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Generally, utility stocks tend to do well when you start to get into a more recessionary environment, so 6-12 months before we anticipate a recession. Now that we're getting into the early part of the cycle, utilities and more defensive names tend to underperform. Dividend stocks have not been performing well, because interest rates are moving higher, making dividend plays appear less attractive.
At some point, the 10-year bond yields will start to calm down, and that's when you'll start to see outperformance in utilities, dividend stocks, banks, and telcos.
He's never considered an ETF for the telecom space. Buying an ETF is a way to diversify your risk. But because telcos tend to have lower beta than the underlying indexes, he doesn't need to buy an ETF to de-risk.
Names to look at include BCE (owns in his portfolio), Rogers, and Telus. They'll perform better once interest rates turn over, but the good news is that you're getting a healthy dividend yield while you wait.
Likes the diversified business model. Leader. Decent valuation at 19x forward PE, with 12% earnings growth. Past year has seen a rotation out of managed care into more exciting pharma names. Stable revenues, downturn-resilient. Aging US demographics will benefit.
Diabetes is not going away. Obesity has made its latest drug popular. Have to ask what are the side effects? Trading at 34-35x forward PE, with a 25%+ growth rate. PEG of 1.6x is not cheap, but not expensive. Overbought. He'd like to see it at the 50- or 200-day MA, around $170-175.
Top performer of the S&P 500. Hype over AI is real, but there's been too much, and you have to look at the fundamentals. Great growth expectations of 30-35% EPS, but if there's any hiccup, the extended valuation is in jeopardy. Trades at 34x price to sales, whereas the S&P is around 2x. Tech is starting to weaken.
He'd prefer names not so much in the limelight, like ASML or KLAC. See his Top Picks.
Uses covered calls, but also highly dependent on capital appreciation and that brings risk. Otherwise, there's no way to achieve the yield of 14-15% via covered calls + dividends. At the end of the day, it's about total return, not just income. A new offering, whose total return is worse than that of a regular financials ETF. He'd prefer a more conservative covered call strategy.
He holds it in more conservative portfolios. Looking back long-term, you can't get a chart that's much better. Yield is 2.1%, which he expects to remain stable and go higher over time. Expects 6.4% dividend growth, very strong. Great balance sheet and cashflow, well run. Low beta, 3/4 that of the S&P.
8%+ dividend yield due to covered calls. When rates start turning down, these names will benefit and move higher. 71 bps, more expensive than average. Great for income, nice payment as you wait for the turnaround.