My, oh my. Tuesday’s hot stock—can you believe it—was Microsoft (MSFT), up 4% to a 14-year high on word that CEO Satya Nadella may soon announce a version of the Windows Office suite that will work on Apple’s (AAPL) iPad. If the rumors are true, Mr. Softee will be in line for perhaps as much as $1.5 billion a year in extra revenue.
Am I happy? You bet I am, with MSFT up 54% in just 16 months.
Fellow gurus at investment conferences used to scoff at me for recommending “stodgy” old Microsoft. But who gets the last laugh now? Since a November 2012 buy signal for MSFT, Wall Street darling Apple is down 7%, even with reinvested dividends!
Meanwhile, the broader stock market doesn’t seem to care if Vladimir Putin grabs Crimea and anything else he can lay his dirty hands on. The S&P 500 index notched its second consecutive gain today, leaving the institutional benchmark only 0.3% below its all-time closing high, set March 7. Sanctions? What are those?
At this rate, it would only take a couple of decent economic releases to push the S&P all the way up to the 1900 target I’ve given you as the market’s next stopping place. I’ve told you to watch for that level by late April, but we may get there a few weeks sooner.
From a strategic point of view, of course, every leap ahead for share prices makes our job a little more complicated. Fewer and fewer stocks are priced to deliver the 12%-15% minimum we want over the next year.
However, there are still a few.
Take Realty Income (O), for instance. Realty Income has increased its dividend payout 75 times since 1994—an average of almost four times a year.
What’s more, Realty Income operates in the safest sector of the commercial property market (triple-net leasing), so you can count on this REIT to keep sweetening its dividend in the years to come. Even right through the Great Recession, Realty Income continued to fatten its shareholders’ checks.
Sporting a current yield of 5.2% (monthly dividends), the stock would need only a modest 7% price gain to achieve our required return threshold over the next 12 months. I think that’s a pretty good bet, given that, as recently as last May, O traded 31% higher than Tuesday’s close.
What about Freeport McMoran Copper & Gold (FCX)? Over the past few days, copper seems to have found at least a temporary bottom, and as long as the spot price can hold without a further significant breakdown, I don’t see any threat to Freeport’s generous 4% dividend.
We’ll have to take it one day at a time, though.