Recession Stocks Weren't Cool... But Now, They Are

Back in my MMO days, there was a web series with Felicia Day called "The Guild".  They had a few song hits, "Do You Want To Date My Avatar" notably, the costume Felicia wore in that video is on display at the Smithsonian, which I recently visited.  Lesser known is their song "I'm the one that's cool" which tells the tale of how the Guild, once a group of nerds, are now the center of our culture.

I look at the recession stocks as the "nerds" of the stock market.  No one thinks they are cool or worth the investment, until something like 911, the housing crisis, or a pandemic hits.  Now they are "burning bright thanks to your rejection fuel" like the song says.  I make sure most of my dividends come from these stocks, because you need your income most during times like this.  The Nerd Stocks are:

Consumer Staples like

• Archer Daniels (ADM) agriculture
• General Mills (GIS) Grocery
• Hormel Foods (HRL) Supermarket
• Kimberley Clark (KMB) TOILET PAPER GOLD
• Proctor & Gamble (PG) Everything else in the store lol!

Utilities like

• Southern Co. (SO) Electric Company working on nuclear power in the south (hot summers)
• Wisconsin Energy (WEC) Electric/Gas company in the north (cold winters)
• Essential Utilities (WTRG) Water Works + Natural Gas
• Excel (XEL) Electric/Gas

Health Care (really shining in a pandemic)

• Abbvie (ABBV) Humira & Allergen
• Abbot Labs (ABT) Covid-19 Testers (cha-ching!)
• Johnson & Johnson (JNJ) everything else!

Now for the stocks in severe trouble.  I am keeping a close eye on them to see who will make it through, and sell off/tax harvest those who cut their dividend.  Thankfully none of them are more than 3-5% of my portfolio, so I can afford to.

Chevron (CVX), while the king of the oil companies, is the closest of my stocks to cut their dividend.  I just glanced at their earnings this morning, and Q1 wasn't as bad as expected.  Q2 may be the real test, however.  CEO assured shareholders the dividend is fine, but everything is always fine... until it isn't.

Okeo (OKE) is the next one.  While they were hit hard by the pin action of the oil stocks, they did report a decent quarter.  They are mostly pipelines and natural gas, so why they haven't bounced back too well is beyond me.  Meanwhile, their dividend payout ratio is high (not as high as Chevrons) and they always had a great yield, now it is scary good - too high!

Realty Income (O) and National Retail (NNN) - these guys are in for a rough ride.  As if brick and mortar wasn't already having issues.  While some of their tenants (Walgreens, 7-11, Dollar General/Tree, Walmart, CVS, Home Depot) are doing well, many may never do well again (AMC, LA Fitness, Chuck E. Cheese).  The problem is, if half your tenants are doing well, you don't get any excess, but if half are not doing well, you don't even get your lease payment.  

Main Street (MAIN) - They dropped their semi-annual bonus dividend, but then they already planned to, and absorb it into the monthly dividend.  They just dropped it sooner, and hopefully will absorb it later.  They appear to be doing fine on paper, but investing in companies is a tricky business during a pandemic where many businesses are failing.  I know they will be investing even smarter from now on.

Otherwise, the pandemic has been good for my wallet.  My employer labelled me "essential" and gave me the documentation to prove it.  They have been providing me with 2 square meals a day, an essential worker bonus, a Q1 bonus, and a secure job.  My family hasn't been going anywhere or spending anything, so we have been working on home project spending only.  The government provided me with a check I don't really need, so I am using it to invest and pay ahead on bills in case another tragedy hits.  Our family has been blessed during this time, and I told my children to try to avoid a job in the entertainment/travel industries, because they are the first to suffer during a crisis.

Net worth took a big hit in February, but has recovered nicely.  I think it is because Vegas is closed, so the gamblers are all playing the market, investing in biotechs and airlines.

IP was taken off tax harvest status on the 16th, so I loaded up a bit.

So glad many of my dividends actually increased during this time!  Honestly, I'm just glad some like Chevron and O maintained their dividend.

Dividend Increases & Special Payouts

Watsco (NYSE:WSO) declares $1.775/share quarterly dividend, 10.9% increase from prior dividend of $1.600.

Johnson & Johnson (NYSE:JNJ) declares $1.01/share quarterly dividend, 6.3% increase from prior dividend of $0.95.

Procter & Gamble (NYSE:PG) declares $0.7907/share quarterly dividend, 6% increase from prior dividend of $0.7459.

Southern Co (NYSE:SO) declares $0.64/share quarterly dividend, 3.2% increase from prior dividend of $0.62.

April Purchases:

ADM	17
IP	17
NNN	10
ORI	4
O	6
SO	4
Stay safe!