Playing it "safe" is paying off!
That's the message I'm delivering this week to hundreds of investors in person at the MoneyShow San Francisco, and the one I'm going to keep hammering home here to you as well.
Why? Because I'm convinced my favorite "Safe Money" stocks won't just keep outperforming NOW but will continue to do so well into the future.
What do I mean by "Safe Money" stocks? Well, the short answer is "Any stock good enough to make it into my Weiss Ratings Safe Money Report.
I don't recommend high-risk, low-rated, overhyped, over-owned garbage stocks. Instead, I recommend lower-risk, higher-rated, underappreciated companies that pass my rigorous multi-step screening process. They're stocks designed to help you build lasting, true wealth over time, not just make a few quick bucks. (And just as likely lose those bucks when the stocks in question collapse under their own weight!)
Today I'm going to get even more specific, though. I'm going to share the details of a stock I recently recommended to my subscribers. It's called One Gas (OGS, Rated "B"), and here is its chart.
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OGS isn't some high-flying chip stock. It's not a cutting-edge social media firm. This isn't a company involved in software-as-a-service, artificial intelligence, autonomous driving, high-end video gaming or any of the other buzzy sectors you hear about so much.
Instead, it's a Tulsa-based natural gas utility. That's it.
The company delivers gas to customers in Oklahoma, Kansas and Texas. It served 2.17 million residential and commercial customers as of year-end 2017 through approximately 60,500 miles of distribution and transmission pipelines.
So, what attracted me to it?
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Start with the fact its business is regulated by utility commissions in its three-state territory. That gives the firm strong visibility into future capital spending, customer growth, and rate increases. Residential customers accounted for 93% of its service base last year, too. This boosts the predictability and stability of its cash flows.
Even better: The shares recently yielded around 2.3%, 50 basis points more than the S&P 500. OGS also just raised its quarterly payout to 46 cents per share from 42 cents. And company officials plan to keep increasing the dividend at an average annual rate of 7% to 9% through 2022.
Operational stability. Superior earnings visibility. A market-beating dividend yield. That's all music to my ears! It didn't hurt that the technical pattern suggested an upside breakout was coming. Sure enough, OGS just jumped to an all-time high above $80 — handing my subscribers a nice open gain.
That's better than what the formerly hot FAANG stocks are dishing out these days, by the way. Facebook (FB, Rated "A-") hasn't been able to get out of its own way for weeks now, while Netflix (NFLX, Rated "C") has roundtripped back to a level it first reached in March.
Other high-flying "fan favorite" tech stocks like Tesla (TSLA, Rated "D") are getting pounded, too. Even formerly red-hot semiconductor names like Applied Materials (AMAT, Rated "B-") and Broadcom (AVGO, Rated "B") are sinking like stones. In fact, AVGO is back to where it traded in early 2017.
One last thing: I don't think this rotation is over. I think it's just getting started. With the economic cycle well advanced, the bull market extremely old, and credit conditions gradually getting more restrictive, "Safe Money" investing should keep winning for the rest of 2018 and 2019 at least.
Make sure you adjust your portfolio accordingly. Or if you want more guidance and concrete recommendations, just give my Safe Money Report a try by clicking here.
Until next time,
Mike Larson
