A Top 5 Income Stock for 2012

By Paul Tracy, DividendOpportunities.com

Just a few weeks ago, we released our newest piece of research The Top 5 Income Stocks for 2012.

These five high-yield stocks represent our favorite income ideas for the coming year, and they pay dividend yields of 7.0%… 8.8%… even 11.5%.

But there is one of these investments in particular I want to tell you about…

For years now we’ve seen the market rise one day, only to fall the next. Meanwhile, events considered to be “once in a generation” — credit crises, sovereign debt downgrades, and bailouts — are now happening with surprising frequency.

In short, the volatility has been unprecedented. But it doesn’t take a PhD to know that. What’s surprising, however, is how many dividend payers have not only held up in this environment… but have prospered. (I first told you about this phenomenon a couple of weeks ago.)

This includes one of our finds — Stock #4 of our Top 5 Income Stocks for 2012. This stock has simply ignored the turmoil.

I doubt you even know this company exists, despite it being vital to your day-to-day life. It owns pipelines, terminals, and storage facilities throughout the United States. These infrastructure assets ship and store gasoline, diesel, crude oil, and jet fuel. More importantly, the company has a monopoly on these assets — no one can simply come and build another pipeline to compete. That means its business is as steady as it gets.

In return for moving and storing these products, this company earns steady fees… that it then passes on to investors. Since going public in 2001, this company hasn’t missed a dividend, and it has increased the payment more than 35 times.

And if you’re worried about the ups and downs of the broader market, I don’t know if it gets much better than this stock — Magellan Midstream Partners (NYSE: MMP). Year after year it has delivered steady gains:

Keep in mind this chart shows just MMP’s share price. As I said, the company also pays a solid dividend. Right now the yield is about 5.0% based on quarterly distributions of $0.80 per share. In total, over the past decade MMP has returned 530% — an annualized gain of 20%. For comparison, the S&P 500 is up just 3% annually.

Of course, with investing there’s never a surefire thing. There’s no quality a company can possess that will guarantee its success going forward.

But Magellan obviously has a history of beating the market year after year without wild swings. Moreover, the partnership has $575 million in expansion projects underway to improve and expand its pipeline network. So with a steadily growing business, solid dividend, and commitment to returning cash to investors, we believe 2012 is likely to register as another market-beating year for MMP.

All the best,

Paul Tracy
StreetAuthority Co-founder

P.S. — Don’t miss a single issue! Add our address, [email protected], to your Address Book or Safe List. For instructions, go here.

Disclosure: Paul Tracy owns shares of MMP. StreetAuthority owns shares of MMP as part of the company’s various “real money” portfolios. In accordance with company policies, StreetAuthority always provides readers with at least 48 hours advance notice before buying or selling any securities in any “real money” model portfolio.

EUR Extends Gains against Main Currency Rivals

Source: ForexYard

Following yesterday’s bullish run for the euro, the currency will attempt to extend its gains in trading today. Investor confidence in the euro steadily increased throughout the day yesterday, as details of a Greek deal to restructure its debt were released. Should confidence in the euro-zone recovery continue, the common currency may be able to prolong its bullish movement in the coming days.

Economic News

USD – Greenback Bearish Ahead of Fed Meeting

Following the losses the US dollar took during the European trading session yesterday, investors will be eagerly watching for news out of the two-day Federal Reserve Policy Meeting scheduled to start today. The USD started off the week on a bearish note following an increase in risk taking due to apparent signs of a euro-zone economic recovery. The trend brought the EUR/USD above the 1.3000 for the first time in nearly three-weeks, while the AUD/USD shot up over 100 pips over the course of the day.

Whether the greenback will maintain its downward trend for the rest of the week will largely be determined by the results of the Fed meeting. While the Federal Funds Rate is not expected to go up when the indicator is announced on Wednesday, investors will be watching the meeting closely for clues as to when US interest rates will go up. Should the Fed decide to maintain its current policy of record low interest rates for the near future, traders will likely take it as a sign that the US economy still has a long way to go toward full recovery. Such an event may lead to further losses for the greenback.

EUR – EUR Sees Broad Gains, but Sovereign Debt Fears Remain

Following the gains the euro saw against most of its main currency rivals yesterday, including the British pound, US dollar and Japanese yen, traders will once again by eyeing any news out of the euro-zone for signs regarding the economic recovery. Today, a batch of French and German manufacturing data is likely to offer clues as to the current state of two of Europe’s leading economies. With all indicators forecasted to show at least slight growth over the previous months, the euro may be able to maintain its current trend.

While the long-term outlook for the euro has improved, analysts are quick to warn that the sovereign-debt crisis that has hit much of the EU is far from over. Traders will also want to note that other international news is likely to impact the euro this week. The results of the two-day Federal Reserve meeting, scheduled to start today, will likely generate heavy volatility for the EUR/USD pair. Should the Fed release news that US interest rates will go up in the near future, the euro may see downward movement as a result.

JPY – Yen Takes Heavy Losses against EUR amid Increased Risk Taking

The EUR/JPY pair shot up yesterday, following an increase in risk taking after positive euro-zone news was released. In addition to a significant drop against the euro, the JPY also turned bearish against other riskier assets like the Australian and New Zealand dollars. At the same time, the JPY was able to maintain recent gains against fellow safe-haven currencies like the US dollar.

Turning to today, yen values will likely be determined by the results of a batch of euro-zone news. While the euro-zone recovery is still very fragile, traders seem to be taking every opportunity to shift their assets toward higher yielding currencies, often at the expense of the yen. Should today’s news reinforce the notion that the euro-zone is on its way to recovery, the yen may resume its bearish movement as a result.

Gold – Gold Continues to Move Up Based on Positive EU News

Gold was able to maintain the bullish momentum it started late last week, following the release of positive euro-zone data which boosted risk appetite among investors. Typically, commodities such as gold move up along with riskier, higher yielding currencies like the euro. While the precious metal is up at the moment, analysts are quick to warn that any negative euro-zone news would quickly bring it down.

Today, traders will want to pay attention to a batch of euro-zone news which is likely to affect commodity prices. Positive data is likely to cause gold to extend its current gains. Furthermore, should the Fed signal any positive growth in the US economy at the beginning of their planned two-day meeting, gold prices may increase as a result.

Technical News

EUR/USD

Long term technical indicators are showing this pair in oversold territory, meaning that an upward correction could take place in the coming days. The weekly chart’s Relative Strength Index is currently at 20, while the Williams Percent Range on the same chart has dropped below the -80 level. Going long may be a wise strategy for the pair.

GBP/USD

According to technical indicators on the daily chart, this pair has breached the overbought zone, and could see a downward correction in the near future. A bearish cross has formed on the Stochastic Slow and the Williams Percent Range has gone above -10. Traders may want to go short on this pair.

USD/JPY

Technical indicators on both the daily and weekly charts are showing this pair in neutral territory, meaning that no defined trend is apparent at this time. Traders may want to take a wait and see approach for the pair, as a clearer picture may present itself in the near future.

USD/CHF

The daily chart’s technical indicators are showing that following last week’s bearish movement, the USD/CHF may see an upward correction in the near future. The Stochastic Slow has formed a bullish cross, while the Williams Percent Range is hovering in the oversold zone. Going long may prove to be a wise choice.

The Wild Card

NZD/JPY

Following the recent bullish momentum this pair has experienced, technical indicators are now showing that a downward reversal could occur in the near future. The daily chart’s Relative Strength Index and Williams Percent Range are both in overbought territory, while the Stochastic Slow has formed a bearish cross. Forex traders may want to go short in their positions today.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

 

USD/CHF Outlook – Jan 23, 2012

January 23, 2012:  USD/CHF had broken the support of 0.9400 and went as low as 0.9307 (little below the next support level) and closed at 0.9345 for the last week. The recent low was just above January 4th’s low.

usd-chf-forecast

This was the first time since November 6th that USDCHF broke below the 55-day EMA level. On one side this price action makes the short-term outlook a bit negative even though the overall outlook stays bullish and we consider the recent move just as a correction/consolidation but the fact that the currency pair did not break below Jan 6th’s low of 0.9305 raises the question about further downward move. To expect further downward consolidation a break of 0.9305/0.9300 is required. On the downside if a strong break below 0.9305/0.9300 takes place then we would expect a good support in the range of 0.9200/0.9240. A move to 0.9200 will only be considered as the Fibonacci 38.2% retracement of the slow upward move during October 27th, 2011 to January 8th, 2012.

On the upside any strong break over 0.9410 and then a minor resistance near 0.9445 should make USDCHF to resume the upward move to retest 0.9596 and with a break over 0.9600, we would look forward to a move towards 0.9780, which represents the strong resistance during January 11th to February 11th, 2011. Any firm break over that should take the currency pair towards 0.9916 which represents, not only the strong resistance of December 8th, 2010 but will also start bringing in the psychological resistance of 1.0000 or parity.

The above outlook will stay good as long as USDCHF does not break below 0.9200. Such a break would start making our short-term outlook bearish to expect some more downward move towards the 0.9065/0.9090 level and then possibly towards 0.8965.

You may also check daily technical analysis of usd/chf and the weekend usdchf forecast at ForexAbode.com.

 

 

Reserve Bank of India Holds Rate at 8.50%, Cuts CRR 50bps

The Reserve Bank of India [RBI] held its repo rate at 8.50% and reverse repo rate at 7.50%, but cut the cash reserve ratio [CRR] by 50 basis points to 5.50% from 6.00%.  The RBI said: “In reducing the CRR, the Reserve Bank has attempted to address the structural pressures on liquidity in a way that is not inconsistent with the prevailing monetary stance. In the two previous guidances, it was indicated that the cycle of rate increases had peaked and further actions were likely to reverse the cycle. Based on the current inflation trajectory, including consideration of suppressed inflation, it is premature to begin reducing the policy rate.”


The RBI further noted: “The reduction in the policy rate will be conditioned by signs of sustainable moderation in inflation. However, the persistence of tight liquidity conditions could disrupt credit flow and further exacerbate growth risks. In this context, the CRR is the most effective instrument for permanent liquidity injections over a sustained period of time. The reduction can also be viewed as a reinforcement of the guidance that future rate actions will be towards lowering them.”

The Reserve Bank of India last increased the repo rate by 25 basis points at its October and September meetings, after hiking a surprise 50 basis points at its previous meeting to 8.00%, having increased 25 basis points in June, and 50 basis points during the May meeting.  India’s key inflation measure, the wholesale price index, increased just 7.57% in December, compared to 9.11% in November, 9.36% in October, 9.72% in September, 9.78% in August, 9.22% in July, 9.44% in June, 9.06% in May, 8.66% in April, and 8.98% year on year in March.  


India reported annual GDP growth of 6.9% in the September quarter, down from 7.7% in the June quarter, and 7.8% in the March quarter this year, and 8.3% in the previous quarter.  The RBI revised its growth projections down for 2011-12 to 7.6 percent from 8.0 percent previously, due to downside risks.  The Indian Rupee (INR) has depreciated about 10% against the US dollar over the past year, while the USDINR exchange rate last traded around 49.98

Bank of Japan Keeps Monetary Policy Settings Unchanged

The Bank of Japan held its interest rate at 0-0.10% and made no changes to its 55 trillion yen quantitative easing program.  The Bank said: “Japan’s economic activity has been more or less flat, mainly due to the effects of a slowdown in overseas economies and the appreciation of the yen.  As for domestic demand, business fixed investment has been on a moderate increasing trend and private consumption has remained firm.  On the other hand, exports and production have remained more or less flat, due to the slowdown in overseas economies and the yen’s appreciation as well as the remaining effects of the flooding in Thailand.  Meanwhile, although global financial markets remain under heavy strain, financial conditions in Japan have continued to ease.”


At its December meeting the Bank of Japan held policy settings unchanged, after it expanded its asset purchase program in October by another 5 trillion yen to 55 trillion yen, and previously announced additions to its quantitative easing program during its August meeting.  The Bank had previously changed its asset purchase program in March this year, when it added a further 5 trillion yen to its target.  Japan reported annual headline consumer price inflation of 0% in October and September, down from 0.2% in both August, July and June, and 0.3% in both May and April.  

The Bank is forecasting real 
GDP growth of -0.4 to -0.3% in fiscal 2011, 1.8-2.1% in fiscal 2012, and 1.4-1.7% in fiscal 2013.  Meanwhile, nominal quarterly GDP growth in Japan was recorded at 1.4% in September, -0.5% in June and -1.7% in March.  The Japanese Yen (JPY) has gained around 7% against the US dollar over the past year; the USDJPY exchange rate last traded around 77.02

100 Billion Reasons To Invest In Space Technology and Robotics

By MoneyMorning.com.au

Here’s a 100 billion reasons why space technology should be on your radar screen -especially if you’re interested in robotics.

According to the journal Nature, the Milky Way Galaxy alone contains at least 100 billion planets.

Now forgive me if I sound excited…but that is huge.

After all, just 20 years ago, astronomers still widely believed that our own tiny solar system contained all of the major planets.

So when I talk about how we are entering an Era of Radical Change, this is exactly what I’m talking about.

It’s not about tiny incremental changes but gigantic shifts in thought.


And here is something else to ponder…

With all of this new data, scientists now believe the universe may contain more than 150 billion galaxies. The math is enough to make your head spin.

How Nuclear-Powered Robots Are Winning the New Space Race


All this brings to mind one key point: The odds that we are alone in the universe grow smaller and smaller every day.

That puts us on the cusp of a New Space Race – one that will undoubtedly favour robots.

That’s why I think NASA’s new Spidernaut is such an important piece of technology. It’s an eight-legged robot that looks like it crawled right out of a sci-fi movie.

NASA plans to use these robots to help construct a new generation of space-science platforms that are so large and fragile they’ll have to be built in orbit.

As it turns out, spiders are really nimble creatures. NASA designed the prototype arachnid robot to have the grace and weight distribution of real spiders.

If the technology works as planned, these giant spider robots would crawl across a “web” of space tethers so as not to damage delicate equipment.

Now how cool is that?

It all goes to show you that despite the soft global economy and budget cuts, we’ve actually never had more interest in space exploration.

But this time it’s not just the United States and Russia. Indeed, China, India and Japan are also funding major programs.

For its part, the United States plans to land on asteroids as early as 2016 using a robotic arm to scoop up samples that the spacecraft will bring home to earth.

We also will send a manned mission to Mars, where the plan is to build at least some type of base. It’s why NASA launched a new robotic vehicle last November expected to land on Mars in August. Roughly the size of an SUV, the robot has 10 “eyes,” a six-foot robotic arm, and is nuclear powered.

Riding Robots In The New Space Race


At the same time, we have a new generation of space entrepreneurs. That’s why I keep track of Microsoft Corp. (Nasdaq: MSFT) co-founder Paul Allen and Sir Richard Branson of Virgin Galactic and their space tourism companies.

Don’t get me wrong. While I find the prospects for commercial space travel exciting, my experience tells me investors will have a much better chance to make money on robotics.

First of all…here on earth, airlines struggle to break even. Several have gone bankrupt.

So if an airline can’t cope with the high costs of jet fuel, how can a company launching rockets for a limited number of tourists be any more profitable?

It just doesn’t make sense.

As for robots, these businesses manage to touch the entire technology supply chain. From software to artificial intelligence to sensors to chips, robots employ all of these things.

So, even if we can’t find a robot company that justifies a direct investment, we will find numerous opportunities with key suppliers. That’s why I think the future of space travel is actually going to ride on robotics.

But don’t take my word for it…

Just ask the senior execs at Google Inc. (Nasdaq: GOOG). They obviously believe in the future of spacebots.

In fact, Google will award $30 million to the first team that can land a robotic vehicle on the moon.

To take home the prize, the bot must travel more than 1,600 feet on the surface, then send hi-def images and video back to earth.

It’s called the Lunar X Prize, and twenty-six privately funded teams are now vying for the reward. And don’t think for a minute this is some kind of gimmick.

After all, it was the Ansari X Prize that provided a huge amount of support for the New Space Race and upcoming commercial travel. And that prize was worth only $10 million!

And remember, when it comes to actually working in hazardous environments like other planets, nothing beats a bot. It doesn’t need oxygen, food, or coffee breaks. It doesn’t get homesick for its loved ones.

Also consider that new technology promises to keep robots steeped in the latest tech changes, greatly expanding their life spans.

For instance, reprogrammable chips will provide instant upgrades so the robotic hardware lasts longer. We’ll beam software patches via satellite so robot “brains” remain rich in new knowledge.

And robots will give us incredible economies of scale…

In the near future, we’ll have automated factories in space or on other planets building the robots needed for exploration, experiments, mining, and helping humans.

An arm of the Pentagon known as DARPA wants to recycle dead satellites worth some $300 billion. To do so, it also is pushing advanced robotics.

Thus, the federal government and private industry agree on one key fact about the future – to conquer outer space, they need to invest heavily in robotics.

So, keep your eye on space technology. Eventually, it will earn robotics investors rich returns.

Michael Robinson
Defence and Technology Specialist, Money Morning (USA)

Publisher’s Note: This article originally appeared in Money Morning USA

From the Archives…

Are ASX Energy Index Stocks Worth The Risk?
2012-01-20 – Aaron Tyrrell

Why the World Bank Wants Your Money
2012-01-19 – Kris Sayce

Could $50 Billion In Unpaid Credit Card Debt Drag Aussie Bank Stocks To A Record Low?
2012-01-18 – Aaron Tyrrell

The US-China Power Struggle… and What it Could Mean For Oil and Australian Energy Stocks
2012-01-17 – Dr. Alex Cowie

How Global Oil Supplies Could Fall 40% Overnight
2012-01-16 – Dr. Alex Cowie


100 Billion Reasons To Invest In Space Technology and Robotics

Why Tungsten and Other Strategic Metals Could Prove Good Investments

By MoneyMorning.com.au

In yesterday’s Money Morning I took a look at how commodity prices performed in 2011 compared to previous years.

But this list only included major commodities. By this I mean those with markets measured in the tens, or hundreds, of billions of dollars. The oil market is worth more than $3 trillion each year. Gold is worth $135 billion.

At the other end of the spectrum there are some metals that are just as important to the economy as oil and gold. The value of the metal consumed each year may not be worth anywhere near $135 billion, but if supply stopped it could cripple an economy.

For example, the tungsten market is worth about $3 billion a year. It may be a small market but tungsten was one of the best performing commodities in 2011, gaining 35%.


Tungsten is used for hardening construction and drilling tools. It is also used in hardening bullets, and other military applications. There is no substitute.

Like rare earth elements (REE), China produces most of the world’s tungsten supply. Since China restricted sales of Adenosine Triphosphate (APT), which is the main form tungsten is sold in, the price has doubled. Tungsten is following the same path as REEs, but no one has noticed yet.

Tungsten price doubles since China restricted sales – is it the next rare earths?

Tungsten price doubles since China restricted sales - is it the next rare earths?
Click here to enlarge

Source: VMS presentation

Tungsten is classified as a strategic metal.

This is defined as “integral to the national defence, aerospace or energy industry; and subject to potential supply restrictions” by Strategic Metals Investor (SMI).

Tungsten is just one of around 48 strategic metals in this category. Some of them are obscure. And some are hard to pronounce. The US National Academy of Sciences (NAS) published the following list:

Obscure metals that an economy relies on

Obscure metals that an economy relies on
Click here to enlarge

Some of these metals are mined from just one part of the world. Tantalum, which is essential for mobile phones, comes almost entirely from Rwanda.

Supply Risk


This is part of the problem. When a metal is mined predominantly in one place, it makes it more prone to supply shocks. All it takes is a change of policy from that country, and supply levels drop. This is what we saw with rare earths and are now seeing with tungsten. Or if the power supply becomes unreliable in a single country, it can affect global production rates. This is what happened in South Africa, which caused a drop in global platinum, palladium and rhenium production.

The British Geographic Society (BGS) put together a list ranking the metals in order of how prone they are to this sort of supply disruption. I’ve included the top half of the list below – click here for the full list.

I’ve highlighted some of the metals on BGS’s risk list. These are the strategic metals predominantly produced in China.

China has locked up supply of many strategic minerals

China has locked up supply of many strategic minerals
Click here to enlarge

Source: BGS


Tungsten is close to the top of the list, and in fact ranks ABOVE rare earth elements for risk of supply disruption.

The US military is talking tough against China’s military over issues like the South China Sea; but at the same time the US relies on China’s tungsten to develop its military capacity.

Other minerals on this list are essential for military applications. Antimony is an obscure mineral that is mostly used as a flame retardant. Molybdenum resists extreme temperatures and is used for armour and aircraft parts. Manganese has military applications as a steel hardener.

China has quietly positioned itself very well strategically, holding a powerful position over buyers of metals like tungsten, antimony, molybdenum, and manganese. All it would take is a quick change of policy to cease exports of these metals to weaken the US military’s capacity overnight.

Graphite may make you think of squash rackets, but it is used mostly for lithium batteries. The electric vehicle revolution depends on lithium ion batteries, which in fact contain more graphite than anything. China has a large and growing domestic market for electric vehicles. As this grows, China could restrict exports of graphite to ensure its domestic supply.

If China restricts the exports of these metals, as it did with rare earth elements, it would trigger a scramble for these commodities, and prices would soar. This would then lead to soaring prices of mining companies with deposits outside of China containing those metals.

It is just a matter of time before the market spots the opportunity with tungsten. Other metals like molybdenum and manganese are not far behind.

Outside Conventional Thinking


The hurdle these metals face is that they don’t have the charisma of gold or the acceptance of iron ore or coal. So it can be a tough to get the market to pay attention. But you could have said the same thing about rare earths a few years ago. Only a few investors knew about rare earths. Then when the price of the rare earths started soaring all of a sudden the idea hit ‘tipping point’ and leaped into mainstream awareness. The share price of every company with an ounce of rare earths suddenly went vertical.

This is the pattern I’d expect for these metals. Investors will need to be patient. But when these metals hit their own tipping point, your patience could be rewarded in spades.

There are only a few good companies on the Aussie market offering exposure to these metals. Some of them don’t get much attention. They are put in the shade by their more glamorous gold, oil or iron ore counterparts. But I think that some of them are excellent investing opportunities for investors with foresight and patience.

I’ve already recommended a tungsten stock to the readers of Diggers and Drillers. But I’ll be looking to add to this with more strategic metal opportunities soon.

Dr. Alex Cowie
Editor, Diggers & Drillers

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Why Fallen Commodity Prices Mean This Sector is Worth a Punt


Why Tungsten and Other Strategic Metals Could Prove Good Investments

Daily Market Wrap: January 23, 2012

Stocks took a breather from last week’s rally as investors were cautious ahead of a possible Greek default. But we are in the midst of earnings season and optimism over quarterly performance helped prop up the major indexes, especially late in the day.

Daily Dividend Report: OILT, DD, KR, MWV, KED

Oiltanking Partners Limited Partnership (OILT) announced its quarterly distribution of 34 cents per share. For the prior quarter, the prorated distribution for the period after the closing date of Oiltanking Partners’ initial public offering, July 19, 2011, through September 30, 2011 was $0.2678 per limited partnership unit, representing the minimum quarterly distribution of $0.3375 on a full quarter basis, or $1.35 on an annualized basis.