Opening Statement from the February 2018 Dividend Gems 

Opening Statement from the February 2018 Dividend Gems 

Originally published on February 19, 2018 

Overview

Investors continue to anticipate rising interest rates. This sentiment has led to further weakness in interest-rate sensitive securities such as Utilities (primarily) Real Estate (somewhat) and Telecoms (to a variable degree). Of course the broad variety of fixed income investments (bonds and bond funds, preferred stock and private equity) has also been adversely impacted. 

For several months we have been highlighting the bull trend in oil pricing. The recent collapse in oil pricing occurred as an impulse reaction to the unforeseen selloff in global stock markets. Notably, the collapse in oil pricing was also heightened by the earnings miss from XOM and the huge miss by CVX on February 2. We previously issued cautionary statements regarding these and other major E&P firms financing a good part of their cash dividends with debt (TOT being the lone exception from our list of recommended securities).

Despite having faced a severe and unexpected stock market correction, consumer sentiment remains quite strong, as do trends in consumer spending. This has helped boost Consumer Discretionary stocks. In contrast, Consumer Staples have remained quite weak as of late most likely due to...