- Indicators point to a solid economic growth.
- Dow Jones has climbed from 6500 in March, 2008 to over 17,000 in August, 2014.
Walt Disney Co (NYSE:DIS).
Disney is focused on marketing products and making income. They may
have the best marketing plan in sales. Year-to-date, the stock price is
up 17%, from $76.04 as of the open on January 2, 2014 to the open on September
2, at $89.88. The strength of marketing through its media networks,
parks and resorts, studio entertainment and consumer products for kids
and adults will grow. Disney pays an annual dividend, and December 2013,
paid $0.86, or 1% yield. Look for the strength of return to be the
stock price appreciation near $100 in 2015.
Merck & Co (NYSE: MRK).
Merck has been a market leader in drugs for years, but also has many
over-the-counter products and animal health care products. Merck's stock
price is up 20% for the year, opening January 2, 2014 at $49.88 and an
open on September 2 at $60.11. Merck pays a quarterly dividend of
$0.44 for a 2.93% yield. Merck's current patents of drugs and earnings
will keep the stock price appreciating in 2015, with the $70 range
expected.
Orchid Island Capital, Inc (AMEX: ORC). Orchid is a real estate investment trust company investing in mortgage-backed securities. The stock price opened on January 2, 2014 at $12.86 and will open September 2 at $13.86. Less than 1% appreciation, but the real reward is the $0.18 dividend its pays per month. The yield is over 15%, and you can take the cash or reinvest the dividends to grow your investment.
Western Asset Mortgage Capital Corp (NYSE: WMC). WMC is an investment jewel because it provides investors opportunity in several ways. The stock price cycles through with the ex-dividend date. Over the last several quarters the stock price drops after the ex-date, then begins a stock price appreciation to the next ex-dividend date. The dividend paid each quarter this year has been $.67, but the stock price swing has been near $1.50. A great opportunity for investors to buy in after the drop and ride the stock appreciation up each quarter. Even if you buy and hold the yield on WMC is reporting near 17%.
CVR Refining (NYSE: CVRR)
is an independent downstream energy limited partnership with refineries
in Coffeyville, KS and Wynnewood, OK. I am very positive on CVRR,
although for 3Q, 2014 they have some downtime associated with the July
29 incident and will have a reduction in production for the reporting
quarter. We anticipate the distribution per unit to be down for this
quarter. Dealing with smaller companies, the risk associated with an
incident like this can have major impacts on the distribution or unit
price. The last two quarters the distribution has been $0.98 in May 2014
and $0.96 in August 2014. The yield is currently at 16%, and even with
this next quarter down a bit, the yield for the year and focused for
next year will remain near the 15% mark.
The negatives in the market.
Unemployment continues down, there are no
signs of overspending to drive inflation upward. The foreign markets are
not skyrocketing or falling, with the European markets dragging along
at a slow pace and the Pacific Rim countries growing at a sustainable
rate. China's growth rate has slowed over the years, but now near the 7%
level. This is expected to remain in the 6-7% range for the next 5
years, so another level, limited to no effect on the markets. The effect
of war breaking out is likely to cause a short term ripple in the
economy, mostly based on investors over-reacting to the news, but not
the effects of the event. The only major event that could cause a major
effect in the economy would be a major terrorist attack in the U.S., but
that would be short lived to several months before the markets return
to a near normal state.
2014 will go down in the investment books as a very profitable year for many investors, and average for those who choose to spread their investments across the table for balance. 2014 will be a profitable year for many companies as growth, positive earnings and cash flow were up. Most companies that pay a dividend held their current dividend or increased in 2014. The stock prices of most companies increased, pushing up the value of portfolios for investors.
2015 will extend the business environment of 2014, as we anticipate many companies to continue earning profits of their current business models. The threat of rising interest rates will cause a pullback of stock prices initially, and some companies may have reduced earnings for 6 months as the rates stabilize, but we expect the increase in interest rates to allow companies issuing loans to be able to increase the spread and create higher earnings. This increase in earnings will spur higher quarterly profits, increase the stock prices and allow dividends to grow also. After the increased interest rates the business of loaning money will create a more profitable environment for many REITs and banking institutions providing loans.
