 a share lower than the current price--so it's been a defacto hold since last year. This just makes the point more clear. It's also possible we'll recommend taking some money off the table--stay tuned for part two of this month's EIA issue.

RobertP

7:29

Recently, the prices of Alexandria and WP Carey Reits, have come down quite a bit and I have started buying in increments. Would you consider these two reits best in class? Thanks for all your years of great service and advice, Robert from Az.

Roger Conrad

7:29

Hi Robert. I already addressed Alexandria REIT in a previous question. But WP Carey also had strong Q1 results including affirming 2023 earnings guidance--so its decline doesn't have anything to do with business results. I am reviewing both at length in the May REIT Sheet that should be out tomorrow morning. If there's more you'd like to discuss after you've had a chance to peruse, please send me an email.

Victor

7:30

Elliott, I read your update on MMP and it is still under the buy price. Are we supposed to wait before adding more to existing positions?

Roger Conrad

7:30

We don't recommend anyone really load up on a single stock unless it's in proportion to the rest of their portfolio. But Magellan Midstream is still a buy up to 75 following ONEOK's takeover offer.

Mark

7:32

2) AES vs. AESC. What are the benefits of one over the other? Am I wrong to look at it like the Center Point preferred play from a year or two ago? I’ve been nibbling at AESC, but I am not sure at which point I’d be better off sticking with AES over AESC. Given the yield disparity and the fact that their prices seem to move in tandem, and the maturity date in early 2024, why not AESC?

Roger Conrad

7:32

Hi Mark. Hopefully I was able to answer the question in an earlier response. As I said there, I think both are good bets on a stock I think is now quite cheap after reporting solid Q1 results and guidance (AES Corp). The preferred is best if you want a higher dividend, the common offers a lower entry point for your investment. I like them both.

Phil

7:34

What are your thoughts on GE. It seems to have gained a new lease on life lately.

Roger Conrad

7:34

Hi Phil. It's one we always look at. At this point, however, it doesn't pay much of a dividend, making it mostly unsuitable for income investors. It's also quite a mish mash of operations and we generally prefer more direct plays.

Aaron

7:37

Gentlemen, when do you think that the tide will turn for dividend stocks? Keep up the fine work !!!

Roger Conrad

7:37

Hi Aaron. I think we probably have to wait until the Federal Reserve stops pushing interest rates higher, which is basically the case for the entire stock market ex-AI hype stocks. The reason has nothing to do with the level of interest rates. Rather, it's the fact that Fed pressure to choke off investment with higher rates is pushing the economy into recession--and the stock market never does well when that happens. The key now is just to be sure we own stocks of companies that can weather a recession with balance sheet strength and preferably growing dividends. And that's the kind of stocks we're focused on now.

Frank

7:37

aes vs aesc pls

Roger Conrad

7:37

Hey Frank. Hopefully I've answered this one to your satisfaction today. If not, please drop me a line.

BKNC

7:39

Okay, thank you for your insight on NEM.

Roger Conrad

7:39

Hey. I don't really have anything to add to what I wrote in the CUI Plus/CT Income report this month. Basically, I think it's a premier play on gold--which will do well in the inflation I expect--and will be all the stronger from closing the Newcrest merger. We're going to get rising dividends as gold and copper prices rise. And the share price should hit close to the century mark by the time the cycle ends. The stock is weak now and therefore at a great entry point.

Alex M

7:45

Hi Roger. With long-term debt now surpassing its market cap, do you have any concerns with Verizon's ability to maintain the current dividend? History has shown that in times like these, management teams sometimes conduct a "strategic review" that leads to asset sales, a shift to buybacks, or some other action to shore up the balance sheet and sneak in a "dividend rightsizing". AT&T, Dominion Energy, and several REITs have taken this path over the last few years. Thoughts on this being pursued at Verizon? Thank you.

Roger Conrad

7:45

Hi Alex. That's a very good question. I would say that debt exceeding market capitalization is more of a concern for smaller companies--especially if they don't reliably generate a mountain of free cash flow after industry leading CAPEX and paying dividends, as Verizon does. A good example in the telecom space would be DISH Networks. Also Lumen Technologies has slipped under $2 a share.

I'm not a long distance mind reader, so I can't say Verizon management would never consider cutting the dividend if they saw what they believed was a better use for the money. But based on Q1 results and guidance they certainly would not be forced to make a cut. And that's really the distinction from AT&T, which took a big cash flow hit selling its entertainment division. Also, Verizon is a pure telecom, so asset sales don't appear to be an option. And Dominion has not made a determination to cut its dividend as part of this strategic review--it may happen but hasn't and again it would not be forced.

Victor

7:45

Would you be adding ET and EPD at the current levels?

Roger Conrad

7:45

Both are trading well below our highest recommended entry points and rate buys in our view.

Wyatt L

7:49

Hello, have you published a list of stocks with "Dream Sell" prices? I'm tired of watching my stocks go way up and then come way back down. I just wish I had some guidance as to when would be a good time to sell something after it's gone up. Thanks

Roger Conrad

7:49

Hi Wyatt. I do publish a list every month in Conrad's Utility Investor of stocks in the portfolios trading above highest recommended entry points--which includes prices for each stock at which investors should consider taking partial profits. There aren't any currently, not surprising considering the market is coming down. But it is a regular feature of CUI and we've been able to make sales at good prices on numerous occasions. In Energy and Income Advisor, we pared back on several holdings to start the year in order to build cash in the Model Portfolio. And we've done the same thing in our CUI Plus/CT Income and Creating Wealth model portfolios as well.

Tommy L

7:53

AGR is sitting at a low that extends beyond 2 years. Do you see a bottom in the near term, or do we wait for the turn in a recession? Thanks for these webcasts.

Roger Conrad

7:53

Hi Tommy. Avangrid Inc (NYSE: AGR) currently faces several challenges as I've noted my CUI coverage. Each is simultaneously a reason the stock is selling at low level and a potential upside catalyst. One is the pending merger with PNM Resources, now being reviewed by the New Mexico Supreme Court and therefore still delayed. One is completing a powerline linking Canada with New England that had been challenged by a Maine referendum. There's ongoing rate cases including New York and opening the Vineyard offshore wind facility. The stock is priced for low expectations. The play is they succeed in one or more of these areas and the stock gets a lift. As for a recession, the company should weather it well as an essential services business. The stock could slip further. But again success with one of the challenges the company faces could trigger rapid recovery.

Jack A.

7:54

Hi Elliott: What are your thoughts about KMI?...... I don't understand why it's down so much in price?...... Is it because of refinancing costs?............ A lot of analysts are not very keen on it....

Roger Conrad

7:54

Hi Jack. Hopefully we answered this question to your satisfaction earlier in the chat. If not, please drop us a line.

Tommy L

7:56

ELLIOTT: How do you view the wildfires in Canada further impacting the price of oil service companies like ENB, TRP?

Roger Conrad

7:56

Hi Tommy. The wildfires haven't done much to affect either Enbridge Inc (NYSE: ENB) or TC Energy (NYSE: TRP) so far. The big issue for TC is getting the Coastal GasLink pipeline built and it appears to be on track. Enbridge has settled rates on its Mainline system, eliminating uncertainty there.

Jim T

7:57

Roger, Yes, I meant AQNU, Thanks.

Roger Conrad

7:57

Thanks. I hope I answered your question on the Algonquin preferred. If not. drop me a line.

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