What recession? After a terrible start to August, the market has completely turned around. The S&P 500 has moved 7.5% higher since Aug. 5 and is again near the old high. I like Cheniere Energy Partners LP (CQP) and its recent dividend yield of 7.3%, advises Tom Hutchinson, editor of Cabot Dividend Investor.
The recession fears that contributed to the worst day for the market in over a year were overblown. And numbers have come out since that indicate a recession is unlikely any time soon. But the Federal Reserve is still expected to start slashing rates next month. It looks like we will still get the rate cuts without a recession. The market loves it.
The rally is back in business for now. A soft landing is still possible. AI is hot again and technology has resumed driving the market higher. It’s good for now, but there is reason for caution. Recession may not be looming soon, but it is now on the radar. The market is also elevated and showing vulnerability to bad headlines. And who doesn’t think there will be a lot of stunning headlines in the months ahead?
Cheniere Energy Partners LP (CQP)
Plus, September is historically the worst month of the year for stocks, followed by October. Anything is possible in the near term, and we’ll see what happens.
That said, there is some very good news for the portfolio. The revitalized market has created great covered call opportunities and may continue to do so in the weeks ahead. Falling interest rates have also brought the previously downtrodden interest rate-sensitive stocks back to life. These stocks are cheap, high yielding, and defensive ahead of a likely slowing economy.
Take CQP. The recession scare of early August knocked the wind out of most energy stocks, including this LNG exporter. But the stock is recovering nicely as those fears have waned.
While CQP is vulnerable to weakness in the overall energy sector in the near term, the longer-term trajectory remains excellent. The world still needs US natural gas. Earnings were solid and expansions are on track. Plus, that huge dividend is solid and highly attractive in a market that could sputter in the month ahead.
Recommended Action: Buy CQP.
